Osaka – Sunday, October 3, 2010
Nikkei, Japanese leading newspaper specialized in business and economy, reported on September 2 that Japanese retailers trading clothes and sundries are expanding their made in Japan product line-up. Such retailers are promoting this with the objective of appealing ”obsessiveness to manufacturing” to grow business in high price range products with value added to consumers, instead of focusing their business on low price range products. Background of such of their change in strategy includes cost increase of China, one of major production site country, which means it is now easier for them to utilize production sites in Japan.
1. How have Japanese retailers training clothes and sundries expanding made in Japan product line up?
Major Japan domestic production expansion of clothes
(Source: Nikkei, translated and edited by the author)
Company Name / Products / Production Expansion Plan
Itoyokado / Shirts, bags, etc. / Develop products with leading production sites. Expand SKUs to 50 by next spring.
AOKI / Suits, shirts, shoes etc. / New made in Japan brand launch. Leverage high tech such as 3D sewing.
Sanyo Shokai / Coats / Obsessiveness to details by its own factory located in Aomori Prefecture.
UNIQLO / Jeans / High end product at 9,990 yen with obsessiveness in processing.
Right-on / Jeans / First made in Japan product launch with its unique brand this autumn.
Sanrio / Towels with character illustrations / Launch as souvenirs targeting travelers from abroad.
SRI Sports / Golf clubs / New product launch in November this year leveraging made in Japan shafts.
AOKI, a leading retailer in Japan specialized in men’s suit, launched a new original brand of made in Japan products of suit, shirt and shoes and started selling them in their 85 stores (equivalent to approximately 20% of total stores) from October. Fabrics are not made in Japan but sewing is done in Japan leveraging Japan’s high technologies such as 3D sewing to enhance wear comfort. The price range of such suit is between 108,000 yen and 128,000 yen, which is high-end range of their product line up. They target sales of 5,000 suits as a start.
2) Aoyama Shouji
Aoyama Shouji, another leading retailer in Japan specialized in men’s suit, is also increasing stores trading made in Japan suits. It started pilot sales in 6 stores this spring and will increase to 10 to 15 stores from the end of October to November this year, to target selling 1,000 suits. Made in Japan suit is sell accepted to travelers from abroad so if their sales turns out to be strong they will study to further expand their business of made in Japan suit.
3) Sanyo Shokai
Sanyo Shokai,a leading retailer in Japan specialized in men’s coat, plans to launch this month a new brand for their main product of men’s coat planned and designed by a well known designer and sewn in its own factory located in Aomori Prefecture. The fact that such coats are made in Japan with much care from cutting of fabrics to sewing will be introduced by showing video at sales floor in order to appeal obsessiveness to details to consumers.
Itoyokado, a leading retailer (super market) in Japan, is also strengthening their line up of clothes and sundries by joint-development with leading production sites in Japan, and appeal “made in Japan”. It launched 36 SKUs of polo shirts and bags etc. made in 10 prefectures in Japan in 160 stores. It targets to achieve sales of 10 billion yen in the first year and 15 billion yen in the second year.
2. Why are Japanese retailers expanding made in Japan product line up?
1) Meeting needs of Japanese consumers
Japanese consumers are not necessarily after low price products or rather some of them are getting tired of low price products so Japanese retailers need to take measures to meet such needs. Expanding and strengthening made in Japan high quality, line-up of high end products and appealing such line up with effective marketing is one effective strategy/option for Japanese retailers.
2) Counter measure to increasing production cost in China
According to the Ministry of Economy, Trade and Industry (METI), approximately 95% of clothes in Japan are imported from China due to low production cost in China; however, with increase in production costing China, it is quite natural for Japanese retailers to review their business strategy. One option for them is pursue possibilities of production in other countries which they already have started. And strengthening made in Japan products line up to grow high-end products is another option they started to pursue and implement, and this was the topic of this article.
In addition, some retailers started to establish their new factory in Japan. Maker’s Shirt, a Japanese retailer with main products of shirts made in Japan, plans to jointly establish a new factory in Japan with a company that they outsource their production.
3. What are possible upcoming challenges?
In order to leverage Japanese production sites, supports such as re-investment by companies with sufficient capital would be vital. This is because most factories in Japan that produces clothes are have not been invested for a long time because currently most clothes retailed in Japan are imported from countries with low production cost.
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Japanese retailers trading clothes and sundries are expanding their made in Japan product line-up with the objective of appealing "obsessiveness to manufacturing" to grow business in high price range products with value added to consumers, instead of focusing their business on low price range products. Background of such of their change in strategy includes cost increase of China, one of major production site country, which means it is now easier for them to utilize production sites in Japan. Their new business strategy is quite rationale but there are challenges ahead to leverage Japanese factories such as re-investment, meaning additional capital is required.
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