French fashion house LVMH Moet Hennessy-Louis Vuitton has abandoned its plans to open a flagship store in Tokyo’s ritzy Ginza district as the global financial crisis hits Japan’s booming luxury market, the company said. Declining sales were cited as the reason for scrapping plans to open the Louis Vuitton store in 2010 in a 12-storey building in one of the world’s most luxurious shopping areas, Japan’s Nikkei, its leading financial newspaper, reported without citing sources.

The store would have been one of the largest Louis Vuitton shops in the world and could have competed in size with the brand’s main store in Paris. However, the world’s largest luxury-goods maker saw its sales in Japan fall seven percent in the first nine months of the year, compared with the same period a year earlier, and decided the business environment was not right to make such a large investment, the Nikkei said.

Japan has begun to lose its shine as the one of the world’s most lucrative retail markets. Department stores and jewelers are complaining that far fewer customers are coming into their stores and those who do are buying less. Unlike other countries, many buyers of luxury goods in Japan are middle-class shoppers who long save for their purchases. Their spending has decreased as Japan’s economy has slipped into recession.