A change in Japanese shoppers’ buying habits could play into the hands of British brands that can offer quality product with a heritage story.
Japan hit the headlines in 2011 for all the wrong reasons. The huge earthquake in March, followed by a tsunami and a nuclear meltdown, led understandably to widespread concern both inside and outside Japanese shores for its people and its economic stability.
But just nine months after those tragic events, the ever-pragmatic Japanese are focused on rebuilding those areas and the lives worst hit, and sending out a signal to their commercial partners abroad that Japan is open for business.
Indeed, despite the recent events, the Japanese yen has not in living memory been as strong as it currently is against the British pound, which is currently at one of its weakest low points.
In the 1970s, the pound was worth roughly ¥1,200 but is now worth just ¥135. It’s a state of affairs that can make being a tourist in Japan an expensive business, but which equally attracts thousands of Japanese tourists to splash their cash in the UK, and makes exporting to Japan a very attractive proposition for the UK fashion sector.
The Japanese fashion market has always held a fascination for us Brits and we in turn captivate the Japanese with our heritage, royal connections and tradition. Japanese consumers are informed, fashion-obsessed and sophisticated in a way that most UK shoppers are not, so entering the Japanese market as a brand is not something to be taken lightly.
But for those considering making the leap, now might be the time to do it. The Japanese consumer, an inherent lover of all things British, is now positively seeking UK brands out as the heritage trend collides with Japanese interest in the royal wedding, the forthcoming Olympics and the Queen’s Diamond Jubilee. It goes beyond attaching a ‘Made in Britain’ tag though, as the Japanese can spot genuine quality and want a history they can buy into.
While the global financial crisis – or Lehman Shock of 2008 as the Japanese call it – has not passed Japan by and has certainly led to a contraction of the country’s fashion market, imported brands are still selling well with the right support and positioning.
In fact, outside Europe, Japan is number two only to the US as the biggest export market for UK fashion and retail brands, and far from being dulled by last year’s earthquake, the Japanese passion for heritage and quality seems to be growing.
Indeed, many of the retailers and wholesalers Drapers spoke to while researching this report said consumers had undergone three months of apparent mourning after the tragic events, during which they bought little and frugally, but that from July they had begun even more to seek out higher-end, quality products, perhaps to reassure themselves.
The other after-effect of the earthquake has been that consumers are more focused on their home and family, meaning that many retailers and brands are successfully moving into homeware and accessories, extending existing brands and also introducing lifestyle sections within many retail operations.
There are some other key factors that affect how successful a brand is in the Japanese market, one of which is the make-up of the population itself.
Japan has an ageing population, with 40% of its people expected to be over 65 by 2055, and this makes the younger generation of under-25s far more reticent to part with their cash as a result of pension and welfare systems being unlikely to be able to fully support their parents’ generation.
This younger age group has embraced the fast-fashion chains that feature in the Japanese market just as they do in the UK – H&M, Uniqlo and Forever 21 being the biggest names.
Before the earthquake, sales at H&M jumped 191% to ¥10.2bn (£84m) in the year to the end of September 2010 compared with the previous year, and Uniqlo continues to be the largest clothing retailer in Japan by overall sales.
An older generation does exist – born in the 1970s and so growing up in the so-called bubble economy boom of the early 1990s – that is more comfortable spending and is looking for more expensive heritage and quality goods including many UK brands.
There has also been a boom in home-grown design talent, with many Japanese designers – such as Beautiful People, Muveil, Toga and Sacai – rolling out successful ranges suited to their home market in style and fit. These sell well in Japan but also export to Europe.
Brands looking to enter the Japanese market tend to choose a Japanese business partner, or enter into a franchise or licensing deal with a Japanese company.
Some then go on to invest directly once the brand is well-known enough for consumers to buy direct.
As well as an understanding of the Japanese consumer, the business partner can advise on adjustments to the product itself which are almost always a necessity in order to sell into Japan. Clothes sizing is a typical adjustment. Japanese women tend to be far smaller than their Western counterparts, as do the men, particularly in shoulder and chest width; they also prefer a closer cut.
The Japanese twist
Brands may also look at varying the design of the product range itself under some licensing agreements and Japanese partner companies often liaise with UK-based design teams, but source and import the finished goods from China. Giving a UK brand that “Japanese twist” is a common practice, bringing many old-fashioned UK brands up to date.
The consumer market is focused on two main cities – Tokyo and Osaka – but of course it is spread across the whole of Japan which, as a country, is slightly larger than the UK and Republic of Ireland combined, but spans some quite different climatic regions. The seasonal variations in temperature mean spring/summer ranges from the UK are often too heavy for the hotter Japanese summer, and might need adjusting.
Taste and style varies from city to city, and retail prices are usually set by the importer, so there is not the price competition evident in the UK.
1 Direct sales to retailers
You can keep your retail price lower by cutting out the middle men and stay close to your buyers, but you need to know the market to succeed.
2 Appointing an agent
Your marketing, sales and PR is done for you and the agent will set a universal RRP, but you pay more and sales may be lower if the agent has other brands.
3 Licensing your business
Production and delivery are taken care of, but you need to trust your licensing partner implicitly or keep control of your brand image.
4 Setting up a Japan office
This will give you full control of your brand.
5 Major trading companies
These act as intermediaries between UK brands, Japanese banks, insurance companies, suppliers and retailers.
Japan buying seasons
The buying seasons coincide with the major international fashion catwalks in Paris, Milan and New York and the major European shows (Première Classe, Tranoï, Pitti Uomo).
Menswear June and July for spring and January and February for autumn
Womenswear September and October for spring and February and March for autumn
Big in Japan - The retail scene
Sales are falling in department stores. In part, consumers have moved their money to select shop chains, but department stores are also losing out to fast-fashion stores and more convenient shopping near transport hubs. The major players are Isetan, Mitsukoshi and Seibu in Tokyo and Hankyu in Osaka.
Select shops, or fashion speciality stores
These are retail chains whose buyers source from overseas and acquire local brands to create a mix to suit their local consumers. They can be branded by the parent company or have unique individual names. The major players are United Arrows, Beams, Ships, Baycrew’s and Tomorrowland.
Etail and TV shopping is on the rise, but there is a separation between online and bricks-and-mortar. Retailers Drapers spoke to were only retailing limited lower-priced stock online and suggested that consumers associated websites with lower-end product and would be reluctant to buy British heritage brands online, but this is certain to change over the next few years.