Shiseido at a loss for Q1

Continuing the trend of declining cosmetic sales in Japan, Shiseido Co., Ltd. posted a loss of 666 million yen in Q1; compare this to a net profit of 4.32 billion yen from Q1 2009. Shiseido's consolidated sales increased 4.4 percent to 145.8 billion yen as overseas sales increased, though domestic sales decreased 5.8 percent in Q1 to 87.32 billion yen. Shiseido's international markets grew 24.5 percent to 58.48 billion yen, while their operating profit grew 56.8 percent to 3.31 billion yen in Q1.

With declining sales at Shiseido Japan, they will launch a new product line of masstige lotions targeting the low-cost category (think fast-cosmetics). The four products, made from moisturizing cream, will be sold under the brand name Senka and will launch in Japan in September and then followed by other Asian markets.

Data Shiseido Co., Ltd.

Tokyo Man Bag

The men’s handbag market in Japan is increasing in popularity – and in importance among fashion designers and retailers. For years Japanese men have been seen carrying their girlfriends' or their wives’ handbags as well as wearing backpacks and messenger bags, carrying satchels and closely holding man-clutches – with both luxury and casual bags regularly being interchanged.

Proof of the market expanding and retailers taking it seriously is the remodeling of the Coach Maranouchi flagship store focusing on the men’s category. This recently followed Coach opening a men’s store in Greenwich Village New York. One of Coach’s most popular items is the classically-styled Thompson messenger bag, priced at 59,850 yen.

With the men’s handbag market getting bigger other retailers are also expanding into this category like Aniary which sells a soft leather tote for 50,400 yen and a shoulder pouch for 31,500 yen. Porter’s Harajuku is also courting men with their nylon satchels and Tanker line of backpacks at 18,900 yen. This September also look for a natural-colored cotton canvas bag from French brand Kitsune, which will be released in a limited run of 750 bags and cost 45,150 yen.

Maybe now with the design and release of fashionable handbags for men it will be the wives and girlfriends who want to carry their man’s bag.

Kao Corporation Grows Q1 Profits

With the beauty care industry still suffering due to the continued contraction of the Japanese economy, Kao Corporation was able to squeeze out growth of 5.7% to 12.48 billion yen for Q1, with sales increasing 1% to 289.97 billion yen.  Kao was able to realize the increase in profits through the right product mix focusing on Japanese consumers' shift away from prestige cosmetics to their new preference of lower priced cosmetics.

Kao Corporations' beauty division includes Kanebo and Jergens and reported sales of 131.3 billion yen, a decrease of 2.2 percent from the same time last year.

Data Kao Corporation

Japan's Department Stores Looking Next Door for Help

With 28 straight months of sales declines, Japanese Department Stores are now looking outside for help after all other (short-term) fixes have failed.  For years Japanese Department Stores have resisted strategic change instead preferring expansion and additional spending even after cutting-costs through closing down some non-performing stores and releasing personnel.  This time with the situation dire Japanese Department Stores are heading next door to South Korea to learn from the successes of their big-three department stores - Lotte Shopping Co., Hyundai Department Store Co. and Shinsegae Co. as well as other outlets.  These same stores who were once the students studying and learning about expansion from, Japanese Departments Stores (one thing they do well) are now the teachers and will teach investment strategy, sales promotion, and how to reduce personnel costs to a contingent of Japanese Department Store executives led by Isetan Co. President Onishi, Hiroshi. 

In 2009 operating profit margins of Japanese department stores were about 1-2%, compared with about 10% for the big-three South Korean department stores.  South Korean Department Stores save on personnel costs by using fewer sales staff, and steer more money into advertising and promotions.  Though unfortunately due to cultural, economic and other differences not all South Korean saving-methods will work in Japan, but at this point it is good for Japanese Department Stores to be open to anything and almost everything. 

Data Nikkei

The Changing Priorities of Japan's Luxury Shopper

In a recent study conducted by Mckinsey & Company on Japan's Luxury Consumer, it was found due to the burst of the luxury bubble that the spending priorities among Japanese consumers in the luxury sector have changed.  This is not new news but the report does offer some very interesting insights into the new spending habits by demographic - so we are able to see how Japanese consumers at different ages are now prioritizing their spending in the luxury sector. 

To view the full Japan Luxury Goods Survey 2010 report click here.

Days of the Week Bras

Although an essential part of every woman’s wardrobe the bra in Japan has always been treated as a garment that is worn and not seen, understandably that is why not so much creativity has been put into its appearance - until now. Now, Japanese designer Une Nana Cool wants to add a splash of color to this otherwise boring but essential garment for Japanese women. Une Nana Cool, a subsidiary of Wacoal, has launched their latest line for this fall called happily enough "Fun Week". This series of bras is in seven colors, one for each day of the week. They are wireless and come in only three sizes and are made with a single panel of stretch polyester in the front with gel padding that adjusts to the changing sizes of women. The line sells for a very inexpensive 105 to 210 yen can be customized with a variety of different application patches such as rabbits, birds, monkeys, and squirrels. Une Nana Cool currently has 37 stores in Japan and an additional 20 throughout Asia.

Former site of Isetan Co.'s Kichijoji department store to reopen this Fall

Do you remember the former site of Isetan Co.'s Kichijoji department store? You know the one that closed its doors in March 2009. Well it seems it will not remain closed very long - though no one really though it would. On Monday it was announced through the city of Musashino, Tokyo, where the site is located, that Mitsubishi Corp. Urban Development Inc., a Mitsubishi Corp. affiliate, will reopen the site this October. The new building will have over 18,000 sqm of floor space and be able to house up to 108 tenants. I was excited to here H&M was in negotiation to take a significant amount of space but finally negotiations on the rental price forced the deal to fall through. With H&M pulling out of the mix there will be openings for several other exciting brands like United Arrows' Beauty & Youth and Fast Retailing's PLST, which is expanding in the Japanese market as part of Fast Retailing's goal of global-apparel domination.

At Least Someone is Hiring

Fast Retailing, parent company of Uniqlo, Theory, GU, UJ, Helmut Lang, Comptior des Cotonniers, PLS+T and more is one of the few fashion companies in Japan to increase their hiring since the burst of the luxury bubble in 2008.  As many companies in Japan laid off workers during the recession and are still slow to hire, Fast Retailing in contrast to the rest of the market grew its workforce 69.4% during the two-year period since the luxury bubble burst. 

With Fast Retailing leading the way in hiring do you think other companies will soon follow?

Fast Retailing to Close Smaller Apparel Brands

In a restructuring move, Fast Retailing will soon close five of their apparel brands operated under their Cabin division. The five apparel brands including Zazie and Enraciné, are small lines targeting the younger Japanese female and have been operating at a loss for some time. With the current economic environment, competition and oversaturation of the market, Fast Retailing's closing of these brands will affect their already falling profit-target for this fiscal year by about 3 billion yen.

Cabin currently has about 198 retail-doors throughout Japan. Fast Retailing will consider Cabin's retail network for other Fast Retailing brands though due to the small size of the stores Uniqlo store most likely will not be opened.

Fast-Fashion Giant Fast Retailing Expands Focus into High-end Apparel

With Fast Retailing's same-store-comps and stocks in recent decline, Fast Retailing announced they will now begin to focus on their higher-end apparel lines. Theory, which is owned by Fast Retailing, is several times more expensive than Uniqlo and uses higher quality fabrics and materials in production, will increase their doors in Japan as well as heavily expand into China, where desire for high-end and luxury brands is high. Another Fast Retailing brand PLS+T which is less expensive than Theory and still more expensive than Uniqlo will also expand domestically doubling the amount of doors from 15 to 30 by next August 2011.

Fast Retailing expects sales for both Theory and PLS+T to grow 51% to 84 billion yen this fiscal year and is forecasting growth of 500 billion yen by August 2020.

With brands like Theory, Helmut Lang, Comptior des Cotonniers, and PLS+T do you think Fast Retailing will be as successful in the high-end apparel market as they were in the fashion-fashion market?

Fast-Fashion Inventories Quickly Piling Up

As predicted fast-fashion retailers in Japan like their luxury-predecessors are starting to experience sales declines - and for the same reasons. Obviously fast-fashion and luxury brands are different on so many levels but the one thing they do have in common is oversaturation and excess inventories.

In the good years leading up to 2007 luxury brands expanded, most times over-expanding; constructing towering luxury buildings, opening multiple shops sometimes within several blocks of one another, releasing frivolous second lines and generally oversaturating the market. Then when the "luxury-bubble" burst many luxury brands were left with excess inventories they had to discount and sell-off discounting their brand image, as well as close non-performing stores and restructure. As these luxury brands were faltering, fast-fashion brands, which in the case of Fast Retailing were readying themselves for the luxury-bubble burst for years, stepped in. And instead of taking a conservative, slow-growth approach suddenly there were fast-fashion retailers everywhere. There was fast-fashion, fast-cosmetics, fast-footwear, and fast-suits. Fast-fashion retailers were expanding, opening more stores, opening multi-floor shops and shopping centers, moving into department stores and supermarkets, as well as expanding and diversifying production - and now, the inevitable is occurring, fast-fashion brands' sales are declining. Just take a look at Uniqlo where same-store-comparative sales have decreased five months out of this year so far and we are only halfway through. Observe companies like Shimamura, Point Inc., Onward Holdings and Tokyo Style Co., who have seen unsold inventories pile up - and their solution will be to discount their already discounted prices. So, just like luxury brands before them who discounted their goods so much that consumers in Japan never had to pay full-price anymore if they just waited for one of the sales, fast-fashion retailers are entering the same discount phenomenon and brand-changing life cycle. Fast-fashion retailers which were smart enough to adapt to the changing priorities of consumers were unfortunately, like their luxury predecessors before them, too greedy to maintain the trend for too long. After all, does fast Retailing really need over 800 Uniqlo shops throughout Japan?

Recommended Read on the Prada Japan Harassment Case

This article was published this morning at Womenenews.org.  It covers the current sexual harassment and sexual discrimination lawsuit again Prada by Rina Bovrisse.  It is an excellent article by Catherine Makino with several quotes from me.  Click here to go directly to the article or copy and paste the following link into your browser http://www.womensenews.org/story/business/100716/japan-prada-case-probes-high-fashion-harassment

Department Stores Sales Down...Again and Again and...

For the 28th straight month department store sales in Japan fell. In June, Japan department store sales declined by 6% to 492.4 billion yen, with sales at Tokyo department stores falling by 5.5% to 126.1 billion. With 28 straight months of decreasing sales, Japan department stores are doing what they do best - opening another department store. This one will be an annex to Mitsukoshi department store in Ginza, opening on 11 September with more of a focus on men's RTW and ACC.


Do you think the Ginza Mitsukoshi Annex will be successful?

Data Japan Department Store Association

Japan Fashion Week Keeps Improving

Tokyo Fashion Week continues to improve, although still not among the top three fashion weeks; New York, Paris and Milan, JFW is slowly gaining credibility as well as corporations, designers and potential investors. Last season JFW attracted over 30,000 visitors who viewed 44 collection shows - even during the shortened fashion week.

JFW's latest improvement comes on the announcement of their new five year deal with IMG. JFW along with IMG Fashion's global fashion network will work together to raise interest in the JFWO and their twice-yearly Tokyo Collection as well as raise their profile and to realize their true potential.

IMG Fashion has had past successes in their partnerships with the British Fashion Council, the Fashion Design Council of Canada, Camera Nazionale Della Moda Italiana and Prêt à Porter Paris.

What You All Have Been Waiting For...

Coming this fall Ralph Lauren will open their first Rugby store in Tokyo, Japan.  Behind the Polo Ralph Lauren flagship and across from the Marc Jacobs flagship in Harajuku, the Rugby store is Ralph Lauren's first Rugby store opening in Japan.  With the success among Japanese consumers in Ralph Lauren's U.S.-based stores as well as the brand-positioning, Rugby is sure to be a hit among Japanese consumers in Japan. 

There will be more information made available on the Harajuku Ralph Lauren Rugby store as Tokyo Fashion Daily receives it.

Asics Expands Via M&A

Kobe-based Asics has announced the acquisition of Swedish outdoor company Haglöfs. The purchase from the Stockholm-based investment fund Ratos AB will be finalized by August 2010 and will cost 11.4 billion yen and is expected to have minimal impact on Asics' finances.

Established in 1914, Haglöfs makes and sells outdoor gear including waterproof jackets and backpacks. Selling its products in Scandinavia and Japan Haglöfs' sales in 2009 were 6.7 billion yen.

Data Dow Jones

The Emperor Has New Clothes

From 1 September 2010 Frédéric Grangie will join Louis Vuitton as new President and Chief Executive for their Japan subsidiary. F. Grangie, a twenty-year veteran of the luxury industry, began his career with Louis Vuitton prior to being-based in New York overseeing new market development for Marc Jacobs as well he was vice president of Fendi Japan.

Tokyo Fashion Daily welcomes Mr. Grangie to LVMH Japan and wishes him all the success.

Bulgari's Pony-Skin Handbag

Not something little girls dream about growing up but Bulgari chief executive Francesco Trapani is hoping Bulgari's new pony-skin handbag aimed at the grown-up woman will help grow their company's expanding accessories business, diversify their product-lines and appeal to the long-treasured and loveable icon of little girls everywhere.

Over the years consumers have become used to and even insensitive to where and how fashion brand's leather goods come from; alligator, snake, cow, horse and now...ponies.  So for that Tokyo metropolitan-woman who wants a pony but just doesn't have the space - a pony-skin handbag is the next best thing.

Fast Retailing Increases Sales but Cuts Forecast

Fast Retailing expects to see a 36% increase in profits this year even with a decrease in sales in the spring and summer months.  Despite the rough summer months Fast Retailing is forecasting a sales increase of 19% to 815 billion yen on the year. The final profit forecast has been downgraded from the original forecast of 71 billion yen to 65 billion yen for 2010, with sales for the year downgraded 19 billion yen from the original forecast.

Fast Retailing is not the only company experiencing decreasing sales and declining stock prices. ABC Mart is experiencing a decreasing stock price as investors are not confident they can match their sales success moving forward, while stocks for both Shimamura Co. and United Arrows Ltd. are declining as investors are hedging on recovering sales of foreign import brands.

What are your thoughts on the recent decline in sales for Japanese brands? Is it a short-lived trend or a broader reflection of a recovering market - away from fast-fashion back to high-end and luxury goods?

Principessa-Couture

Finding new online shops is a hobby of mine and when I recently was introduced to this exciting online shop I just had to share it with you.  Online shop Principessa-Couture, which first launched in June 2009, has already expanded their online operations and launched their Japan site this past February. With additional features, categories and an easier shopping experience they are steadily expanding thanks to stylish-merchandising and a loyal customer base. Principessa-Couture, which started from two Singaporean sisters’(Gladys and Shirley) love of travel-shopping and then blogging about their finds has sprung into a web-popular online shop selling affordable casual wear and limited collections of elegant and classic handpicked pieces. The product lines range from the obvious “The Jeans Collection”, and “Special Day Dresses”, to “Qipao” and a variety of accessories as well as lines of RTW and ACC that were available before their launch in Japan. Speaking with Gladys Toh, one of the two sisters that make up Principessa-Couture, she said “what makes our business successful is word of mouth. We have many loyal customers who have been with us since the beginning when we were just a blog-shop. And in turn these customers have brought us new and loyal customers”. It doesn’t hurt either that Gladys’ own sense of elegant-style helps drives the merchandising and buying. What’s next for Principessa-Couture? Working with designers in New York, and Singapore, plans are on the way to create their own in-house brand for dresses and accessories as well the addition of Japanese and Chinese language options to their web site. Gladys adds, “There is a lot of work required for our dreams to come true”. And it does seem their dream of having the most spacious, most fabulous, adorable and loveable clothes all, in one walk in closet has come true and it can be found at Principessa-Couture.

Bottega Veneta.co.jp

Earlier I blogged about Prada launching their Japan ecommerce site in the near future.  Following that blog Tokyo Fashion Daily has learned Bottega Veneta will also launch their Japan ecommerce site by the end of this year.

As fashion companies see and realize the value of the web more will embrace ecommerce, social media, mobile and digital strategies and learn how to incorporate them in their retail and marketing strategies.  For example Bottega Veneta realized the web was crucial when its site’s global traffic surpassed the number of people actually coming into its physical stores.

Once Bottega Veneta launches their Japan ecommerce site they will soon after launch their mobile site.  Which is a good thing as 113.025 million people or 85% of Japan's population are currently connected via their mobile phones * - the marketing and sales implications are endless.

* Data CNET Japan News

The ABC's of Bad Weather

ABC Mart's same-store-comparative sales fell 1.5% in June. Even though this was the first fall in same-store-sales since October 2009, the decrease still drew the ire of their investors who let their stock drop 110 yen from Monday to 3,260 yen.

As most companies of late, bad weather was too blame for the fall in sales. To follow up on weather patterns affecting sales; does bad weather stop you from shopping?

Is Luxury Back in-Style in Japan?

That is what a new report from McKinsey & Company suggests. In a survey conducted by McKinsey & Company which surveyed both executives and consumers, it was found the Japanese customer is more price-sensitive and fickle when it comes to buying a luxury-brand item but they are buying again.

Result from the survey indicate 80 percent of the 15 luxury goods executives expect their companies’ sales to improve this year compared to last year, with a further 33% expecting their sales to grow at least 10% this year - compared to 2008 when 85% of executives expected their sales to fall.

The survey also found consumer confidence is also increasing with less people no longer inclined to shop for a lower-priced but equally stylish equivalent of a luxury brand item.

Is this good news for Japan's luxury goods industry? Yes, according to the Yano Research Institute, but sales growth will still be slow increasing less than 1% in 2010.

United Arrows Increases Same-Store-Sales

United Arrows' same-store-sales increased in June up 0.8% from June 2009, due to strong sales of summer-wear and accessories.  This is United Arrows' second straight month of positive same-store-sales as they also experienced a 5% increase this May compared to May 2009. This positive growth was enough to increase United Arrows’ stock price 69 yen to 1,086 yen.

Data Nikkei

Uniqlo Sales Down Again

For the fifth month this year and the first time in two months Fast Retailing's Uniqlo experienced a decline in sales in June.  With sluggish summer apparel sales Uniqlo's same-store-sales decreased 5.8%, while customers declined 5.2% and sales per customers fell 0.7%.

Sale Season a Sales Boost for Department Stores

With many summer-sales starting yesterday department stores are already reporting lines (3,000 people lined up for Shinjuku Isetan), crowds and sales; with first-day sales at department stores experiencing a 4% increase, and department stores Mitsukoshi and Nihonbashi reporting double digit sales increases. 

Data Japan Department Store Association

Another Japanese Company Adopts English as the Official Language

Rakuten, Japan's largest online shopping mall announced that they like Fast Retailing will implement English as the official language in the company by 2012.  Going a step further than Fast Retailing, Rakuten will not only require executives and managers to speak English but also local staff. 

Rakuten like Fast Retailing recognizes the need for English as Japanese apparel retailers and etailers internationalize and expand globally. 

Before Fast Retailing and Rakuten, Shiseido Cosmetics Group expanded globally and utilized English alongside Japanese. 

Hard Times for Japan's Big Four Department Stores

The Big Four Japanese department stores' same-store-sales fell 12% in June compared to the same time as last year with Daimaru Matsuzakaya down 2.5%, Takashimaya falling 5.5%, Isetan department stores decreasing 2.3% and Mitsukoshi falling 12%. 

The decline in sales was due to sluggish sales during the annual summer gift-giving season as well as low apparel sales.

Data Japan Department Store Association

Prada.co.jp

For the first time outside of Europe, consumers in Japan and the US will be able to shop and buy Prada merchandise directly from Prada at Prada.com.  Prada's ecommerce launch will be part of the build up to Prada readying (once again) for an IPO.  The IPO is being considered for the beginning of 2012, so expect to be able to shop for that new Prada "it" bag and shoes at Prada.com before that time.