Selling bags is expensive

Is it expensive to sell bags in the Ginza district?  You bet!  A 2004 report by the Japan Real Estate Institute estimates that the cost of real estate in the Ginza to be almost $13K/square foot.  To open its new 8-story store in Tokyo, Gucci is estimated to have spent $80 million for the real estate alone.

With that investment, Gucci is also adopting the selling strategies of department stores.   Gucci has gallery space and a cafe on the upper floors of their Ginza store, as they try to lure customers through the entire store and entice them to stay longer.  Moreover, if customers want to find the low end canvas bags, they will have to pass by the very expensive leather bags by the store entrance and travel to the second floor to find the less expensive merchandise.  The longer folks linger, the more likely they are to purchase something -- even if it's only made of canvas.

Gucci is also introducing something called a "selling ceremony", to bolster the notion that purchasing a Gucci item is a momentous event.

Why are these steps necessary?  Because the luxury manufacturer is trying to have it both ways.....By fostering a notion of trend-setting exclusivity, while simultaneously selling a lot of crappy canvas bags.