IADS Exclusive: Toying with brand merchandising in Tokyo

Japan's retail performance has been buoyant in recent quarters, driven by rising wages, strong inbound tourism (especially from China), a competitive currency making prices attractive, and ongoing digital transformation.

Total retail sales peaked at 15.6 trillion yen in December 2023 (USD 105.6bn), then reached 14.2 trillion yen in November 2024 (USD 96bn), and 14.06 trillion yen in March 2025 (USD 85.5bn), indicating performance is cooling. However, Q1 2025 still grew year-over-year (+2.9%) and quarter-over-quarter (+1.5%). Overall growth is expected to moderate, with projections of 1.6% to 1.8% YoY for 2026 to 2027.

Japan’s luxury retail market is flourishing. The luxury goods market was estimated at USD 34.9 billion in 2024, with a projected compound annual growth rate (CAGR) of 4.42% through 2033. The luxury fashion segment alone was valued at USD 6.5 billion in 2024 and is expected to reach USD 10.7 billion by 2033, marking a CAGR of 5.3%. Tokyo, particularly the Ginza and Shinjuku districts, saw a surge in luxury flagship store openings: 24% of all new openings in 2024, up from 20% in 2022.

The IADS had the opportunity to visit Tokyo and review the iconic Isetan Shinjuku and the Ginza Six mall. Another standout location during the visit was Parco Shibuya. Below is a review of these store visits, focusing on how Japan animates stores by playing with adjacencies and brand associations.

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