The Fashion Market in Japan by G Massimo Lupis

G. Massimo Lupis

THE FASHION MARKET IN JAPAN

A Report Entrusted by ICE – Istituto nazionale per il Commercio Estero January, 2004

“SERVING CLIENTS WHO CHALLENGE THE WORLD”

TABLE OF CONTENTS

Research outline

INTRODUCTION

11 Before entering the market: evaluating the scenario 14 Between old logics and new trends: three cases of success 16 A product that sells well in Japan will sell well in Asia SECTION A 19 THE JAPANESE APPAREL MARKET 20 20 20 22 24 26 26 30 32 32 34 35 37 39 40 41 45 46 47

Distribution Scenario of the distribution trends for foreign brands The crisis in the traditional commercial channels Abandoning the kata of the distribution New signs and trends in the distribution Distribution types, representative companies, distribution models for the Italian PMI The department stores Innovative strategies in the world of the big department stores: the Mitsukoshi case The 'shop-in-shop' formula: the Marina Rinaldi case A new trend by now consolidated for the retail stores of a big brand: the megastore Independent retail, chains, select shops A growing phenomenon: the SPA The SPA that has shaken the Japanese market: the Uniqlo case FOM, a winning formula for the distribution of the clothing to be imported? FOM: the Yokohama Bayside Marina case Direct marketing: many formulas under the same term Buying fashion on the Internet The television sales The postal catalogues: the Belluna case

2 The Fashion Market in Japan

50 The competitive scenario 50 International and national brands: strong and weak points, risks and opportunities 51 Competition between companies: how important is the country-of-origin image? 54 Weak points and risks for the import fashion 56 Sizes and shares in the import market: the position of Italy 58 Commercial paths and strategies of the foreign fashion brands present on the Japanese market 58 Zara, the success is in the system innovation 62 Development strategies in franchising: the Benetton case 65 Itochu, renewing the tradition to manage the high fashion-content brands SECTION B 70 CONSUMER AND FASHION TRENDS 71 Consumer markets 71 Criteria and methods for the segmentation of the Japanese consumers: average consumers and trend setters in the fashion consumption 73 Innovators and conservatives, traditionalists and individualists, and much more: the segmentation of the consumers according to Itochu Fashion System 76 The segmentation of the fashion consumers according to JMR Science 78 A typically Japanese segment: the 'Oyaji' 82 The segment of the O.L. 83 The parasitic singles 83 The third age: three segments in one 88 88 89 92 96 98 111 124 137 150

Six target-segments for the Italian fashion Criteria-guide The fashion dream and the sign of money The values in fashion The backstage of the fashion purchase The twenty-year-olds The thirty-year-olds The young forty-year-olds and the mature forty-year-olds The fifty-year-olds The sixty-year-olds 3 The Fashion Market in Japan

163 163 165 168 169 172

Fashion products consumer trends Imported products: values, perceptions, behavior and purchase choices Critical choice factors for domestic and imported products Where is import fashion purchased Fashion themes, colors, materials, applications Sales seasonality

SECTION C 175 MARKET ENTRY AND EXPANSION STRATEGIES 176 177 179 181 183 185

Target charts The twenty-year-olds The thirty-year-olds The forty-year-olds The fifty-year-olds The sixty-year-olds

187 188 190 192 193 196 197 198

Distribution strategies Direct presence strategy The costs of direct presence Strategy of the alliance of the channel Relations with importers and agents Strategy of licensing Mixed strategies Strategies of manufacturing countries with low labor cost: the case of Vietnam

200 The business system in Japan 200 From FOB prices to window prices: a long and tormented chain of value 202 How to avoid Italian companies falling into the most dangerous traps 202 Dealing with mistakes so as not to loose customers 205 It is always best to know beforehand

4 The Fashion Market in Japan

209 209 211 211 212 214 214 214 215 217 219 221 221 224 225 226

Marketing The position of Italian fashion in Japan: the country image Recommendations on product and price policies The guarantee of a wide choice of sizes Retail prices according to consumer experience A thought on marketing From the perception of product value to the perception of experience value The influence of testimonials Listening to the opinion of customers: the CRM according to Wacoal New marketing techniques for an old philosophy: the kaizen applied to the CRM The power of customer service Marketing costs The media in fashion and their cost Economic and effective methods to create brand visibility The kodawari factor Micromarketing

SECTION D 229 DEALING AND SELLING WITH JAPANESE COMPANIES 230 From A to Z, an initial ABC guidance book on how to handle business relations in Japan

5 The Fashion Market in Japan

RESEARCH OUTLINE

Scenario This research has been realized during the last quarter of 2003. The desk phases, aimed at the selection, assembly and analysis of the statistical-documental evidence available (from Japanese and international sources) have been performed in parallel at the Bari headquarters and in the Tokyo office. The field research is articulated in a series of interviews of special figures in the sector and in a motivational survey performed in four cities (Sapporo, Tokyo, Osaka and Kitakyushu) on a sample of 329 consumers of all age brackets, through the administration of questionnaires structured with select answers. The general coordination in Japan was provided by Asayo Takazawa, business supervisor of the Tokyo office. The research report is divided into an introduction and four sections. Introduction The introduction is divided into three topics: - Before entering the market: evaluating the scenario The media today tends to provide a negative image of the Japanese market, so much so as to discourage the Italian enterprises from developing exportations to Japan. In this chapter there are reported the direct opinions of prominent Italian and Japanese figures encouraging the abandonment of the schematic representations of an impressionistic style, presenting the wealth of opportunities that the market offers. - Between old logics and new trends: three cases of success This chapter presents three structures of great importance in the Japanese fashion sector. A Spanish company, an Italian company and a Japanese company are the protagonists of the three cases, as much varied as symbolic, that are subsequently discussed during the research. 6 The Fashion Market in Japan

A product that sells well in Japan will sell well in Asia Japan, already in itself a market that is more than rewarding of the company efforts necessary for access and consolidation, is the foothold for operations that may extend to all the large consumption markets of the western Pacific. The chapter discusses this scenario, with the support of the documental evidence of a very recent international survey performed on the consumers of 11 metropolitan areas in the 8 large markets of the Far East.

Section A – The Japanese Apparel Market This section is divided into two major subjects. 1. The distribution: the dynamics that presently characterize the fashion distribution chain are illustrated, and particular attention is dedicated to the retail typology of the prominent figures and to the innovations underway. 2. The competitive scenario: with particular attention to the international competition and to the position of Italy and the role of the made in Italy factor, it also provides the elaboration of the three company cases presented in the introduction. Distribution trends The traditional ‘long channels’ are in crisis, the intermediate roles are often shortcircuited; the old ‘rules of the game’ of the distribution fail one after another. The chapter represents the existing phenomena with varied but singularly assonant testimonies: a businesswoman, two scholars, and an essayist. Typologies and prominent figures of distribution - The department store, stronghold of the high-range retail: the report summarizes strong points and areas of doubt in the formula that constitutes a myth in the distribution of fashion in Japan, with a discussion on the Mitsukoshi case. - The megastore, a trend by now consolidated for the retail stores of a big brand. - Independent retail, chains and select shops: the disturbing factors for retail. - The revolution in the casual fashion: the phenomenon of the SPA (Specialty store retailer of Private label Apparel). The Uniqlo case, the SPA that paved the way. - The formula of the FOM (Factory Outlet Mall) strengthens over the entire archipelago, with the diffusion of known brands at reasonable prices. An example: the Yokohama Bayside Marina case. - The ten channels of direct marketing are in the development phase: optimum results for the sales on the Internet and the television sales. Even the more traditional postal 7 The Fashion Market in Japan

catalogues confirm their traditionally strong position among the non-store channels: the Belluna case. The competition among producing countries: Japanese products and import products This chapter analyzes some aspects of the competition between domestic products and import products, proposing a qualitative analysis of strong and weak points of the image of the major countries that compete in the fashion sector in Japan, in order to finally present the position of Italy through recent quantitative data. The strategies of the foreign fashion brands present on the Japanese market The report presents three different strategic options, strongly characterized by the centrality of the weight of the distribution on the entire company business: 1. The reinterpretation of times, processes and channels that create margins and profits: the Zara case. 2. The foreign products are integrated downstream in the retail marketing; the Benetton case. 3. The old protagonists of the intermediation reinvent their role by strengthening the collaboration with the big international brands in order to renew their commercial strength. The Itochu case. Section B – Consumer and Fashion Trends This chapter dedicated to the consumption markets deals with, in a central role, the theme of the segmentation of the Japanese market, for the purpose of providing operational tools for the marketing of the Italian companies interested in evaluating the market. In the first part of the chapter there are described some techniques used for the segmentation of the market. First of all there are presented two ‘designer’ theories: the first is of Itochu Fashion System, and proposes a very specifically ‘Japanese’ segmentation that is particularly suggestive and effective as well. The second is proposed by the JMR Science institute, and proposes interesting clusters generated by a field study. Beyond the two cases formulated, the research proposes other segments that are quite useful to be considered: the O.L. (Office Lady), the so-called ‘parasitic singles’ (the young people who choose not to leave their parents’ house) and the third age, analyzed under various aspects. 8 The Fashion Market in Japan

Subsequently there are identified and proposed six target-segments for the Italian fashion. Each target-segment, corresponding to an age bracket, is discussed in three analysis sections, each of which focuses attention on a specific theme of the consumption behavior. 1. The fashion dream and the sign of money, which deals with the aspects of the level of attention given to fashion, the real fashion spending, the emotional experience of the fashion spending, and the repressed inclination towards the purchase; 2. The values in fashion, which deals with nine different topics: the aspects of the value of the image of the producing country, the image of the department stores and multi-brand shops, to then measure and compare the perception of the reliability of the three principal non-store channels (television, Internet, postal catalogues), to analyze the phenomenon of the two main reassuring factors for the fashion consumer (the price and the brand, defined as anxiolytics of the purchase process); and to point out, finally, the value of the brand through a survey on the popularity of ten signs very well known in Japan; 3. The backstage of the fashion purchase, which studies both the system of the influencers that weigh on the purchase choice of the consumer, as well as the system of the companions that interact with the consumer during the shopping process. The next subsection discusses some trends in fashion consumption, expanding on various aspects connected with values, perceptions, behavior and purchase choices. The consumers’ system of comparison between domestic and imported fashion products is discussed from various viewpoints; the preferred purchasing channels for the imported fashion products are identified, and there are proposed the results of a very recent study on the specific weight of seven different variables (fashion component, materials, style and color, price, origin, functionality and brand) in the choice mechanism of the consumer, arriving at establishing the ‘formula’ that influences the final choice as a function not only of the sex of the buyer but also of the various product typologies. The section concludes with a survey on the seasonality of the sales, analyzed as a function of four fashion sectors (womenswear, menswear, childrenswear and footwear) and on monthly-based chronological intervals. Section C – Market Entry and Expansion Strategies This section opens with a series of concise ‘target-charts’, organized according to the age brackets of the target segments already identified, that illustrate for each bracket the retail types preferred for the purchases and the sources of fashion information used most often; 9 The Fashion Market in Japan

subdividing the analysis between formal and casual fashion, critical aspects of the evaluation mechanism are pointed out for each bracket along with their percentages. The next chapter is dedicated to the distribution strategies. It identifies the three strategies of commercial presence most widespread in Japan among the foreign fashion companies: the strategy of the direct presence, the strategy of the channel alliance, the strategy of licensing, and the mixed strategies; the chapter is equipped with direct opinions of special sector testimonies. The chapter that follows is focused more on the effectiveness: a subsection on the value chain of the fashion product precedes the analysis of the most risky traps for the Italian companies. The last chapter of the section is dedicated to marketing: the first subsection deals with the theme of the positioning of the Italian fashion image, while that which follows proposes two recommendations on the price and product policies, rich in examples and brief cases. The third subsection is more articulated, as it proposes five themes of reflection on the marketing of fashion in Japan. Also in this case the themes are connected to dynamics and cases of the Japanese market, and provide ideas for thought that can be of particular use to the enterprises interested in accessing this market and in the elaboration of their specific marketing strategy. To conclude this chapter there follows a ‘service’ subsection that presents a review of the press media most useful for the campaign planning, with suggestions on the target segments, circulation and advertising costs, and a final subsection that illustrates two themes of how one can ‘dress up’ the offering system in order to enable it to gain visibility at a low cost on the Japanese market. Section D – Selling and Dealing with Japanese Companies The concluding section of the research presents a series of reflections concerning twentyfive critical themes that have proven to be useful in order to avoid errors, save money, and resolve difficult situations: in short, practical suggestions on how to deal successfully with the Japanese companies. The themes are presented alphabetically: from A to Z, and can also provide, for those who are not interested in operating directly on the market, a quick identification of the most relevant areas of conflict in the economic relationships provoked by the profound diversity between the Latin culture and character and the complex Japanese social and cultural system. 10 The Fashion Market in Japan

INTRODUCTION

Before entering the market: evaluating the scenario In the fall of 2002 Yves Carcelle, a director of Louis Vuitton, declared: “It’s been ten years now that the economists continue to speak about the risky conditions of the Japanese economy. However a distinction should be made between the Japanese and their banking system. The Japanese have money, their banking system does not. And while the years go by and one continues to wonder if and when a drop in the Japanese economy will take place, I see the Japanese always purchase more products by Vuitton." Seen from afar, the Japanese economy is certainly far from the clear and positive results it had experimented not so many years from now. Taking a look more specifically from Italy to the distribution world, the amplification given by the means of communication to the clamorous failure of various figures in the sector have induced many observers to interpret the future of Japanese economy with concern, while the economic operations who had recently attempted to evaluate the possibility of getting access to the Japanese market could not hide a certain dampening of their enthusiasm. Luciano Benetton, one of the representatives of Italian fashion in Japan is in tune with Carcelle’s opinions and therefore not at all pessimistic about the Japanese scenario. “This country is certainly not sinking. A country that claims a commercial surplus equal to thousands of billions of yen in one month (February 2003, 20% more with respect to the 11 The Fashion Market in Japan

previous year) is not at risk. Some sectors are. Banks and building companies. But a serious renovation is being carried out. Slow but effectiveâ&#x20AC;?.1 It cannot be denied that the low level of vitality in the dynamics of Japanese consumption is also tied to the objective difficulty of pushing a consumer to buy while the consumer feels uncomfortable with being constantly exposed to a scenario that tends to be pessimistic: the media seems to only speak about the difficult economic situation in Japan. In a country that since after the war has experienced decades of wealth, and that then experiences a scenario of recession with a lack of familiarity and evident discomfort, the consumer is instinctively pushed to have a purchase behavior that leans towards caution and savings, rather than the development of investments and purchasing impulsively; and if instead one thinks about how different the condition of the Italian consumer is, used for decades to living with economic scenarios often declared to be on edge of a collapse, and that in spite of this the consumer continues to manage basic as well as superfluous expenses, even within economic conditions that are often dramatically different from those of the Tanaka family - the ideal and typical representation of an average Japanese family. Actually this is a fact that tends to escape the analysis of the Italian businessman who today often tends to show a certain scepticism towards the possibility of investing in the development of the Japanese market. However the Tanaka family has some funds available on their bank account â&#x20AC;&#x201C; therefore some savings that is cash on hand and available â&#x20AC;&#x201C; on an average equal to about 14 million yen (over 100,000 euro); this figure even doubles in those families where the head of the family is over 65 years of age 2. A good part of the problems that the Japanese economy finds seems to be created by the difficulty that the Japanese companies meet when having to convince the consumers to spend their savings, certainly not in a lack of cash. This scenario is very well known to Roberto Pelo, director of the ICE headquarters of Tokyo, who with the evidence of the facts and figures clearly interprets the key facts needed for a correct interpretation of the Japanese economic situation. "Japan is and for at least 15-20 years will remain to be the second economy in the world with regards to the Gdp, and among the first for pro capite income. Considering the average of the last three years, the Japanese Gdp has been about 5,000 billion dollars, and the pro capite income 35,000 dollars; if a quick comparison is desired, it would be enough to consider that for Interviewed by Pio d'Emilia for Viste, magazine of the Italian Chamber of Commerce in Japan May/June 2003. 2 Source: Management and Coordination Agency, Tokyo, annual reports. 1

12 The Fashion Market in Japan

the Gdp it is a figure equal to the sum of that in Italy, France and United Kingdom all put together (dollar more, dollar less), but with 50 million inhabitants less. And with regards to the pro capite income, the Japanese exceed the Italians by about 70%. Moreoever. Japan holds the highest stock of savings pro capite in the world: an inactive and dormant monetary mass that is waiting for better times to come (and perhaps here lies the entire ‘psychological’ component of the stagnation).3 However could the crisis in the Japanese market even mostly be therefore due to the inability of renewing the system of the offers and of the commercial formulas? In full harmony with this interpretation, only apparently absurd, appears Midori Tani, an executive of the Japanese Ministry of Economy, Commerce and Industry 4 . Recently meeting a group of economists5 she confirmed the high level of cash on hand in the bank accounts of the families, trying to interpret the reasons for which the Japanese tend to save and spend less, thereby slowing down the development of the economy. “I feel that there are at least two reasons why we have enormous cash on hand on the bank savings accounts. The first is due to the fact that Japanese already have everything they need. There is not much to be done about this. If the Japanese do not purchase because they already have everything they need for their daily life, then we must try to sell something new that they still do not have. There are two ways to sell new things to people. The first is to invest in the development policy of the product. This is an area in which the Ministry of Economy, Commerce and Industry has worked hard, and therefore it is not a field in which the results can be seen from one day to the next. The other way is importing. The world is vast. There is no doubt that somewhere in the world products exist that can be imported and that would make our Japanese consumers exclaim 'how cute!' or: 'That looks really useful', and push them to spend their savings”. Certainly nobody can ever claim that in Japan nothing has changed and that the behavior of Mrs. Tanaka, who is in charge of doing the daily shopping for her family, has not changed during the last few years, and certainly not in the direction of purchasing more impulsively and ‘lightly’. However the statement made by the president of Louis Vuitton, that shows Japanese women that continue to spend money to purchase his very expensive bags, not only Roberto Pelo, in Viste, magazine of the Italian Chamber of Commerce in Japan, September/October 2003. 4 METI - Ministry of Economy, Trade and Industry. 5 Midori Tani, from the greetings given at the round table “The construction of a new management strategy for distribution channels in a Japanese style”, Import Distribution Symposium 2002, MIPRO – The Japan Machinery Federation, Tokyo, October 2002. 3

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represents something tied to the world of those who purchase luxury items; shopping in department stores, shopping malls and chain shops continuing to show evident signs of an inclination towards shopping. And if sometimes these signs could remain at a level of window shopping, which is contemplating the products shown in the shop windows, the responsibility is not automatically and exclusively found in the caution of the consumers. This is the opinion of Yoshihiro Tajima – president of the Distribution Economics Institute of Japan and professor at the Gakushuin University – who, calmly and simply confirms the point of view of Mrs. Tani of the Ministry of Economy, in his own way, and launches a clear signal that is also an invitation to the foreign businessmen to act. "So, it is said that the Japanese consumers do not spend money as before. But we still have money to spend on things that inspire us. Let’s take the case of theater tickets for the opera. In Japan, November and December is the season for opera, and a ticket never costs less than 50 or 60 thousand yen (between 400 and 500 euro) and usually one goes to the opera as a couple. Why do they spend all of this money? For the pleasure of listening to good music and good singers. This type of consumers do not seek satisfaction in material goods, but rather in emotions, as in music. The Japanese retailers are grieving that the Japanese consumer does not want to spend money; in reality he continues to actually spend money for what gives him the most pleasure or good feelings. And I feel certain that the foreign retail operators will now how to move".6

Between old logics and new trends: three cases of success Among the many cases of success that have continued to take place on the Japanese fashion market, it has been chosen to present an elaboration of three very different types, ideally typical representations of operative models that belong to very assorted logics and levels of the fashion product distribution, but nevertheless ready to be reproposed, reformulated or simply used by the Italian enterprises that are about to enter the Japanese fashion market. The first case – Zara – tells a story tied to the casual fashion. It appears particularly interesting for the Italian enterprises, because it proposes management solutions that Yoshihiro Tajima, president of the Japanese Institute of Economy of Distribution and professor at the Gakushuin University, in “The Policies of Distribution and Promotion of Consumption in Japan”, speech at the convention “Scenarios and Prospects for Foreign Distribution in Japan”, Import Distribution Symposium 2000, MIPRO, Tokyo, 2000. 6

14 The Fashion Market in Japan

present an excellent level of integration with the new needs of the Japanese market, as well as because the entrepreneurial formula of the Galician company vividly interprets the winning features of commercial flexibility and creativity of many small and medium Italian enterprises. The second case is Italian and presents a fusion of the general strategic choices of Benetton, viewed through the testimony of the person who adapted them in order to establish the company’s presence on the Japanese market. The third case – Itochu – intends to repropose the model of shosha, the Japanese version of the trading company, that has dominated the fashion world - and in general the Japanese commerce - during the entire twentieth century. In the new distribution model the wholesalers' long channel is competing with the short and fast channel of the SPAs7; the shosha move along the first of the two channels. "The role of the shosha is fundamental for the functioning of the market, but acts a lot less often in the spotlight: it is a role that is very similar to that of kuroko8. In our culture there is a big puppet theater animated by kuroko, men dressed in black. The kuroko are visible on the scene, and their presence is necessary, otherwise the show could not be represented; but it is a custom - as dressed in black – that the spectators must consider them invisible. In the kabuki theater as well something similar occurs: a technician dressed in black comes on the scene, his role is indispensable for the show to continue, but the spectators must pretend that they do not see him.” This effective image, told by an executive of Tomen,9 treated with unusual keenness and ability to summarize the profile of the shosha. It is without a doubt that the shosha is not free of dimensional limits, tied to the tied to the elephantiasis of which they have suffered, and partially continue to suffer, many big names that have written the history of Japanese commerce. Suffering from problems tied to age that have varied from fifty years to a few centuries of life; suffering daily attacks of innovative and modern structures that scour the spaces of the market thanks to their small size and consequential great agility, and taking advantage of the changes taking place on the market scenario. Yet, in spite of it all, the shosha continue to represent a benchmark of the Japanese distribution system. Without the business of the kuroko-shosha – invisible puppeteers of the Japanese wholesale business, centenarians but tireless – the economy would risk Acronym per "Specialty store retailers of Private label Apparel". Kuro in Japanese means black. 9 Takashi Kondo, executive in the clothing sector of Tomen. 7

15 The Fashion Market in Japan

becoming totally blocked. For the Italian businessman interested in this market it is indispensable to not ignore their commercial potential, the strategic choices and the operative logic. The three cases introduced here are illustrated in detail within Section A of this report.

A product that sells well in Japan will sell well in Asia It’s no secret, it’s a fact: Japan is the guide-country for consumer trends in the Far East. The Japanese culture is dominant on all fronts, even if this phenomenon regards almost exclusively the younger generations, those that have not gone through, even indirectly, the experiences of war. But by now the war stories are no longer told, and no contaminating factor – or even disturbing factor – slows down the new Japanese colonialism, fortunately driven by bloodless marketing strategies rather than by military strategies. Some data may help to sum up the phenomenon in an objective manner, beyond the suggestions of an impressionistic approach. During 2003 one of the leading Japanese companies of the publicity and market research sector10 conducted an international survey among the consumers of eleven cities in eight large Asian countries, excluding Japan. The subjects were asked for an opinion concerning the compared image of the products of Japanese, European, American and Korean origin (the major producing countries of the imported consumer goods present on the Asian markets). The results, which are reported in the table that follows, are surprising. The image of the ‘made in Japan’ is undeniably dominant in all market areas, and overwhelms that of the European or North American producers even in fields that, for a Westerner, may seem difficult to accept. For example, regarding the question concerning the country from which ‘fashionable’ products originate, the consumers of all the Asian markets, without exception, unanimously agree in awarding first place in the classification to Japan. And the same unexceptional unanimity is shown by the Asian consumers in indicating the country from which originate the products that give greater prestige to the person who uses them or wears them: in this case as well, as expected by now, the reply is “Japan”. 10Hakuhodo:

Hakuhodo Global Habit Survey, 2003, published in the 2003 JETRO White Paper on International Trade and Foreign Direct Investment, JETRO, 2003. 16 The Fashion Market in Japan

The interpretation of the table, that also provides other interesting ideas for reflection, is in any case unambiguous: Japan is the trendsetter country of the Far East. The Far East is an area that on the demand front shows, on the other hand, constant signs of growth. During the last decade the level of private consumption has grown in China from 194 billion US dollars (1991) to 582 billion in 2002. China, however, continues to increase its ‘large buyer’ country share in the group of the countries of Eastern Asia, going from 27.5% in 1991 to 39.9% in 2002. Over the decade a middle class has progressively developed and consolidated in the Far East and is particularly present in the metropolitan areas of the eastern coast of China, a class that has a relatively high income and consumption ability; it is a social class made up of executives and middle management that work for foreign companies (North American, European, Japanese) in the sectors of finance, high technology, information technology, as well as businessmen and professionals – lawyers, doctors, accountants. From India to China, Indonesia to Thailand, billions of consumers model themselves on that which Japan consumes, and – when they have the chance, both in terms of availability of the supply and availability of income – they copy choices and trends via the shopping ritual. In this scenario, the Japanese businessmen, aware of the economic power of the high image of the country, continue incessantly to plan the commercial development in Eastern Asia, viewed ever more as a market of consumption, after the consolidation of the role of supplier of low-cost manpower. And for those who still believe that the Japanese trading companies are by now destined to progressively disappear from the economic scene, it is enough to observe the strategic consistency of some of the more recent moves of Itochu. The Castelbajac, Renoma and Greenclubs brands are aimed specifically at the development of the Chinese market; the Cimarron brand is a foothold already launched in Korea and Hong Kong, inside the Sogo department stores.

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Stylish

Japanese products

Singapore Taipei (Taiwan) Seoul (R.O.K.) Kuala Lumpur (Malaysia) Bangkok (Thailand) Jakarta (Indonesia) Shanghai, Beijing, Guangzhou (China) Delhi, Mumbai (India)

56,0 53,0 38,6 76,9 50,4 73,7 51,9 62,7

48,9 43,0 34,6 57,9 45,0 51,5 30,1 45,6

24,1 27,5 25,4 58,7 33,6 34,4 21,3 37,5

32,1 32,5 30,6 60,7 41,1 54,4 27,9 42,0

American products

Singapore Taipei (Taiwan) Seoul (R.O.K.) Kuala Lumpur (Malaysia) Bangkok (Thailand) Jakarta (Indonesia) Shanghai, Beijing, Guangzhou (China) Delhi, Mumbai (India)

26,6 27,1 21,4 53,3 56,6 33,0 34,8 49,1

23,7 26,3 25,4 45,0 32,9 51,2 24,0 45,6

14,4 21,9 22,4 35,1 19,3 17,4 18,6 35,1

Singapore Taipei (Taiwan) Seoul (R.O.K.) Kuala Lumpur (Malaysia) Bangkok (Thailand) Jakarta (Indonesia) Shanghai, Beijing, Guangzhou (China) Delhi, Mumbai (India)

30,4 29,1 19,4 43,4 46,3 37,6 30,5 33,4

19,5 28,9 20,8 34,5 28,9 46,7 26,1 30,6

13,0 17,5 18,4 29,7 16,4 18,7 17,1 26,1

Koream products

High quality

European products

THE IMAGE OF FOREIGN-AFFILIATED PRODUCTS Dynamic Cosmopolitan Pioneering

Distinctive

Expensive

Safe

Fun

37,3 34,4 26,6 55,0 33,4 24,5 23,4 29,4

38,1 29,6 28,9 42,4 31,3 22,6 27,1 32,4

42,2 44,4 37,3 37,6 19,6 18,0 31,6 33,9

37,5 23,3 21,8 57,4 16,6 37,8 29,5 28,1

32,0 16,5 17,5 44,8 26,4 27,6 8,4 30,7

27,4 33,5 32,0 49,0 41,9 33,4 30,4 41,2

19,1 26,4 24,9 32,0 23,4 19,3 19,9 22,3

22,1 20,6 23,8 17,6 22,6 16,4 20,9 23,9

46,5 19,5 30,6 60,3 60,3 45,6 44,5 42,4

23,7 21,0 18,6 31,4 23,9 14,5 23,5 22,9

10,1 11,5 11,0 18,2 9,8 11,8 6,7 24,2

24,5 28,4 24,4 37,4 36,6 33,0 25,1 26,0

19,9 21,8 22,1 24,6 19,1 23,0 17,3 19,4

20,3 19,5 23,8 12,0 20,3 19,9 20,9 18,1

51,5 30,0 27,3 48,1 58,6 45,8 40,9 24,2

25,2 14,0 18,9 24,4 20,3 17,2 18,1 13,3

10,3 9,8 9,5 11,6 8,0 11,0 5,4 16,0

14,6 4,5 36,9 22,3 8,4 27,2 12,0 10,0

14,8 8,3 20,6 13,0 9,3 18,3 14,2 11,9

Singapore 10,1 18,7 32,3 7,9 12,4 11,8 11,4 Taipei (Taiwan) 5,5 15,6 29,1 8,9 9,6 14,4 5,4 Seoul (R.O.K.) 29,8 27,3 43,6 22,1 24,4 25,0 21,8 Kuala Lumpur (Malaysia) 28,3 27,9 37,2 26,6 18,6 12,4 17,8 Bangkok (Thailand) 14,0 19,5 15,4 20,0 16,0 17,4 8,4 Jakarta (Indonesia) 36,3 33,0 39,0 31,9 28,8 17,4 21,8 Shanghai, Beijing, Guangzhou (China) 17,3 25,4 25,1 12,9 24,4 21,9 19,7 Delhi, Mumbai (India) 24,1 24,0 20,6 18,6 18,8 14,8 15,2 Survey based on interviews in each city. Multiple responses allowed. The percentages indicate the proportion of respondents choosing that category. Sourcee: Hakuhodo Global Habit Survey, Hakukodo, 2003

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SECTION A THE JAPANESE APPAREL MARKET

19 The Fashion Market in Japan

DISTRIBUTION

Scenario of the distribution trends for foreign brands In order to better understand the dynamics taking place in the demand, it is useful to focus on some trends and some phenomenon that have been developed and made visible during the last few years and that could represent a useful means of reflection for the Italian economic operators that propose an offer for broad consumption, in general, and even more particularly for the protagonists of the fashion system. In fact in this sector changes appear more rapid and cutting, deserving a more careful and deep analysis. The crisis in the traditional commercial channels In reality, it is the crisis of the traditional ‘rules’. For decades in Japan the ‘length’ factor and the concept of ‘specialization’ have featured the import channels of broad consumption. Every figure in the channel managed its own specific area of competence, with its own rules, procedures, peculiarities, and its own relationships of strength, more or less coded, with the other figures at the head and the end of the chain. The system ran smoothly, leaving a margin of profit to each ring in the chain, and continuing to shift the entire system of costs connected to its functioning to the price tag shown to the final consumer; the price remained high enough to satisfy the needs of all the figures in the chain. In the meantime, two singular and specular processes were being considered by the Italian and Japanese economic operators who – more and more frequently – were appearing on markets of reciprocal interest. In the Italian businessman’s eyes, not yet aware of 20 The Fashion Market in Japan

complexity and costs of domestic distribution, the retail price of their specific products on the Japanese market appeared to be considerably high, so much as to make those who had just arrived imagine the possibility of making big profits with relative ease. On the other hand, more and more often, the Japanese operators visiting Italy were asking the reason why the prices of the products marketed by them cost so much less in Italy â&#x20AC;&#x201C; even on the most visible level which is the price to the final consumer â&#x20AC;&#x201C; than what is proposed to them by the wholesale distributor in Japan. As stated by the owner of a fashion boutique in Osaka, who preferred remaining anonymous: "like many of my friends, I took many trips for pleasure in Italy. But a few years ago, purely by coincidence, I met an Italian businessman who produced articles I was interested in and I asked him if it would be possible to purchase directly from him. He invited me to the company, I could not believe my eyes when I saw the prices charged to the factory. I was not familiar with transportation costs, duties and everything that had to be paid in order to directly import. However the prices I had seen were too inviting and the fact that I had personally met the Italian businessman and his kindness in offering to sell the merchandise directly to me represented a very interesting occasion for me. Although worried about what my suppliers in Japan could have thought, and overcoming a certain feeling of guilt, I therefore made my first direct order to the Italian factory, and I must confess however that I spent many sleepless nights worried about my first small supply, fearing to find some unpleasant surprise when the merchandise arrived. Fortunately for me and to my great satisfaction, everything went very well." Although not expecting it to be considered a pattern in its extemporaneousness and irrelevance of having a meaning in terms of the business dimension, the episode told by the Osaka shopkeeper symbolically represents a deep and significant change in the mentality of the Japanese economic operators. The meaning of the direct experience of the shopkeeper from Osaka finds an academic confirmation in the analysis of Yoshihiro Tajima 11 . "During the fast growth of our economy, the Japanese consumers had total trust in the price policies of the producers. In spite of this - and this is especially the case of the consumers â&#x20AC;&#x201C; the comparison of the prices of the same brand products, easily carried out through trips abroad, has progressively created a lack of credibility in the price system of the Japanese market. The effect has been obvious: the consumers have progressively accepted the 'discount' system or that of the 'category killers', that have revived a vivacious competition between the retail figures based on the price." 11

Yoshihiro Tajima, cit. 21 The Fashion Market in Japan

Shuzo Koyama is perfectly aware of the situation, professor of Service Management at the Bunri University. "Foreign observers of the Japanese market seem to wonder why the Japanese retailers would not deal directly with the producers. Sometimes I too am asked why they tend to avoid direct transactions with the producers, which might enable them to obtain the goods at much lower costs. But it is not easy to answer this question: the supply of products on the domestic market as well as through imports requests considerable costs for shipping, processing, storage, et cetera. In Japan all those operations pertaining to the distribution of merchandise are supposed to be performed exclusively by the wholesale distributors. In other words, they are the functions that have not been performed by the manufacturers (except for products of their own) or the retailers. Therefore, even if the retailers would want to directly deal with the producers, they would not be able to obtain the products without action from the wholesale distributors. It cannot be stated, therefore, that the direct transaction with the producer will actually cut the cost of procurement; and this explains why so many Japanese retailers are reluctant to start dealing directly with the producers. Unless the retailers build distribution centers of their own, they will hardly implement direct transactions with the producers."12 Abandoning the kata of the distribution The change being considered is particularly relevant for the wide consumer goods, and can be summarized like this: the discovery of the feasibility of alternative and innovative manners. However in order for its importance to be correctly understood, this concept requires a deeper understanding for the western reader and useful to the processing of cooperation methods and formulas with Japanese business partners. Japanese society is historically marked in such a deep manner as to be dramatically serious and real in the principle of the existence of the ‘correct manner’ of doing everything. Shikata ('the manner in which things are done') is a very widespread word used in the Japanese language, and – as stated by Boyé Lafayette De Mente, author of books on Japanese culture and society – goes well beyond the mechanic process of carrying something out: it even goes as far as to incorporate the physical and spiritual laws of creation13. It refers to the manner in which things are expected to be done, according to Shuzo Koyama, in "Features and prospects of the distribution market in Japan”, speech given at the convention "Scenarios and prospects of the foreign distribution in Japan ", Import Distribution Symposium 2000, MIPRO, Tokyo, 2000. 13 Boyé Lafayette De Mente, Kata, Hong Kong - Singapore, 2003. 12

22 The Fashion Market in Japan

form and procedure: and doing things ‘in the correct manner’ takes on a meaning and experience that in Europe would be called religious, as perceived as such an important contribution as due to keeping the harmony of society and within the universe. Doing things ‘in the correct manner’ takes on a moral importance, so much as to legitimize a social punishment against those who do not comply. (kata ni hamaranai, being 'outside of the correct manner', is a crime against society). Therefore in Japanese society there is a correct manner, a “form” (kata) for everything: to read, to think, live, just as for all the daily activities. Consequentially, resisting innovation has more of a consistence with respect to the western scenarios: anyone who decides to look for new manners (for example new commercial channels) has had to first of all historically accept to pay the cost of the social punishment, besides the risk tied to the potential mistake potentially and essentially connected to each innovative process. Therefore the shopkeeper of Osaka has dared much more in short-circuiting the long conventional distribution chain of clothing, as could appear to the eyes of a western businessman. She deviated from the ‘correct manner’ to act as a retailer, and consequentially has been subject to the social punishment of the world of commerce. However the temptation was evidentially very strong and the progressive opening of Japanese society to the western way of doing things has contributed, in parallel, to encourage the lady to deviate from the retailer’s kata; and probably the economic result of the transgression has contributed to lessen the unease deriving from the guilt. Many kata today have lost importance in every day life, others remain very much alive and practiced, such as those tied to the economic business practices and in particular regarding negotiations, better explained later. However the practice of kata presumes study, care, stubbornness, strong self-discipline and constant sacrifice; and, probably, the Japanese businessmen have found themselves – as the shopkeeper of Osaka – in the best coincidence and conditions to abandon kata and experiment a new way, it can be imagined that having obtained a positive compensation has further stimulated the search for innovative commercial formulas for the purpose of maximizing the enterprise’s profits. Changing is possible – this perhaps in an extreme summary, is the conviction that is progressively putting its roots in the Japanese commercial businessmen. Whether this conviction is the result of objectively innovative processes and tied to the strategy, or is created from the difficulty found in continuing according to ‘the correct 23 The Fashion Market in Japan

manner’, it should in any case be stressed that the process is fully triggered and that it does not seem possible, at this point, to imagine any inversion to bring back the traditional ‘correct manner’.

New signs and trends in the distribution During recent years within the Japanese distribution system, various and not at all marginal processes of change have been seen. The changes, considerable in almost all the sectors, have not excluded the clothing and fashion sector, traditionally marked by a certain level of complexity within the distribution chain. In fact and according to an opinion practically unanimously shared by all the economic operators, the traditional complexity of the Japanese distribution channels in the clothingfashion sector are slowly changing, and the changes are oriented towards a progressive simplification. The current processes are not shown with particular abruptness, but their speed tends to increase, as a reaction to the innovations that feature the distribution scenario. At most, the current trends can be summarized as follows: 1. The marginalization of the wholesale operators’ role, whose role is always more often short-circuited by the direction connections between importers and retailers and between producers and retailers. 2. The role of the wholesalers remains solidly anchored to the distribution that appeals to small family -managed shops. 3. Delivery times tend to be considerably and further reduced. For example, some department stores tend to constantly react rapidly to the new fashion trends, and – overcoming the classic six month interval – push the buyers to constantly monitor the dynamics of the market, and place orders with delivery even within three months, and sometimes even only two months. An authoritative analyst of the dynamics in Japanese distribution has a precise opinion about the phenomenon that could soon distinguish the scenarios of the distribution channels of import products. "The management of the commercial retail business in 24 The Fashion Market in Japan

Japan, where the cost of land is very high, tends to be marked by low levels of returns on investments. But from now on the foreign retailers will not only start to come on our market through the retail sale points, but also combining various commercial manners: for example coordinating sales by mail order with sales on the Internet. In other words, they will try to increase their productivity thanks to the combination of various sales techniques14." According to the Japanese Importersâ&#x20AC;&#x2122; Association in the textile-clothing sector 15 , the foreign economic operators should not miss evaluating seven key points that are fundamental for understanding the market. 1. The market is particularly complex, but also very rich with information and expects small size orders and quick deliveries. 2. Consumption is very diversified. 3. The market is always full of offers and exaggerations are a rule. 4. The market is endlessly competitive. 5. Clients expect quality, high quality. 6. Sales on a return basis â&#x20AC;&#x201C; which used to be a habit in Japan â&#x20AC;&#x201C; are still common. 7. The phenomenon of SPAs16 is in development.

Yoshihiro Tajima, cit. JTIA (Japanese Texiles Importers' Association), The Japanese Apparel Market in Imports, 2000. 16 Acronym per "Specialty store retailers of Private label Apparel": virtual producers. Actually, retail business enterprises that sub-contract the production of their own collections. 14 15

25 The Fashion Market in Japan

Distribution types, representative companies, distribution models for the Italian PMI The Japanese distribution scenario in the fashion sector is rapidly changing in to different dimensions: concerning the distribution channel length, on which the corporate integration processes at the beginning and the end make the traditional rigid distinction between wholesalers and retailers more and more obsolete; as well as concerning the commercial formulas, at times combined and difficult to code. This section of the report presents some considerations with prevalently qualitative features on the historic and arising figures in distribution, selected according to the aspects that present the most interest in the eyes of the Italian enterprises when observing and studying the market. The department stores A hundred-year-old symbol of the upper bracket of the retail market in Japan, the department stores are going through some market problems connected both to the changes in the entire distribution channel as well as â&#x20AC;&#x201C; more specifically â&#x20AC;&#x201C; to the changes taking place in retails, in which the adjustment to the new needs of the demand are perhaps a bit more rapid. In any case, it should also be considered that in a scenario that tends towards a recession, the biggest companies suffer the most difficulties within a competitive picture where the newcomers operate with structures that are relatively more agile and ready to build their image according to the dynamics of the market. With an â&#x20AC;&#x2DC;importantâ&#x20AC;&#x2122; and occasionally a bit dusty image, almost all the department stores are making considerable efforts to maintain their positions on the market. Over and beyond the most superficial refurbishing interventions, often necessary in any case (the flagstore of one of the biggest names in the sector had not been renovated for decades) many companies are also carrying out actions of a considerably strategic nature. The case proposed to complement the presentation of some scenario facts concerning department stores also presents some critical themes that are on the agenda of the managements of all the historic companies of the sector. 26 The Fashion Market in Japan

Even if the trends in the turnover dynamics of the recent years have not been altogether exciting, the department stores represent an institution of great impact and presence in the scenario of the upper and medium-upper bracket of the Japanese retail business. The chart below, based on figures collected by JDSA17, presents two important aspects that characterize this channel: the size of the sales volumes, and their distribution within the entire archipelago. The segmentation is performed by regions and metropolitan areas; the latter are indicated with an asterisk. One should also note, furthermore, the quantity and percentual weight in the world of retail consumption of the two major metropolitan areas in the country, Tokyo and Osaka.

2002 TURNOVER OF DEPARTMENT STORES BY GEOGRAPHIC AREA 175 212 233 257 292 304 314 404 416 450

Shikoku Kobe * Kinki Chubu Tohoku Hokkaido Kyoto * Chugoku Yokohama * Nagoya *

722

Kyushu

1,071

Osaka *

1,401

Kanto

2,086

Tokyo *

500

1,000

1,500

2,000

2,500

(Values in billions of Yen) Source: JDSA, 2003.

The department stores, moreover, continue to be strongly characterized for their offering system in the fashion area. The data that follows shows how, in the space of a decade, the 17

Japan Department Stores Association. 27 The Fashion Market in Japan

position of the department stores has remained substantially unchanged in the Japanese market scenario: with a strong tradition, in several cases, of centuries of corporate history, this retail channel remains a central reference point for the companies interested in developing a presence in this market. In the chart that follows the data is also provided by JDSA, the association that unites 280 department stores of the country with a widespread presence in all seven major commercial areas of Japan. Its director, Shigeyoshi Imai, is proud of the association’s role: “We are present on several international occasions of encounters and comparisons with our foreign counterparts. Our meetings often deal with the theme of fashion, and we seek the opinions and direct suggestions of the most prominent figures on an international level. Recently, in Italy, we have had a very positive encounter with Giorgio Armani. In a market scenario in constant evolution, the department stores carefully analyze the dynamics and trends taking place and develop the most suitable strategies to adapt to the changes and manage the market of the near future.” FASHION TURNOVER OF DEPARTMENT STORES: 1991 AND 2002 978.3 836.2

Accessories 255.2 304.9

Children

2,131.2 2,073.4

Women 646.1

Men 0

500

998.2 1,000

1,500

2,000

2,500

Men

Women

Children

Accessories

2002

646.1

2,131.2

255.2

978.3

1991

998.2

2,073.4

304.9

836.2

(Values in billions of Yen) Source: JDSA, 2003.

28 The Fashion Market in Japan

DEPARTMENT STORES: THE PROMINENT FIGURES18 Company

Headquarters

Province

1 Mitsukoshi 2 Kintetsu 3 Seibu 4 Hankyu 5 Isetan 6 Takashimaya 7 Takashimaya 8 Takashimaya 9 Daimaru 10 Tokyu 11 Tobu 12 Matsuzakaya 13 Daimaru 14 Odakyu 15 Takashimaya 16 Hanshin 17 Yokohama Sogo 18 Keio 19 Izutsuya 20 Daimaru 21 Nagoya Mitsukoshi 22 Iwataya 23 Takashimaya 24 Meitetsu 25 Tsuruya 26 Daimaru 27 JR Takashimaya 28 Sogo 29 Tokiwa 30 Marui Imai

Nihonbashi, Ebisu, Tama Abeno and other 6 shops Ikebukoro Umeda, Senri, Kawanishi Shinjuku Osaka and other 3 shops Yokohama, Konanai Nihonbashi Shinsaibashi, Umeda Shibuya, Higashiyoko Ikebukuro Nagoya Motomachi other 3 shops Shinjuku Kyoto, Rakunishi Umeda Yokohama Shinjuku Kokura, Kurozaki Kyoto, Yamaka Sakae A Side, Z Side, Kitakyushu Shinjuku Nagoya Kumamoto Hakata Nagoya Chiba Oita, Beppu, Wasada Town Sapporo

Tokyo Osaka Tokyo Osaka Tokyo Osaka Kanawaga Tokyo Osaka Tokyo Tokyo Aichi Kobe Tokyo Kyoto Osaka Kanagava Tokyo Fukuoka Kyoto Aichi Fukuoka Tokyo Aichi Kumamoto Fukuoka Aichi Chiba Oita Hokkaido

2002 Turnover (millions of yen) 301,800 281,687 272,610 246,722 240,516 246,722 175,596 166,284 158,323 146,524 133,799 133,000 128,780 115,603 110,722 107,240 102,352 101,420 92,252 87,761 86,225 83,679 82,402 74,535 74,277 74,145 73,832 73,492 73,065 68,832

% Variation from previous year -1.3 -3.5 -1.1 -1.5 -0.6 -1.5 -2.7 -12.9 -4.0 -4.5 -2.8 -2.4 16.9 -8.7 -2.1 -0.2 1.0 -2.6 7.4 -2.0 -3.8 2.6 3.6 -2.9 9.6 -0.2 11.9 -3.8 -5.9 4.0

Source: chart on the Nikkei and Japan Department Store Association data, in "Il 2002 si conclude con scontento", Notizie & Analisi sul Mercato Giapponese, ICE Tokyo, April 2003. 18

29 The Fashion Market in Japan

Innovative strategies in the world of the department stores: the Mitsukoshi case Mitsukoshi is one of the historic names of the elite in the Japanese department stores. Present all over the archipelago, the Mitsukoshi Group directly manages 21 sales points, diversified under three signs (the banner-sign Mitsukoshi is reserved to the traditional style department stores, targeted to a traditional upper range public; Printemps has a fashion-content that is more specifically directed to career women, finally under the Alta sign, – once reserved to only one sales point localized in Tokyo, in the district of Shinjuku – new shops were recently opened in Sapporo and Niigata, with a young target). In spite of the general problems shared by all the Japanese department stores and that – in the case of Mitsukoshi – is motivated by a slight fall in the turnover, today ranging on about 450 billion yen, the management of the group has recently shown a profile to the press oriented towards optimism and faith in its own strategy. As for the commercial management policies, these are constantly oriented by the compliance with five key-themes, constantly monitored and analyzed by its executives19: 1.

The optimization of the space for the purpose of better satisfying the demands of the consumers.

The increase of per tsubo20 profitability rate.

The simplification of purchase procedures.

The strategic management of the information relative to the clients.

The search for more attractive business formulas.

On the first point, Mitsukoshi’s work is based on the analysis of the segmentation of the client base, searching for the definition of the segments according to principles concerning quality; for example one of the models used is viewed through a double Formulation of Ken Shigematsu’s speech, Mitsukoshi Ltd. executive, at the convention Import Distribution Symposium 2002, Tokyo, The Japan Machinery Federation - MIPRO, 2002. 20 Japanese square measures, equal to about 3.3 square meters. 19

30 The Fashion Market in Japan

matrix system that places each consumer according to age variables and lifestyles, the other according to the family trend and the career trend. On the basis of this segmentation decisions are made concerning the strategic organization of the ‘open spaces’21 and the choice of the products. These spaces progressively becoming more important in the management of the department store; traditionally entrusted to independent proposals of the companies in the fashion sector, today every deepato 22 are taking on the direct management, in the constant search for a recovery in the profitability of every tsubo of space useful for sales. The second point is contextually connected to the first, in the sense that it is a direct logical derivation. In fact, joined to the space given to the international designs, in every department store an “open strategic space” is developed, divided and entrusted to the sales people according to the concept-guide processed on the basis of the client study and entrusted to the sales people that have most experience. Each area is then extended or restricted according to the economic results obtained, measured in terms of monthly sales for tsubo. On the third point, with regards to products with a fashion-content, efforts towards optimizing the supply flows are registered. According to Ken Shigematsu, a manager of Mitsukoshi, with specific experience in this sector:23 "I have personally worked in this sector. Traditionally the relationship between the producer and retailer has never been one of the best. It would occur that the producer was not able to delivery the orders on time; the retailer would return the merchandise without any comment, within an atmosphere of scarce reciprocal understanding. We have worked towards writing a new contract, able to 'armor' the delivery times and assure the feasibility of the delivery for the possible subsequent reorders”. The fourth point regards the structuring and use of the client database. Currently, Mitsukoshi has 2.4 million families that hold fidelity cards and it meticulously develops and manages the information relative to the clients. Shigematsu tells about a specific circumstance in which the analysis of the data has given useful business information: "We must adjust to the times: once the big department stores were located around stations and the most crowded areas and the consumers really In Japanese: jiyu-henshu-uriba ("sales area liberally interpreted "). In Japanese, department store’ 23 From the speech given at the convention Import Distribution Symposium 2002, Tokyo, The Japan Machinery Federation - MIPRO, 2002. 21 22

31 The Fashion Market in Japan

bought just about anything. Now we must study the consumer tastes and trends and for this purpose we use all the information we have available: we analyze the receipts, the time spent for purchases, the frequency with which the clients visit. Let’s take the case of menswear sales. In order to attract the male consumers, the traditional commercial strategies suggest to display the products consider ‘for men’, such as alcohol and all the accessories to play golf. However the study of our databases reveals that the products most sold together with menswear are sweets. We have therefore studied the suitability of creating a leaflet of sweet offers to be delivered in the area where menswear is on sale”. Mitsukoshi’s offer system is not limited to national products; importing is inevitable, to face the challenge of an offer that is constantly innovative. For this purpose, Mitsukoshi usually uses its own branches abroad to look for new products. Another technique is the development of a collaboration with fashion offices and creative groups abroad to capture the new international trends. For example, in October 2002, Mitsukoshi launched an ad campaign in France aimed at looking for new products. Out of less than one thousand proposals received, the selection phase found an interesting area of new ideas in the measure of 10-15% of the indications received. With the field of candidates narrowed down, Mitsukoshi sent its buyers abroad, to place orders on site; in that period, the company had a total of 145 buyers working abroad. The 'shop-in-shop' formula: the Marina Rinaldi case The Marina Rinaldi brand, owned by the Max Mara Group, is very well known in Japan thanks to a smart development policy with the shop-in-shop technique, sales areas managed directly and localized within sales structures with various brands (generally within department stores). In 2003 Marina Rinaldi made other openings in Japan, thereby coming close to the goal of 30 sale points (including the Tokyo flagstore), all managed by the Marina Rinaldi Japan company. A new trend by now consolidated for retail sales of a big brand: the megastore This is a strategic choice carried out by a good part of the international designs. Since 2000 to the present the opening of large commercial spaces in the most elegant shopping areas of Tokyo have continued to open; a common feature to all of these outlets is the 32 The Fashion Market in Japan

vastness of the sales area (not less than 1,000 square meters, an absolutely unusual size according to the Japanese standards) and the localization in greatly prestigious positions. This strategy has been followed, among others, by the famous French brands Hermés, Louis Vuitton and Dior, from the German Hugo Boss, from Armani, Benetton, Tod's and Gucci, always with excellent results in terms of the brand’s visibility and the direct attraction of new clients, thanks to the attraction and innovation of the megastore formula. In particular Gucci is even on the eve of opening another one, as for 2005 the opening of a new big shop, always in the Ginza area is being expected where it has 1,000 square meters available for the sales. In the case of Tod's, the investment was evaluated to be around 80 million euro for a building designed by Toyo Ito, a Japanese architect who is very famous in his own country. Louis Vuitton has chosen an intermediate solution: his new megastore that is over one thousand square meters has been inaugurated in Tokyo in 2003 and is located inside of the Roppongi Hills shopping mall. On the contrary, at least two cases have been found in which the strategy of a vast commercial surface managed directly does not seem to have achieved the results expected: Trussardi has chosen to close his banner-shop in 2002, while the level of the turnover achieved by Tiffany does not yet appear to be up to the expectations. In May 2002 Ferragamo as well opened his megastore Tokyo. In a year in which the Gruppo Ferragamo suffered a drop in the turnover on almost all the markets of the world, from the United States to Europe, the Japanese market has assured Ferragamo positive dynamics. With a turnover of over 100 million euro achieved in 57 shops distributed all over the country, the Gruppo Ferragamo has chosen to consolidate its presence with a new commercial structure designed by the designer Michael Gabellini and positioned on three levels, with about 600 square meters for the clients. In the same building, in the center of Ginza, the historic neighborhood for Tokyo’s elegant shopping, the Group reserved four floors for the offices. It is also interesting to notice how – thanks to the roots that this strategy has among the most visible designs and international fame – not only the term megastore, but also the term outlet (traditionally tied to the Anglo-Saxon world for sales points with a medium-low profile) are acquiring experience for elegance and prestige as perceived by the Japanese consumers. 33 The Fashion Market in Japan

Independent retail, chains, select shops Transformation and innovation are two key words that recently marked the dynamics of independent retail work in the fashion sector in Japan. The chart that follows is taken by the precious source Notizie & Analisi sul Mercato Giapponese, distributed free of charge on the Internet by the Tokyo Office of ICE, that presents an entire vision on the names and data of the sector.

PROMINENT FIGURES IN RETAIL24 Company Menswear Konaka Aoyama Shoji Aoki International Haruyama Shoji Taka-Q Goto Futata Torii Ginza Yamagataya Womenswear Sagami Blue Grass Suzutan Riochain Cabin Pal Childrenswear and Casualwear Fast Retailing Right-On Shimamura Nishimatsuya Mac House Workman

Iterim turnover (2002, millions of yen)

% Variation on the previous year

48,941 64,265 31,296 24,263 9,115 7,947 6,256 5,549 5,298

-4.4 4.0 -4.4 6.2 -15.4 -0.3 -13.2 -11.7

26,672 20,710 15,521 13,808 11,500 8,685

-3.2 -0.4 -20.3 15.6 -9.0 22.6

341,640 52,609 124,388 28,692 20,015 12,582

-18.4 1.6 7.8 30.1 13.7 7.6

Source: chart on the data Senken, Japan Consuming and Retail Japan 2003, in "I tessuti danno utili", Notizie & Analisi sul Mercato Giapponese, ICE Tokyo, March 2003. 24

34 The Fashion Market in Japan

Cox Jeansmate Point Reo Sportswear Himaraya Kojitu Xebio Footwear Chiyoda ABC Mart Tsuruya

11,612 11,345 9,265 5,866

-6.9 2.9 31.7 1.2

32,425 7,270 41,691

-10.7 4.7

76,796 19,485 5,394

-5.8 15.3 -2.6

The select shops are distinguished by a specific concept: focusing on a particular consumer profile. The market range in which they work is often medium or medium-high and recently they have achieved a good success on the Japanese market. The most wide spread names are Journal Standards, Beams and United Arrows, founded by a group of former employees of the same Beams. It is probable that United Arrows the most successful brand in the select shops segment, by now listed on the stock market, with ambitions of achieving a top national position for its turnover, reports very significant increases, in profitability as well, thanks to having registered â&#x20AC;&#x201C; in the last fiscal year â&#x20AC;&#x201C; an increase of the profits that exceeds 20%. Furthermore, in a slightly more economic bracket of the market, the brand Green Label Relaxing works, controlled by United Arrows, aimed at the family segment.

A growing phenomenon: the SPA On the Japanese market as well, during recent years the growth of the phenomenon of importing products from countries that have a low labor cost has been more and more frequent, objectively favored by the rapid development of the production quality, a time that is definitely inadequate for satisfying the demands of the consumers. If, on one hand the producer countries (among which China in a definitely predominant position) continue to govern the middle-low market bracket, it should also be noticed that the Japanese investments in China (almost always indirect: rarely tied to acquiring factories and facilities, much more often featured by the control of the management in 35 The Fashion Market in Japan

the factories and by the acquisition of the saturation of their productive capacities) has also caused the offer to develop that, from a quality point of view, could today be compared to that achieved in the facilities of the parent companies in Japan. The policies of technical assistance and quality control have therefore achieved excellent results, so much so that more and more often even the final operations of the production cycle of clothing (the quality control and labeling) tend to be carried out in facilities that are abroad. Thanks to the development of communication, today the fueling of the production can often be managed in a semi-automatic manner by computer-telematic programs that analyze the data coming from the sales points and propose the production launching, simulating the development of the demand. The prominent figures of this strategy are those enterprises named, in international jargon SPA (Specialty store retailers of Private label Apparel), virtual producers that do not have any factory or production line but are strongly specialized in style research and in entrusting the productive business to third parties and with a strong marketing and commercial capacity. SPAs therefore represent an organization model that is specifically featured by the design of the product, by the delocalization of the production and entrusted to third parties, by the management of the physical distribution and of the logistic chain as well as the direct marketing of its own retail sales points. THE ACTIVE SPAs IN THE JAPANESE MARKET: REPRESENTATIVE NAMES Bigi Eddie Bauer Japan Fast Retailing Five Foxes Flandre GAP Itokin Laura Ashley Japan Nice Claup Olive des Olive - Mokomoku Onward Kashiyama Ryohin Keikaku Sanei International Sazaby World

36 The Fashion Market in Japan

With an evident and very high potential for flexibility in the production, connected with the possibility to turn to producers featured with any kind of specialization in any part of the world and with a high level of financial agility, thanks to the relatively low level of fixed costs tied to the investments in productive systems, SPAs have achieved very interesting results on the Japanese market as well.

The SPA that has shaken the Japanese market. The Uniqlo case The most representative case of the SPAs in Japan is represented by Uniqlo (commercial brand of the company Fast Retailing of Yamaguchi), that since 1984, the year in which the first shop in Hiroshima was inaugurated, has quickly gained great visibility on the Japanese clothing market, thanks to the 600 sales points distributed all over the national territory. Focused on the casual clothing sector, Uniqlo was quickly able to build an offer system centered on an assortment of lines and products that are rather ample, featured by an excellent ration between the quality perceived and the price offered. Positioned, pricewise, about 30% below Gap, Uniqlo is well able to transmit the image of a brand through a casual-simple style, reflected in the design of the models (none of which carry the corporate logo: the fashion of ‘no logo’ has been wisely straddled by Uniqlo’s management) as well as by the aspect of the sales points, arranged without seeking any particular decoration. The concept that summarizes the style of the Uniqlo shop is expressed by Access Asia 25 with a pun ("pile 'em up, sell 'em cheap") that perhaps loses a part of its effectiveness in the Italian translation: "impilali molto, e vendili a poco". The simple approach of the brand is confirmed by the words spoken by Tadashi Yanai, president of Fast Retailing: "If the clothes shout louder than the person, the person cannot be heard". An invitation to the consumer to react to the extreme pressure of fashion, emphasizing the value of individualism and pushing each client to confirm their own personality, in total freedom, through clothes. The corporate communication refuses the definition of priority targets, claiming to represent a brand ‘for all ages’ and inviting the clients to ‘look for their own image’, with anarchic-populist type of messages: "Uniqlo is not a conventional clothing brand. We won't tell you what to wear or how to wear it. 25

In "Fast Retailing (Uniqlo): a Company Profile", Access Asia Report, October 17, 2003. 37 The Fashion Market in Japan

We believe that as individuals, we all have our own sense of style. By offering a wide range of well-made, logo-free basics, we aim to give you the choice to create yours."26 In spite of the rigidity in the constant search for a profile that, in Italy, would be defined as 'alternative' (also in the official images he is always shown in a strictly casual style, against all the rules of the Japanese business world), president Yanai suddenly loses his simple aplomb speaking to the shareholders27 and presenting the group’s targets, openly stating the target of 1,000 billion yen of sales (about 8 billion euro) within the year 2010 28. As is to be expected, the manufacturing is concentrated on about 90 production lines, all located in China, the company directly controls all the phases of the productive process, starting with the supply of the raw material up to the design, production, distribution and retail marketing. This management strategy (defined by the company as 'Total System Control') includes the progressive reduction of the number of suppliers, for the purpose of reducing costs through the increase in the contractual power they hold with them. With the exception of those who work in the sector, not many probably remember the stir that the first product-campaign of Uniqlo caused all over Japan, in the fall of 1989. In that season, in the sign of the slogan “turning fleece into fashion” the sop windows of the chain were filled with the great offer that featured the collection of that year: an outfit in fleece with a fixed price of 1,980 yen (about 16 euro) for each item. In reality, the windows requested being filled more than once because of the speed with which the items in the collection were being sold; one of the most convincing arguments was actually in the price, equal to less than half the traditional average cost of similar products on the Japanese market. The fall/winter collection sold millions of outfits and decreed Uniqlo’s entrance in the restricted gotha of the “corporate cases of success”. In parallel, Uniqlo improved its capacity to manage the warehouse of finished products, thereby avoiding the mistake of sales not made for unavailability of the merchandise in the sales points. Fast Retailing has constantly registered increases in sales, achieving its maximum peak in 2001 (over 400 billion yen, equal to about 3,200 million euro), however suffering a heavy trend inversion during 2002, that brought the sales level down to about 310 billion yen. It should be stressed that the 2002 balance sheet as well has closed with business margins In "About Uniqlo", www.uniqlo.co.uk, corporate website of Uniqlo (UK). From Tadashi Yanai’s message, president of the Fast Retailing group, at the shareholders meeting, October 2003. 28 The current turnover level (2003) of the group is a little over 300 billion yen. 26 27

38 The Fashion Market in Japan

(47 billion yen of profits before taxes), and that – in spite of the evident phase of difficulty in growth - Uniqlo seems to enjoy good health and is attractive to the consumers. The commercial development of Uniqlo did not lack pain for the system of the most direct competitors. Many of the bigger retailers were tempted to compete with Uniqlo at all costs on the price factor, proceeding to cut the costs as much as possible. On a sector level, the entire effect of leap frogging low prices was the decrease in the average expense per capita, contributing to reduce the value of the clothing market. On the other hand, some of the most marginal retailers, not able to compete on the price factor from the start, have tried to diversify their offer system, attempting to become repositioned on the market bracket featured by the high margins of added value. Probably, the most serious effects of Uniqlo’s expansion on the casual market were suffered by the North American producers, whose presence in this market bracket is traditionally very important. According to interpretations shared by various operators of the sector, a limit to the growth of Uniqlo could be found in a certain excessive tendency to standardize the product, in a moment in which the demand appeared oriented towards the search for innovation and diversification. The recent launch of a basic product line with a more extravagant fashion-content would seem to legitimize the possibility considered that becomes even more credible because of the acquisition of the “Theory” brand, featured by an image strongly aimed at working women.

FOM, a winning formula for the distribution of clothing to be imported? An interesting trend – even if not very recent – in the distribution of clothing in Japan is represented by the development of the shopping centers specialized in proposing sales points directly managed by the producers. Starting during the 1990’s, the spreading of the FOMs (Factory Outlet Mall) has however developed with a certain rapidity during recent years, especially being localized on the outskirts of the main Japanese metropolitan areas. One of the key factors of the FOMs success is given by the capacity to transmit the perception of an excellent ratio price/quality to the consumer: on one hand, the concept of 'factory outlet' is joined to an ideal ‘direct line’ between the producer and retailer, able 39 The Fashion Market in Japan

to assure more contained prices with respect to the traditional specialized retailer, or to the department stores; on the other hand, also thanks to the parallel opening of megastores in the most prestigious commercial areas of Tokyo that have great trademarks of international fashion, the same concept seems to not have suffered image contamination sometimes suffered in Europe and in the United States, tied to the perception of sales point aimed at clearing stocks, if not even faulty outfits. Among the most prominent figures in the development of the FOMs we have the company Chelsea Gca Japan, created by the agreement between three distribution figures. The American Chelsea Gca Reality is an enterprise specialized in the sector of designing shopping malls in the United States and that has done research on American brands to be proposed on the Japanese market; Nissho Iwai â&#x20AC;&#x201C; one of the most famous Japanese trading companies â&#x20AC;&#x201C; and the Japanese real estate company Mitsubishi Estate are partners in the American company: they have been jointly entrusted with the duty to research and invite Japanese companies in the fashion sector and in the restaurant sector to establish themselves in the shopping mall, as well as the duty to find the best commercial localization, obtain building permissions and monitor the entire building and start-up process. The first creation of the new company was the design of a FOM in Gotemba, in the Shizuoka Prefecture, at about one hundred kilometers from Tokyo, for which 5 billion yen were invested (about 40 million euro). Opening in 2000, the structure hosts about 70 shops, with a mixed offer of Japanese brands as well as foreign brands. The latest structure designed will be opened in 2004 in Kyushu (the most western island in Japan), and will host 80 sales points within a space that will develop over 13,000 square meters.

FOM: the Yokohama Bayside Marina case However the real boom that has featured the FOMs recently has perhaps been the opening (in September 1998) of Yokohama Bayside Marina, created by the real estate group Mitsui Fudosan with a declared investment of 3 billion yen (about 25 million euro). With a more than excellent localization (Yokohama is already a city of primary importance, tightly linked to the metropolitan area of Tokyo), Yokohama Bayside Marina is one of the biggest Japanese FOMs. It develops over 30,000 square meters, of which 16,000 are for commercial business with over 50 shops (with a strong fashion department) as well as 9 restaurants. 40 The Fashion Market in Japan

The investment immediately appeared successful. Shigeto Kadowaki, managing director of the shopping mall, declared that already in the first year of business he had exceeded the sales budget (the sales expected were 12 billion yen, but a turnover equal to about ma 14 billion yen resulted), prevalently thanks to the “good combination of a selection of sales points with excellent bands, directly managed by the parent companies, and to some aspects that are typical of theme parks”. Actually, Yokohama Bayside Marina is built according to the model of the old port of America’s New England in the first half of the 1800’s. In order to stress the specificity of the shopping mall, RTKL Associates was given the project, an architect’s studio from Baltimore, and the establishment of the most North American brands as well as most popular in Japan were given priority status, such as Eddie Bauer, Nike and Levi Strauss. At the same time, the opening of Yokohama Bayside Marina has marked the commercial debut of 17 new brands on the Japanese market, even the presence of many ‘new faces’ was considered one of the reasons for the success achieved by the shopping mall.

Direct marketing: many formulas under the same term In Japan the direct marketing channels are very dynamic and aggressive and the familiarity that the families show to have towards postal catalogues, television sales, and sales on the Internet, and so on, definitely appear superior to what can be found in Italian families. Certainly, the great reliability of the Japanese postal services, well articulated between the public and private sector, has represented (and continues to represent) a precious ace up their sleeve in the daily game being played with the consumers, reassured by the certainty of the delivery times and quality of the service, these are factors that have historically represented the swamp in which the strategies of the development of direct channels in Italy have gotten stuck. In spite of the favorable conditions, the market share of the direct marketing channels on a whole of the retail sales has never historically been able to exceed the level of the two point percentages, although in any case having considerably increased the turnover during the last ten years.

41 The Fashion Market in Japan

Compared to the 130,000 billion yen a year (a little more than 1,000 billion euro) that fuel the retail sales in Japan, and focusing the analysis on the time scenario of the beginning of the years 2000, Japanese direct marketing in fact develops a business equal to about 2,500 billion yen (about 20 billion euro), within which the traditional postal catalogue business is placed in a top position. Over and beyond the postal catalogues, the Japanese direct marketing system is articulated over about ten channels. It seems strange but none of the active channels shows evident signs of a decline, in fact with no exceptions, they all then to keep their positions, if not increase their shares. DIRECT MARKETING CHANNELS Other

1.9

Direct import catalogues

2.9

Radio sales

3.6

Credit card services

12.2

Newspaper ads

14.9

Internet

20.5

Newspaper inserts

22.0

Postal mailing

22.1

Magazine ads

22.2

Television sales

22.9

Postal catalogues

52.6 0

20 30 40 Use percentages (2001)

Source: JADMA, 2003.

The case of sales on Internet is very different as they have shown an increase in a ‘jump’ in 2001, evidently connected to the exceptional increase in the domestic ties that have been registered in Japan during 2000-2001. The chart above, processed on the basis of data published by the Japanese Direct Marketing Association 29, presents the channels upon which the Japanese Direct Marketing system is supported in a synoptic outline. It appears that the role of the postal catalogues completely takes priority over the other channels, registering a market penetration of 52.6%. It is interesting to note, however, 29

In Fact Book on Direct Marketing 2003, JADMA – Japan Direct Marketing Association, Tokyo, 2003. 42 The Fashion Market in Japan

that behind the traditional catalogue there follows a compact group of five different channels: the television sales, the direct sales of products advertised in magazines, the sales through specific postal mailings, the sales through the newspaper inserts, and the sales on Internet. All the channels cited show a penetration level of little more than 20%, but Internet is registering a considerable rate of development, so much so as to allow for the prediction of its break from the group already on the occasion of the next periodic survey organized by the JADMA association. Thanks to the nature itself of the channel, that is structured on the basic management of data, and that is fueled by the ability to analyze the information contained within each record, the world of direct marketing offers a particularly rigid and clear representation of itself: to practically reconstruct all the aspects that feature the consumption that travels on direct marketing channels it is articulated enough and combines and interprets the quantity data available. The chart that follows, for example, was processed on data coming from the same source already mentioned and shows which are the types of merchandise that are sold in Japan on the direct marketing channels. The supremacy of the clothing sector, and more generally of personal products, not only appears evident, but also very stable in the extrapolation of the recent trends; among the products that show a trend oriented towards a definite growth there are cosmetics and the health food sector. THE 10 MOST SOLD PRODUCTS IN DIRECT MARKETING 13.5

Furniture Childrenswear

14.0

Health products

14.1 15.7

Food

18.0

Footwear, fashion accessories

19.7

Leisure products

22.0

Menswear

23.7

Cosmetics

30.0

Underwear

40.9

Womenswear 0

(Values in percentages; year 2001)

Source: JADMA, 2003.

43 The Fashion Market in Japan

With the subjects that had declared to have used some type of direct marketing channel, the JADMA survey also asked for the reasons that had motivated them to do so. Thanks to the analysis of the results, an interesting synoptic picture is obtained of the strong points of direct marketing in Japan, visually capturing the comparison between the truly critical factors of the business success and those that, even though contributing favorably to the success image of the direct channels, occupy a relatively secondary position. Among these, not entirely marginal (7%) is a motivation of a misanthropic nature (“I don’t like the sales assistants”); the survey, in truth, refers generally to a dislike of the mediation process of the sales personnel inside the shops. It is, however, the price factor (40.2%) that drives the success of the direct sales, closely followed by the novelty characteristics of the products proposed (35.9%) and their ability to attract the consumer (33.5%). The other motivations are strongly tied to the peculiarities of the non-store channels: the savings in time and effort (32.4%), the possibility to thoughtfully evaluate the purchase at one’s leisure (26.9%). THE REASONS OF THE DM CHOICE

0.6 2.6

The DM is trendy DM was recommended to me

7.0 8.3 8.7 10.0

I don’t like the shop sales assistants I can choose how to pay The purchases are delivered when I want The goods can be returned

26.3 26.9

I get catalogues without even requesting them I can choose at my leisure

30.3 32.4 33.5 35.9

I have already had good experiences with DM I don’t go out and I save time and effort The products are attractive The products are unavailable elsewhere

40.2

The price convinces me 0.0

5.0

10.0

15.0

20.0

25.0 30.0 35.0 40.0 45.0 Results in percentages. Multiple answers. Source: JADMA, 2003.

44 The Fashion Market in Japan

Buying fashion on the Internet Through the analysis of the results of the survey among the Japanese consumers carried out for this research, there was also established the level of trust attributed by the public to the various channels of direct marketing. A result, perhaps unexpected, of the survey conducted over the course of the last quarter of 2003 has shown a more than solid level of reliability of the Internet, whose value not only exceeds that attributed to the television sales but – in the opinion of some age brackets – it is even greater than that registered by the postal catalogues. "It is possible to buy good fashionable clothing through..."

70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Television Internet Catalogues

Twenties 26.7 66.7 33.3

Thirties 23.5 29.4 41.2

Young 40's Mature 40's 28.0 23.5 48.0 47.1 32.0 52.9

Fifties 35.6 44.4 42.2

Sixties 17.3 43.2 29.6

Percentages of agreement with the statement by age bracket Source: Diva Eris, 2003.

One of the reasons this data is interesting lies in the clear overcoming of the specific intangibility of Internet; the postal catalogue has always enjoyed the advantage of materiality, and the television sales enjoy that of the institutionality specific to TV. Evidently, over the recent years the image of Internet has also been progressively consolidated, so much so that – in the limit-case of the twenty-year-olds – almost 70% of the subjects declared to agree with the statement “It is possible to buy good fashionable clothing on the Internet”, while in the cases of the postal catalogues and TV the percentage of agreement remained around 30%. 45 The Fashion Market in Japan

It is presumable that, in this case, the emphasis placed in the question on the concept of ‘fashion’ played in favor of the Internet, viewed as a ‘modern’ tool and thus more reasonably close to fashion than could be, for the specific nature of the means, the postal catalogue and the formats of the television sales, probably far from the fresh and dynamic image of the web.

INTERNET SALES: REPRESENTATIVE NAMES E-NET JAPAN GETWAY PRINCE HOTELS SENSHUKAI SOFTMAPS SOTEC X-ING

The television sales If the development of the sales on the Internet is impressive due to the novelty of the channel and the quickness of diffusion, the sector of the television sales appears no less dynamic, however, driven by the figures of Jupiter, the design that initials a TV channel reserved exclusively for direct sales. Managed by Shigeru Ohashi, the development of the channel has been rapid and tangible, having achieved a turnover of little less than 30 billion yen (240 million euro) during 2002. A highly innovative aspect of Jupiter Channel is its progressive ‘tangibilization’: the success of the sales on the air has pushed the management to open a true and tangible shop in Tokyo, which – if it is awarded by the turnover levels – may continue to expand over the rest of Japan. The case of Jupiter Shop Channel also confirms the absolutely primary role, in the Japanese retail, of the customer service component. While the procedures of accepting orders are largely automated, most of the business of the call center employees of Tokyo (and also, soon, the employees of the Osaka call center whose opening is expected in 46 The Fashion Market in Japan

2004) is focused on two activities different from that of sales in the strict sense: the service of responding to the requests for specific information on the products and that of post-sales assistance. TV SALES: REPRESENTATIVE NAMES JAPANET TAKATA JUPITER ORBIS QVC JAPAN TOKYO MYCOOP

The postal catalogues: the Belluna case The Saitama Company is one of the major prominent figures of the Japanese market of mail-order sales. The approximately thirty different postal catalogues of Belluna involve a great variety of sectors and merchandise, among which the dominant sectors are furniture and, above all, fashion, in which lays the core of the companyâ&#x20AC;&#x2122;s turnover. Belluna has more than 700 employees, and despite the difficulties encountered over the last year in Japan even by the stronger retail structures (starting with the department stores), it closed the last profit and lost statement with a significant increase in turnover, on the order of 5%. Even if the profits have not developed proportionally with the turnover, the corporate forecasts for the closure of 2003 appear optimistic, aiming at the consolidation of the turnover results above the goal of 100 million yen (approximately 800 million euro). Belluna distributes its catalogues through two channels. Some catalogues are promoted in the channel of the bookstores (widespread in all the urban Japanese scenarios, and always quite crowded; those open also in the evenings and nighttime are not inferior in terms of public concentration), and they are presented as voluminous and elegant glossy magazines. Sold at a cover price, they are aimed largely at women between 25 and 35 years of age. The postal diffusion is even more massive, usually occurring after the customer has filled out and sent in the request slip. The slips are published inside the advertising inserts of 47 The Fashion Market in Japan

daily newspapers, magazines and specialized periodicals, and the management of the databases that are built through the data coming from the requests of the customers represents a wealth of marketing information that is at the heart of the entire business of postal sales. Regarding the segmentation of the clientele, it is not necessary to go into particularly complex analyses: the Belluna market is a female universe, in which the men represent an extremely small minority of less than 15%, even though the company admits that it wants to pay greater attention to the male clientele in the future. But in the female universe of the readers of postal catalogues there is, however, a marginal presence of adolescents and young women. From the analysis of the JDMA data one begins to find non-marginal accumulations of clientele starting from the bracket of the 30-year-olds, to be progressively concentrated in a growing manner with the increase in age, achieving the greatest density in the generations of the fifty-year-olds and sixtyyear-olds. Still in the embryo stage, however, are the experimentations concerning the direct sales on the Internet. Currently Belluna has entered the sector in a marginal and indirect manner, managing a portal dedicated to the retailers interested in developing the sector; nor, on the other hand, does the management of Belluna appear to be very interested in investing in this business area. The predominant interest of Belluna in the research of new products and new suppliers may be best summed up in a single word: novelty. Sectors, product types, commodity areas take on a totally marginal importance with respect to the need for novelty that represents one of the key factors in the purchase mechanism of the company customers: a factor perfectly in line with several interpretative analyses of the cautious behavior of the Japanese consumers over recent years, some of which are even included in this report30. Nobuaki Nakanishi, a Belluna executive31, explains the strong point of this commercial channel as follows: â&#x20AC;&#x153;Are you familiar with the concept of impulse buying? Well, we base ourselves on exactly the opposite principle: the unhurried purchase. Our catalogues are read at home in the spare time. Unhurried, our reader flips through the magazine, pausing on that which attracts her attention, and reads the entire description of the product that interests her. And this is where our greatest ability lies, in providing good reasons for the purchase. For this purpose it is important for us to present new products, above all if 30 31

For all, see the already cited speeches of M. Tani and Y. Tajima. Executive of the Strategic Planning Area. 48 The Fashion Market in Japan

there is a story to be told: a traditional but little-known use, an innovative retail, a particular that not everybody knows.” Despite the fact that the catalogues also present upper-range products and products of an international level in terms of brand reputation, in reality the postal purchases are concentrated for the most part in the medium price range. The big brands contribute to give luster, prestige and image to the shop signs of the postal catalogues, but the consumers still prefer to experience the emotions of purchasing fashion clothing with prestigious tags in the customary and satisfying scenario of the department store, to which the segment of the not-so-young women remain firmly loyal (enough) for that which concerns ‘important’ clothing. Studying the offer system of Belluna or other postal catalogues, it shouldn’t be difficult, for an Italian company, to verify how realistic the possibility is to initiate contacts with this channel of ‘sales without shops’ in order to market their own products in Japan. Belluna, for example, regularly participates in the international fairs, and is even often contacted by the most active shoshas in the fashion and furniture sectors in order to evaluate new collections and products.

49 The Fashion Market in Japan

THE COMPETITIVE SCENARIO

International and national brands: strong and weak points, risks and opportunities One of the important factors in the international competition lies in the image of the producing country. On this theme, of great interest is the examination of the dynamics that have been registered over the last two years regarding the preferences demonstrated by the consumers with respect to some specific product types among import items and items of domestic production. This theme has been investigated in a recent survey on the consumption inclinations and the attitudes of the consumers regarding import products 32 . Concerning the specific question on their preferences between import or domestic products for each typology, a slight drop is observed (on the order of 1-2 percentage points) that is however spread over all the products in the case of the choice of import products; in parallel, but with a larger drop, there is also a decrease in the consumers that show preferences for the domestic products. The strongest and most evident result, therefore, is given by the net increase in the segment of the consumers that do not have an overall preference between national and foreign products: a result consistent with the effects of globalization and with the connected general reduction of the visibility of product origin, or in any case of the diversion of the consumersâ&#x20AC;&#x2122; attention from this specific aspect.

The 10th Survey on Consumers' Awareness of Imported Goods, MIPRO, Tokyo, 2002. 50 The Fashion Market in Japan

FASHION PRODUCTS: TRENDS IN THE PREFERENCE BETWEEN DOMESTIC AND IMPORT PRODUCTS (Data expressed in percentages) Product

Choose foreign products 2002 2000

Choose domestic products 2002 2000

No preference 2002 2000

Womenswear

6.1

6.9

34.1

34.0

59.9

59.1

Menswear

8.1

10.4

31.9

37.0

59.9

52.6

Shoes and ties

24.1

25.3

11.1

17.9

64.9

56.8

Underwear, stockings

4.3

5.2

40.2

43.1

55.5

51.7

Purses

29.0

31.6

11.1

12.8

59.9

55.5

Non-sporting footwear

11.9

13.4

31.7

35.0

56.4

51.6

Belts, wallets, access.

21.2

22.2

9.4

18.5

69.4

59.3 Source: MIPRO, 2003.

The table shown above demonstrates how some import products of the fashion sector enjoy – in the choices of the consumer – a position of considerable advantage over the others. In particular, the consumers appear to be strongly xenophiliac in the choice of purses, shoes, ties, belts and wallets; it is the world of the fashion-complements and accessories that is, evidently, placed at the top of products ‘to be bought through importation’. Competition between companies: how important is the country-of-origin image? Probably the most interesting data that results from the analysis of the previous table lies in the transversal and practically indiscriminate increase in the values recorded in the “no preference” column, which concerns all the cited products without exception. This result may be read as a combined effect of the loss of origin identity of the products (caused by the globalization) on the one hand and the greater familiarity with the import products on the other. 51 The Fashion Market in Japan

This information is relevant because, in the medium-long period, the trend registered here may theoretically lead the Italian enterprises to the progressive cancellation of the competitive advantage attributed to the made in Italy factor; this raises the need not only to not interrupt, but even to never ease the pressure in the planning and carrying out of specific and continuous actions in support of the particularity and singularity of the Italian product. However, in parallel, it is equally necessary to initiate effective actions against the usurpation of the competitive advantage connected to the image of the name of origin; without this corollary, any promotional action of the made in Italy factor would automatically give an unexpected contribution also to the business of frauds and falsifiers. And yet the advantage – however narrow – that our country achieves in taking on the role of the ‘source of fashion’ with respect to France, its historical rival, should be understood in a generic manner, or could the competition between the two countries hold surprises if it is examined with a magnifying glass, observing – for example – the differences expressed between the various consumer segments, or if – changing perspective – one searches for possible distinctions expressed by the consumers according to the various types of fashion products? The question, clearly rhetorical, finds some interesting answers both in the results of the direct study realized during this research, concerning the different opinions expressed by the various age brackets, and within the already cited MIPRO survey on the attitudes of the Japanese consumers towards the import products. The subjects who demonstrated to be favorable to the purchase of import products were asked from which producing country they would prefer to purchase the goods that attract their greatest interest. Through the analysis of the countries of origin thus identified crossed with the reasons for the purchase choice, it is possible to reconstruct the picture – concise but revealing – of the producing countries perceived by the subjects. The observation of the results, reported in the table that follows, shows how the leading position regarding the fashion image is fought for on various fronts, and with alternating fates, between different countries. In the segment of the fashion accessories (that of shoes and ties, in particular) there is not yet a single winner: the first position is shared by France and Italy. In the casual sector, however, there is no battle for the first positions: the dominance of the US brands is 52 The Fashion Market in Japan

clear, even if Italy is nevertheless present on the podium, in third position, after the cheap brands of China (the only, and totally unanimous motivation adopted by the subjects for the identification of the preference towards the Chinese products is precisely the low cost). Sustaining the Italian choice, the argument of the design, style and colors (89%) teams up with the image of the brand (44%). The leather goods witness, however, the net supremacy of Italy (39.7%) with France considerably detached (19.1%) and the appearance, in third position, of the United Kingdom. There is an additional victory for Italy in the footwear sector (41.2%), accompanied by a motivation that demonstrates the strong level of success of the reputation of the brand leader, in addition to the generalized choice of the design and style. It should be noted that, in this sector, the position of the United States wins over that of Great Britain, even though traditionally very aristocratic in its country image tied to the offering system of the classical menâ&#x20AC;&#x2122;s footwear. IMPORT COUNTRIES PREFERRED FOR SOME FASHION PRODUCTS Product

Country of origin

Motivation of the purchase choice

Ties and shoes

France (32.6%)

Design, style, colors (89.7%) Availability of a favorite brand (51.7%) Design, style, colors (75.9%) Availability of a favorite brand (41.4%) Design, style, colors (60.0%) Availability of a favorite brand (40.0%) Reasonable price (100%) Design, style, colors (88.9%) Availability of a favorite brand (44.4%) Design, style, colors (56.0%) Availability of a favorite brand (56.0%) Availability of a favorite brand (66.7%) Design, style, colors (42.9%) Availability of a favorite brand (85.7%) Design, style, colors (42.9%) Availability of a favorite brand (66.7%) Design, style, colors (57.1%) Design, style, colors (71.4%) Quality, lifetime, superior performance (42.9%) Availability of a favorite brand (42.9%) Quality, lifetime, superior performance (40.0%) Design, style, colors (40.0%) Availability of a favorite brand (40.0%)

Italy (32.6%) Casual clothing

United States (40.0%) China (17.3%) Italy (12.0%)

Belts, wallets, accessories

Italy (39.7%) France (19.1%) Great Britain (11.1%)

Footwear (non-sporting)

Italy (41.2%) United States (13.7%) Great Britain (9.8%)

Source: MIPRO, 2003.

53 The Fashion Market in Japan

Weak points and risks for the import fashion The MIPRO study cited above illustrates some interesting aspects concerning the causes of dissatisfaction of the consumers regarding the import products of the fashion sector. This subject is certainly not marginal; approximately 40% of the people interviewed expressed some complaint about foreign products purchased over the last years. If the grumbles and complaints are widespread throughout all the sectors of consumption goods, the sectors that register the highest levels of dissatisfaction are also those with the greatest general use (foods and fashion-clothing system). This data is understandable; the import products tend to become a daily component of the life of the Japanese consumers who, little by little as they enter into contact and become familiar with the foreign products, naturally tend to perceive the problems and to show signs of dissatisfaction. It is probably inevitable that the greater frequentation and familiarity with import products also entails an increase in problems, dissatisfaction and inconvenience. The study has already pointed out how this experience is common in 4 out of 10 consumers; to these it was also asked how they then managed the protests. About half declare to have discussed the problems with the seller, while 10% declare to not have taken any steps following the inconveniences encountered, or to have spoken with some public agency; furthermore, these consumer associations do not seem to be completely prepared to manage information on import products. In the case of the fashion-clothing system, the inconveniences and complaints are caused: 1. by a general perception of quality inferior to that of the domestic product, understood in terms of performance and lifetime of the product; 2. by the high price; 3. by the unsatisfying level of wearability. It is interesting to point out that the last two items have exchanged positions with respect to the previous surveys. Actually, the level of dissatisfaction connected with the

54 The Fashion Market in Japan

wearability has practically been halved, probably in correlation with the efforts of the foreign producers to adapt to the morphology of the body of the Japanese consumers. It should also be emphasized that, in the clothing area, there is an ever-increasing recourse to the production in Asian countries with low labor costs of clothing planned and designed in Japan, and thus completely suitable for the specific wearability needs. Concerning the second point, a very sharp increase is registered in the complaints due to the prices of the import products being too high. The demand for quality products at a low price, together with the damaging effects of the long-term recession, is creating a considerable transformation in the perception of the retail prices. Finally, also in the 2002 edition of the study, as occurred in the previous years, the subjects that had expressed a generally negative attitude towards the import products provided reasons largely connected with the quality and safety of the products. It should also be noted that the motivation tied to the negative effects that the importation may have for the national industry has moved into first position, which confirms the hypothesis of the ever more diffused concern of the consumers for the health of the economy. The data reported in the table that follows refers to the gray area of the complaints of the consumers towards the import fashion products. To comment on the table, which actually doesnâ&#x20AC;&#x2122;t require any remark thanks to its clarity, there should only be highlighted how the price factor is the cause of complaint only for the leather goods and accessories sector, while in the case of clothing the consumers tend to be much more critical concerning the other factors shown. It goes without saying that the information that emerges from the study is capable of providing very useful ideas both for the companies already active in the Japanese market, which â&#x20AC;&#x201C; in this case â&#x20AC;&#x201C; will find it to be a useful comparison and support for the surveys carried out through their specific direct experiences, as well as the enterprises that use this work as an aid for the strategic planning of their future entry into this market.

55 The Fashion Market in Japan

PRIMARY REASONS FOR DISSATISFACTION CONCERNING THE FASHION IMPORT PRODUCTS Product

1st reason for dissatisfaction

2nd reason for dissatisfaction

3rd reason for dissatisfaction

Casual clothing

Quality, lifetime, performance

71.5 Wearability

28.5 Price

9.7

Menswear

Quality, lifetime, performance

48.1 Wearability

40.7 Price

37.0

Shoes and ties

Price

52.4 Quality, lifetime, performance

31.0 Design, style, colors

14.3

Underwear, stockings

Quality, lifetime, performance

61.8 Wearability

23.5 Price

20.6

Purses

Price

65.8 Quality, lifetime, performance

34.2 Post-sales assistance 10.5

Non-sporting footwear

Quality, lifetime, performance

42.9 Wearability

31.4 Price

28.6

Belts, wallets, accessories

Price

55.9 Quality, lifetime, performance

29.4 Wearability

8.8 Source: MIPRO, 2003.

Sizes and shares in the import market: the position of Italy The assessments on the subject may be varied, and experienced in a manner more or less positive as a function of the inclinations and expectations of each reader; but the language of the figures is objective, and provides a starting point for the reflections that may then be developed by their analysis. So here is the data 33 : in 2002 Italy was positioned in second place among the exporting countries of clothing to Japan, with a total export turnover of 112 billion yen. Better than Italy there was only the result realized by the impressive flow of goods coming from China that â&#x20AC;&#x201C; almost exclusively with products 33

Sources: International Financial Statistics (IMF); Japanese Ministry of Finance; JETRO. 56 The Fashion Market in Japan

included in the low range of the market – guaranteed it a clearly dominant share of the market (79%). The second place occupied by Italy – that corresponds, at the current exchange rate, to little less than 900 million euro – is equivalent to a market share of little more than 5%, which provides with vivid immediacy the dimension of the detachment between the ruling position of China in the foreign trade of clothing with Japan. But any type of analysis that intends to compare the Italian export with that of the Chinese would be completely misleading, both for reasons connected with the specific product types that to this day appear to be objectively so varied as to make a comparison practically impossible, as well as for the relevance of the share of the Chinese production imported in Japan that emerges, however, from the delocalization operations of production carried out by native enterprises of eastern countries or of Japan itself. More interesting, however, is the data concerning the positive dynamics of the Italian exportations, with an incremental value of 3.5% with respect to 2001. So the Italian export of clothing to Japan is growing, and the trend appears to be confirmed by the data regarding the first half of 2003. Even though in an overall negative scenario that has halted the total value of the Japanese importations, the Italian share of the market has risen further, in confirmation of the good image that the sector maintains both among the public of consumers as well as among the professional Japanese buyers. Less positive is the data of the leather goods sector, whose exportations to Japan have suffered a two-figure percentage drop (a decrease of 11% has been registered). Dimensionally very considerable, the value of the Italian export has proven to be around 80 billion yen, a global result not very far – in terms of size – from that registered by the whole of the clothing sector. Also in this case, evaluating the market shares, the Italian exportations to Japan are positioned in second place with a share of 19%, once again clearly preceded by China (46%), and surpassing, even if by little, the French export that has acquired a share only a few tenths of a percentage point less that of Italy. The first data concerning 2003, still marking the overtaking of France, show a slight increase in the market share of the Italian export; this is made possible by the overall negative dynamics of the value of Japanese imports. 57 The Fashion Market in Japan

Commercial paths and strategies of the foreign fashion bands present on the Japanese market This chapter offers a summary of three corporate cases of particular interest, regarding the strategies followed over the recent years by European enterprises that have established themselves on the Japanese market. Regarding the cases of Zara and Benetton, it concerns enterprises that have chosen the path of the direct presence on the market (or that, as in the case of Benetton, have arrived at this conclusive choice); the third case presents the successful partner of an impressive parterre of big names in international fashion that has chosen to expand and take root in the market thanks to a collaboration with Itochu Shoji.

Zara, the success is in the system innovation 2001: one of the worse years for international retail sales, marked by bankruptcies and more or less silent disappearances. However within this scenario that is certainly not encouraging, when on the morning of January 15, 2002 the spotlights of the Jacob Javits Convention Center of New York were lit to give the award for the retail operator of the year – one of the most prestigious acknowledgements in the sector, assigned by the National Federation of Retail of the USA – Mr. José Maria Castellano Rios, executive of Inditex stepped on the stage to receive the award. The Galician company Inditex, owner of the Zara brand (with which it creates over 70% of the group’s sales) and of other commercial brands with which it works on various international markets, has a relatively short history, if compared to the age of many companies with the same international importance. Beginning as a small productive unit in 1963, Inditex began to direct market only in 1975, with a small shop in the north of Spain. But with the coming of the new century the history of Inditex as a winning case on the international clothing market began, becoming an object of study for prestigious observers and commentators of the worldwide industry. 34

Among others: "The Most Devastating Retailer in the World", The New Yorker, September 2000; "Justin-Time Fashion: Spanish Retailer Zara Makes Low Cost Lines in Weeks by Running Its Own Show", The 34

58 The Fashion Market in Japan

The entrepreneurial formula of Zara in Japan does not substantially differ from the one that leads the operations of the group on all the markets of the world. “The middle-aged mother buys from Zara because it isn’t too expensive and her daughter who is a little over twenty buys from Zara because it is fashionable. Evidently, Zara straddles the two winning retail trends: low price and fashion and is able to combine both in an exceptionally effective formula." 35 In 1998, the year in which the business of the Zara brand began on the Japanese market, Inditex was already present on at least another ten foreign markets. In the choice of the access strategy, the executives of the Spanish group evaluated the possibility of starting a collaboration with a big department store or with one of the big Japanese trading companies. The result of the initial exploration of the market was not satisfactory: all the solutions prospected seemed to set too many limits to the commercial independence of Zara. The choice of creating an independent company was therefore considered the most coherent with the features of the commercial action carried out by the company: above all speed and flexibility. Therefore the speed factor. The rapidity of Zara’s solution to fashion is something incredible: in the most extreme cases, the brand is able to carry out a cycle in only thirty days that starts with the identification of a new trend and delivering the new product in the sales points, passing through the design, development of the model, its engineering and prototype, supplying the materials to the base, the packaging and quality control. More generally, an average time to reach a solution could about two or three months, which represents a result that is difficult to image for the majority of the fashion producers. For companies similar to Zara for the market range and corporate size, the times needed from the first sketch of the new model to supplying the sales points is in fact a lot longer: 4 months for the “quick” companies and up to 12 months for those organized in a more traditional manner.

Wall Street Journal, May 18, 2001; "Galician Beauty: Spanish clothier Zara beats the competition at efficiency – and just about everything else", Forbes, May 28, 2001; "Fast Fashion: How a secretive Spanish tycoon has defied the postwar tide of globalization, bringing factory jobs from Latin America and Asia back to Continental Europe", Newsweek, September 27, 2001; "Zara", Case History, Columbia Business School, 2002. 35 Devangshu Dutta, "Retail @ the Speed of Fashion", in imagesfashion.com, New Delhi, 2003. 59 The Fashion Market in Japan

A key-principle that has allowed Zara to achieve these kind of results lies in the logic with which the concept itself of adjusting to the dynamics of fashion is conceived. Instead of concentrating their efforts on studies aimed at predicting, many months ahead of time, of what the consumers could request, Zara has concentrated its efforts on the ability to react immediately to the dynamics already existing in the demand. “Satisfy the demand, rather than predicting it" seems to be the slogan of the company: but for many competitors tied to the traditional cycles and production times, this strategy is objectively inapplicable. It is evident that being able to capture a new trend and immediately sell the right product not only reduces the inherent risk in the concept itself of predicting the future trends, but also allows to throw the competition. Therefore the speed-factor of Zara would remain a theoretical statement of principle, if it were not supported by an effective production organization model. Zara’s creative group is active all year round and is organized to constantly receive hints about what is happening on the market. For this purpose, no research institute is used; the information comes from the sales points spread throughout the world, with phone calls and e-mails. The development of new lines and new models is constant, and the new proposals approved for the production passage can count on a productive procedure made rapid thanks to a couple of basic principles. First of all, the Zara persons-products know that they must prefer a very narrow array of materials in designing the outfits, which makes the tendency of finding them available in the warehouse possible. But a further acceleration factor is found in the integration at the head of the group that – although not active in the actual weaving process – directly manages the dyeing, considerably accelerating the time in which the material dyed in the cutting line becomes available. The second key principle lies in the favorable combination of distributing the packaging phase between outside laboratories and domestic production lines, and by the use of Galician and Portuguese manpower (according to rumors, often underpaid) 36 and by the productive decentralization in countries with a low cost of labor, scattered between eastern Europe and Asia37.

Devangshu Dutta, cit. In 2000, Zara would have produced over 50% of the production in various countries with a low cost of labor (29% in Asia, 15% in eastern Europa, 9% in Africa).Source: corporate data quoted by Nelson Fraiman and Medini Singh in Zara, a corporate case of the Columbia Business School, New York, 2002. 36 37

60 The Fashion Market in Japan

A further key principle that guides the productive choices lies in the size of the production lots. The strategy begins to appear coherent: in view of an impressive amount of new models launched by the creative group (twelve thousand a year on an average) a modest dimensioning of each production lot can be compared. Processing the corporate data that declare a production of about 90 million articles of clothing a year, an average production size for the launching of each new product is found to be equal to about 7,000 units. This mechanism provokes a very high rate of product rotation in the sales points, and induces evident economic benefits that arise from at least four considerations. 1. The rapidity with which the models disappear from the shelves (to then tendentially not reappear) causes the customers, once having become familiar with this characteristic of the shop, to return often to look for novelties. But the customers must know the rules of the game: says Devangshu Gutta 38 that when Zara opened its first sales point on Regent's Street in London many customers entered the shop, looked around browsing through the articles and then they would leave to then return and purchase during the sales. It was necessary to push the personnel to inform the customers that the models changed every week and that the products for which they imagined they could come back to purchase during the sales would most likely never again appear on the shelves. 2. Once the awareness of this commercial policy has been acquired, the customer no longer postpones the purchase in time: if the customer finds something he likes, the purchase becomes immediate, in the conviction that he could no longer find it the next time he comes to visit the shop. The Zara effect is so immediate and effective as to be commented by a consumer from Tokyo: "Oh, no â&#x20AC;&#x201C; I fell for it. I made my first purchase at Zara, the Spanish fashion chain shop. Reasonable prices (halfway between the Banana Republic and Gap), but the models are much more trendy and with the casual style of Europe and of the south. Yuki had spoken to me about it and then even one of the young attorneys from the office, one who is rather fashionable, she always goes there to shop. I bought just about everything and I spent 60,000 yen." 39 3. The size of the stock is drastically reduced. Thanks to the low size of each lot, the stock is almost never considerable. 4. During the sales cycles, the speed with which the fashion trends are satisfied in any case causes the stock to keep a high fashion content: this allows Zara to only discount Devangshu Dutta, cit. From the page dated February 19, 2003 of the blog (personal diary published on the Internet and open to comments from outsiders) of an anonymous consumer from Tokyo. 38 39

61 The Fashion Market in Japan

18% of the products on sale, a percentage equal to about half of what is charged by the other producers on an average. Probably, on few markets in the world as on the Japanese market would a formula such as this been able to better join the trends of consumption of young consumers interested in the casual fashion. Famished for novelties and with an average availability of money totally coherent with the price bracket requested by the Spanish brand, the young Japanese continue to visit the nine shops present on the market, including the megastore of the group, located in Shibuya, where for decades the most spontaneous trendy fashions are created for the Japanese youths; far from the high-class shopping districts (Ginza, Omotesando) and from the most obvious localization for a young target (Harajuku).

Development strategies in franchising: the Benetton case 40 The introduction of the agent figure in Japan The distribution system of Benetton is generally considered to be one of the key factors in the history of the rapid development of the company. At the beginning of the new millennium, Benetton has 1,500 sales points in the Italian market, based on two segments: womenswear and childrenswear. Each of the two segments is managed by a single person, with the help of an assistant; thus four people control the business of 1,500 shops. This is made possible exclusively through the activity of the agents (12 in the Italian market). The agent, paid on a commission basis, has the job of searching continuously for potential managers of new shops in franchising, to constantly monitor their business, and â&#x20AC;&#x201C; obviously â&#x20AC;&#x201C; to present the new collections to the manager of each sales point, to take orders and to send them into the company. The mechanism allows the Italian agents to realize significant turnovers. The agent for Lombardy, for example, manages an annual turnover on the order of about 60 million euro; on the basis of the average commission pay (5%), the agent can count on an income Adapted from the speech of Takashi Endo, chairman of Benetton Japan, at the conference "Scenario and prospectives of the foreign distribution in Japan", Import Distribution Symposium 2000, MIPRO, Tokyo, 2000. 40

62 The Fashion Market in Japan

of 3 million euro. Considering that the agency is usually family-run, with the help of some part-time collaborators, it is evident that the profit is considerable, so much so that some agents travel with their own personal airplanes. This distribution model that has worked all over the world was not applied by Benetton during the first phases of access on the Japanese market. Currently, however, the system has also been activated in Japan, where there already exist several local agents. Shop-fitting and sales areas Since 1981, the year of the opening of the first four Benetton sales points in Japan, the typology of the Benetton sales points in the Japanese markets has progressively developed and articulated, until reaching the figures of 2003, that testify to a complete success: 24 billion yen of turnover, 250 employees, low level of rotation. The history of the development of the commercial formula is told by the chairman of Benetton Japan himself: “When a potential manager proposes himself to us for a collaboration in franchising, the responsible agent of the area studies the competitive scenario of the area in which the manager intends to operate. If from this phase of investigation there do not emerge negative aspects the manager is authorized to contact the designated shop-fitters of the company for the realization of the shop. At first, Benetton preferred to realize and sell the shop-fittings by Japanese companies, with an average cost per manager of 500,000 yen per tsubo (about 1,200 euro per square meter); subsequently, the entire shop-fitting was realized in Italy and exported to Japan, with a significant savings: the average price is now 300,000 yen per tsubo (little more than 700 euro per square meter). The policy of Benetton has always explicitly aimed at reducing the fixed costs of the managers as much as possible, and thus significant savings in the costs have been obtained thanks to the constant practice of this policy of attention to the purchasing choices41.” More recently, the Benetton shops in the world have begun to expand towards large surface areas; but the cost of the retail commercial locations in Japan have not made simple the hypothesis of requesting private manages for the opening of large retail areas. Benetton has therefore chosen to invest directly, and to open in Tokyo – in the zone of Omotesando – the first large sales point with direct management, the "Benetton Megastore", inaugurated in December 2000.

Takashi Endo, chairman of Benetton Japan, cit. 63 The Fashion Market in Japan

As of today, Benetton has thirteen sales points in Japan, including the new megastore of Osaka – the largest by far – inaugurated in 2003 by Mrs. Ota, governor of the Osaka prefecture. Policies of samples and order placing Benetton has approximately 1,200 models for each season. Upon arrival in Japan, the set of samples is examined by the agents and by the managers of the main sales points, for a first broad selection. In this first phase a general skimming is achieved that reduces to 300 the number of models then destined to be actually presented by the agents to all the sales points for the formation of orders. As a general rule, that which sells well in the rest of the world is destined to sell well also in Japan; for that concerning the fashion proposals, Benetton Japan does not notice significant differences in the reaction of the customers between Italy and Japan; but there exist differences concerning colors and wearability. As a consequence, these two factors contribute to additionally narrowing the selection. On the other hand, however, in each season at least a few collections of the latest fashion are always added to the selections already performed. Consequently, in the first round orders are placed for about 60%, leaving the remaining 40% to subsequent reorders. When, at the beginning, Benetton Japan required an immediate sharp placing of 100% of the orders there occurred problems in the final inventories, while currently – thanks to the possibilities offered by the development of flexibility in the productive processes of the parent company – the mechanism of order placing has been able to be modified as described above. Communication policies On the subject of advertising, Benetton entrusts the campaigns to the photographer Oliviero Toscani. The strategy behind each campaign requires that the promotional message must always be the same in any Benetton shop in any part of the world, paying the most attention to themes of social interest. War, AIDS, discrimination: Benetton wants that the consumers are not only aware, but also active protagonists in the debate on these themes. Takashi Endo again states: “Usually ads revolve around the theme of the excellence of the product. Nothing to do with our strategy: we have chosen to commit our resources to 64 The Fashion Market in Japan

communicating with the customers. Using this logic, we started the first advertising campaigns: it required a bit of courage, in a country like Japan, dominated by many rules. I’ll never forget our first advertising campaign – it advertised the use of condoms. Usually we receive about six photos for each season from the parent company, and in that case we chose the one that seemed more acceptable: it was, precisely, the one of the condoms. For the first large advertising appearance we chose the area of Aoyama. On the first campaign day we received about five thousand telephone calls. We received more than a few accusations; but some customers, the younger ones, asked us where they could purchase the condoms that we advertised. Afterwards, we reached an agreement with the Okamoto Company to produce condoms with the Benetton brand, which are regularly on sale in the supermarkets today; and everything began with that advertising campaign. Each time that we launch a campaign we receive accusations and protests, and on the worldwide level we have also suffered boycotts by consumers, but Benetton has never modified its line of communication42.”

Itochu, renewing the tradition to manage the high fashion-content brands Among the big Japanese companies, Itochu Shoji and Mitsui Bussan are a few of the historic figures that represent the business of the commercial development of the designers. In spite of Mitsui Bussan’s strength (a little less than 10,000 workers, 28 offices directly in Japan and 74 abroad, and almost 800 companies controlled in the world), during the last decade Itochu’s position has been further strengthened in this business area. With the strength of a share capital equal to 200 billion yen and an operative structure distributed throughout 156 offices in the world, the company is considered a leader in the sector of brand products. The business of the company in this sector is difficult to trace to the most widespread terms of the current commercial terminology; defining Itochu as an 'importer' or 'distributor' is objectively limiting, even though import and distribution operations are a part of the specific work carried out by the enterprise. The traditional role of the shosha, tied to operations on a standardization level that tends to be high, and with a creativity content that is relatively low, has been deeply 42

Takashi Endo, chairman of Benetton Japan, cit. 65 The Fashion Market in Japan

reinterpreted by Itochu, on the basis of almost a century and a half of business in the commerce (the company was founded in 1858). Today, Itochu’s new management - for each new brand to be developed – specifically plans the strategy and proceeds to plan the actions needed, through a business plan that includes the definition of the concept and of the experience of the product, the identification of the guidelines for the communication, the choice of the positioning for retail sales and of the relative commercial channels. It is obvious that the current management of the marketing remains to be the corporate core business, but it is relevant to notice that the content of marketing creativity – strategic as well as operative – that today distinguishes Itochu’s business represents one of the keys of success of the group in the not so easy Japanese scenario of the trading companies.. The functional renovation of is dated 1997. In that year, Itochu created a structure based on divisions, giving a great level of independence to each division, for the purpose of increasing the flexibility in the action of the market, while keeping the advantages of the economic scales tied to the multinational dimension of the company. Currently, Itochu manages about one hundred brands on the Japanese market, many of which of primary international importance. The most famous among the domestic brands are No Concept But Good Sense and Akiue-Go. The former, developed in collaboration with Yamato International, is designed by the Japanese fashion designer Yoichi Nagasawa, and is focused on casual women’s wear segment in the higher bracket. The No Concept But Good Sense system is not only limited to offering clothing but includes a wide array of accessories and shoe wear, as far as men’s wear to progressively expand to a younger customer. Akuie Go, launched in the fashion world by the success obtained by participating in the television program Asayan, in 2000 signed a collaboration contact under license with Itochu. In that same year, the launching of the Akuie-Go brand – supported by the Hankyu department stores and by a heavy television campaign – was awarded with the exciting record of 200 million yen of sales in only two weeks, equal to an incredible amount of 400,000 yen a minute. The commitment and actions carried out in scouting new and promising brands to launch and develop on the Japanese market represent an operative area constantly pursued and supported by Itochu; yet the investments connected to this activity do not always turn into very solid cooperations, not only in the short run but also in the middle and long run. 66 The Fashion Market in Japan

To a long series of success and alliances by now ‘historic’ (all we have to do is think about the Mila Schön case, a designer brand managed in Japan by Itochu for twenty five years now) are also opposed just as famous cases of separation of the commercial roads: this was the case of Dunhill as well as of Giorgio Armani, two designer brands supported by Itochu in the launching phase among the Japanese consumers, but that then chose an independent strategy in the development of the market. Itochu’s scouting policy however, should not be intended in the most radical meaning of the word. In fact Itochu does not seek promising products and enterprises still in the embryo stage of their journey towards success: it rather evaluates the suitability of the commercial development of a new brand on the Japanese market according to the fame and success that the brand has already achieved on its original market. Itochu’s policy is set out in five guidelines: 1. The introduction of western brands in the luxury division on the Japanese market 2. The development of an offer aimed at the young casual sector 3. The use of very famous figures in the world of television cartoons 4. The development of gourmet brands in the high range 5. The diversification of the commercial channels A first business area of Itochu is importing products. Currently, Itochu can already boast a portfolio of internationally famous foreign brands. In the sector of fashion accessories, the most famous name is probably that of the Swiss brand Bally, today a partner of Itochu with a major share of 80%. In the jewelry sector, the brand Scavia stands out, together with the Bulgari designs, that works in the jewelry as well as fashion sector. Considering the growing importance that the big international designers give to the presence and visibility on markets with the most prestige, many brands managed by Itochu are also present in Japan with institutional shops managed directly: this is the case of Bulgari itself, but even other brands such as Hunting World, Tumi, Furla and Tanino Crisci. The last agreement signed by Itochu is very recent and provides for importing products in the ready to wear line of Roberto Cappucci.

67 The Fashion Market in Japan

Instead a second business area is tied to the widescope cooperation with foreign brands and designers on the basis of global license agreements; within this type of business, the business tied to the constant development of many designs of primary international fame on the market are included, through the development of many opportunities connected to the objective to optimize the business of the commercial exploitation of the brand’s fame. Within this business area, and relative to men’s fashions, by now Itochu has been following the development of Paul Smith on the Japanese market for about twenty years, a brand that is seen very much in the big department store channels. In women’s fashions the relationship with Vivienne Westwood is just as strong, strong because of an active association for ten years now; but the relationship with Mila Schön is even more representative of the stability philosophy to which Itochu appears to be inspired, articulated on 35 product lines and consolidated by twenty five years of collaboration. Instead for ten years the production upon license of the Renoma Paris brand is active and used to enlarge the commercial presence of the group in the big department store channels, with fashion lines for men as well as women. However the big designer fashion shows continues with the names of Enrico Coveri, Guess, Katharine Hamnett and Lanvin, with which Itochu has signed a long term collaboration contract. On the other hand, there are also new acquisitions, such as the agreement with Morgan, French retail operator in women’s fashions. Already present in Japan with about 40 sales points, Morgan expects to considerably develop – thanks to the alliance with Itochu – its turnover, operating in parallel with the business of licenses and imports, to achieve the target of exceeding 10 billion yen in 2008. A third business line is always connected to the development of brands aimed at the despecialized retail commercial chain, focused on a young family target. Among these: UP Renoma, Adam & Eve, PP Rikorino (a brand whose presence is also being developed on other Asiatic markets), MCM, Bevely Hills Polo Club. The sportswear business area is dominated by the Converse brand, between the leaders of the sector, while the Munsingwear brand is specifically aimed at the development of the Chinese market. Other names managed by Itochu within this offer are Airwalk, New Bilance, K-Swiss, Abu Garcia, Scorpion Bay and Tony Hawk. The fifth business area is focused on the casual fashion market. Other than the very well known Miss Sixty, Itochu manages Joes Jeans and the Cimarron brand, also developed abroad, within the big department stores Sogo in Hong Kong and in Korea. 68 The Fashion Market in Japan

Over ten brands of cartoons represent the heart of the business area tied to the commercial development of figures that are very well known to children. On the basis of an agreement with Sachiko Kimono, author of Nontan, a famous series of books for children, Itochu has started to use this brand in the children and pre-school segment (from birth to 10 years old). Other famous figures are the TV cartoon Tottoko Hamutaro, in collaboration with Shogakukan Productions, and Tsuri baka nisshi (diary of a fishing fanatic); the adolescent market is also followed by the brand Girl is Girl developed in cooperation with the Nicola magazine.

69 The Fashion Market in Japan

SECTION B CONSUMER AND FASHION TRENDS

70 The Fashion Market in Japan

CONSUMER MARKETS

Criteria and methods for the segmentation of the Japanese consumers: average consumers and trend leaders in the fashion consumption The logics and techniques currently used for a segmentation of the Japanese consumers are quite varied and heterogeneous. In the micro-economical literature the criteria largely preferred is that of a psycho-sociological character; the use of profiles connected with the behavior and habits of consumption often allows the authors to transmit representations to the reader that are effective and of strong impact. The limit of this approach is tied to the objective difficulties that are bound to be encountered by any user of the segmentation, struggling with the needs – for example – to build a strategy of access on a new market, or to develop a budget for a new business area. In fact, the passage from the formulation of some ideally typical profiles of psycho-socioeconomical behavior to the ‘counting’ phase of the population belonging to each segment entails the undertaking of such a level of approximation in the estimate so as to render this technique not very suitable for corporate uses. Alternatively, the ‘scenario’ studies, with greater attention to the macro-economical dynamics, more frequently use traditional segmentations that are based on personal data variables. Excluding the recourse to qualitative techniques for the break-up into clusters of the entire population, the construction of the subgroups is set out in a traditional twoentry matrix, as a function of the variables of sex and age bracket. 71 The Fashion Market in Japan

Contrary to that which occurs in the literature of the European matrix sector, in Japan there is a frequent trend to scan the segments through the use of age groups in ten-year steps: the bracket of 10 years (thus including the entire bracket of the teenagers, but extending the lower limit to the population of the 10, 11 and 12-year-olds); that of 20 years (from 20 to 29 years of age), and so on. This is, for example, the case of the optimum studies on the consumers produced by MIPRO, often cited in this research. The approach used by the commercial enterprises is variable from case to case and, working on the large-scale retail front – as is the case of department stores and SPAs, for example – they can’t do without having instruments available for the analysis of the clientele. The Tobu department stores, for example, use and process the analyses developed by Dentsu, one of the big names of the world of publicity and market research in Japan, but they also formulate an internal method that is carefully kept secret. Without evading the company rule of secrecy, an executive of the fashion sector of Tobu43 identified the most interesting segments for the department store as follows: “Our customers are women, with an absolutely dominant percentage. According to our estimates, around 80%. The main age bracket coincides with that in which is concentrated the greater part of the national population: between 45 and 65 years of age. There is then another bracket, no less important for us, which is that of the women between 25 and 35 years of age – it is the second generation of baby boomers, in which the presence of working women is concentrated. Often among the customers of the first bracket and those of the second there is a close relationship: that of mother and daughter. It is not rare to see in our department store a mother/housewife and a daughter/career woman shopping together: this familiar frequentation is very important for us. Even all our locations are studied to optimize the frequentation of nuclear families: in Shinjuku, Tokyo and here in Ikebukuro44.” Returning to the theme of segmentation, the executive explained the key words that identify a supply system capable of optimizing the profits. “There are four 45, and they are connected to a system of values shared by the protagonists of the target-segments. ‘Conservative’: communicates the message of authenticity and originality of our products. 'Rich': communicates an atmosphere of sophistication. 'Elegance': transmits the serenity Motohiko Aruga, executive of the women’s fashion sector of Tobu. The three place-names cited refer, actually, to three locations within Tokyo that take the names of the large intermodal stations (bus – metro – railway), frequented on a daily basis by several million passengers in transit (mostly commuter traffic). It could be said that they are three large ‘quarters’ of Tokyo, but their vast dimensions do not match the more limited concept that the term has in Italian city planning. 45 The key words are given in English in the original, just as quoted. 43 44

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that characterizes the woman who knows that she wears clothing that is always perfect and suitable for the occasion, with which there’s no mistaking. 'Global': represents the harmony of standardization.” Innovators and conservatives, traditionalists and individualists, and much more: the segmentation of the consumers according to Itochu Fashion System. A very effective and functional segmentation hypothesis has been elaborated by Itochu Fashion System46. The method used presents at least three clear strong points. 1. Immediate perceptibility of the limits of the segments proposed. This aspect, essential for the possibility of using the segmentation for processing and discussions of a corporate nature, is obtained thanks to the choice of registry-type limits that therefore make it possible to define the segments in quantitative numerical terms. 2. Fineness and astuteness in the definition of the limits of each segment. The subgroups in this scheme appear uniform and well coherent to the eyes of any Japanese reader, who doesn’t have to struggle to grasp the effective elements and to recognize their functionality. 3. Evocative immediacy of the definitions assigned to each segment. The definitions assigned to each identified segment have been created with a clear and efficient summary ability. Some definitions, moreover, already belong to the current Japanese language, while others have been coined from scratch. But precisely by virtue of the specific ‘Nippon-ness’ of each definition, the Japanese reader immediately and instinctively understands the characteristics of the specific cluster, thus demonstrating the effectiveness of the segmentation. It is, however, true that for the foreign reader the compilation of a series of supporting comments are indispensable for the understanding of the terms used; nevertheless, the necessary discussions that help to grasp the sense of the definitions assigned to each segment and of the cohesive factors of the population that each of these combines can represent an interesting beginning of the progressive comprehension of the sociopsychological schematizations of the behaviors of the Japanese consumers. In The target of fashion consumption – The active market depends on seven generations, Itochu Fashion System, 2002. 46

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Below are presented the seven segments proposed by Itochu Fashion System, complete with a summary comment; for the discussions, rich and interesting, refer to the cited publication. 1. The Purikura47 generation: 11.2 million Japanese, born between 1977 and 1983 (from 20 to 26 years of age). Characterized by a good level of flexibility and creativity, the purikura like interpersonal relationships, but they keep them at a superficial level, often entrusting them for the most part to the cellular telephone and electronic mail. Their purchase behavior is very similar to that of the adults. When they encounter an obstacle they stop. They often share the idea that the age-old tendency to ‘do one’s best’ leads to a bad image. 2. The Dankai Junior48 generation: 11.6 million Japanese, born between 1971 and 1976 (from 27 to 32 years of age). They were born during the second “baby boom”, which peaked during 1973. They tend to move in groups and, having money at their disposition, they do not spend greedily, but with determination and autonomy. They are prominent figures of the ‘Shibukaji’ style that takes its name from the Shibuya and Harajuku districts. They do not accept orders, and they adapt easily to temporary jobs, even though maintaining a high level of autonomy. 3. The Banana49 generation: 10.5 million Japanese, born between 1965 and 1970 (from 33 to 38 years of age). Even if having grown up in a reassuring economic scenario, this generation has had to confront the first difficulties of the Japanese economy, thus it manifests a need for security and stability; not very sensitive to the appeal of fashion, they prefer a life style of a materialistic framework. From the term purikura, Japanese version of ‘print club’: the booths that allow one to take photos with friends and to reproduce them on small colored stickers that have had enormous success among the youth of this generation. 48 Dankai means ‘mass’ in mineralogy. In the period between 1946 and 1951, the large number of births (baby boom) suggested an image of a large rock; an analogous phenomenon occurred between 1971 and 1976 (the second baby boom). 49 From Banana Yoshimoto, a writer who is popular worldwide for her stories inspired by the life of the people in this generation. 47

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4. The Hanako50 generation: 9.5 million Japanese, born between 1959 and 1964 (from 39 to 44 years of age). This generation is strongly marked by the development of the society of mass consumption. In the reference values it is identified as a “new humanity” (those that the previous generations are not able to comprehend); they see themselves as bearers of new ideologies, connected with the development of the information society. The women study at the university and conquer new places in society, becoming in some cases prominent figures of popular television productions. 5. The DC 51 generation: 11.6 million Japanese, born between 1952 and 1958 (from 45 to 51 years of age). During the adolescent age they aimed at being different from others by means of designer clothing and accessories. Having grown up during the boom of the economy, they manifest attitudes of social disinterest, so much so that they are often indicated with the nickname of the ‘indifferent generation’; but they continue to assign great value to the use of spare time and the pleasure of devoting attention to the family life. 6. The Dankai52 generation: 12.4 million Japanese, born between 1946 and 1951 (from 52 to 57 years of age). This is the generation that has experienced the echoes of the dynamics of the North American students’ movement: they expose the value of the community opposed to the regime and tend to modify the traditional characteristics of the relationship between husband and wife, rendering it more friendly and equal, with the progressive abandonment of the more male-chauvinistic aspects. But, on the other hand, this generation also appears to be heavily marked by the toughness of the competition: in the entrance examination for access to the university, the grading of the university exams, the difficulty of finding a job. As a consequence, since a young age they are used to being classified by a score. The diffusion of the principle of equality between men and women has strengthened the desire of the women to study at the universities. They hide senses of dissatisfaction and contention towards the social values and the values of parents, with respect to which they are much more selfcentered. From the name of a weekly women’s magazine very popular in Japan, considered as the ‘bible’ of the young women of this generation. 51 From the definition of Design & Character Brands, the ‘fashionable’ brands. 52 See the note regarding Dankai Junior. 50

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7. The Cinema53 generation: 16.5 million Japanese, born between 1936 and 1945 (from 58 to 67 years of age). While their early childhood was marked by the tragic experiences of the war, such as hunger, rationing and deportations, in the after-war period they progressively enjoyed the enthusiasm for the expanding economy. As a consequence, they have developed an intense need for security, yet often being pushed to develop consistent behaviors of consumption. In the period of their youth the cinema was at the peak of prosperity and was the cultural heart of the entertainment for the young people: and thus the definition of this segment with the name of the “cinema generation”. Due to the rigid system of values developed in Japan in the period included between the two world wars, they consider it to be of fundamental importance “to be careful how one is seen by others” and “to want to be like the others”.

The segmentation of the fashion consumers according to JMR Science

Through the detailed analysis of the results of a very complex and articulated study on fashion, focused on the demand front and aimed at sampling attitudes and purchase behaviors, the Osaka Institute recently identified six significant clusters of consumers. The identification of the six clusters occurred as a function of the repetition of the replies provided concerning the 20 attitudes proposed on the theme of fashion, with respect to which the level of adhesion of the subjects was measured. Crossing the results with quantitative variables both of a registry nature, as well as connected with the estimates of the individual spending values, JMR Science has proposed the six key segments reported below; the definitions given for each cluster have been added here for an explanatory purpose.

In the period of their youth the cinema was at the peak of prosperity and was the cultural heart of the entertainment for the young people: and thus the definition of this segment with the name of the ‘cinema generation’. 53

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FASHION CONSUMERS: THE SIX CLUSTERS ELABORATED BY JMR SCIENCE54

Fashion, but my way 14%

Fashion-dependent 12%

It’s enough to clothe oneself 23% Loyal to the brand 21%

Careful of the price 14%

I am fashion 16%

Cluster 1 “Fashion, but my way” Sensitive to fashion, but they assign much importance to their own personal taste; they do not give much importance, however, to the price. They spend about 130,000 yen per year for their purchases; two thirds are women, with particular concentrations in the age classes of 40 and 60 years of age. The weight of the cluster is 14%. Cluster 2 “Fashion-dependent” They give great importance to fashion, to the well-known brands and to the expensive products; probably they are not very sure of their own personal tastes. They spend almost 90,000 yen per year, and they are mostly twenty-year-olds and thirty-year-olds, equally distributed between men and women. The weight of the cluster is 12%. Cluster 3 “Loyal to the brand” They are not very particularly influenced by fashion, but instead appear dependant on their habitual shops or preferred brands, for which they spend little less than 80,000 yen 54

Source: The effect of consumption in the era of IT, JMR Science, 2003. 77 The Fashion Market in Japan

per year. With a slight majority of women and of the age brackets between 20 and 50 years of age, this cluster has a percentage weight of 21%. Cluster 4 “I am fashion” They purchase according to their own tastes and as a function of the effect that they experience when wearing the clothing. Not very sensitive to brand and price, they spend 55,000 yen per year, and are 69% women, for the most part thirty- and fifty-year-olds. The weight of the cluster is 16%. Cluster 5 “Careful of the price” Sensitive only to the bargain sales, indifferent to fashion. They spend about 45,000 yen per year; they are in slight majority men, thirty- and forty-year-olds. The cluster weight is 14%. Cluster 6 “It’s enough to clothe oneself” They do not have any interest in fashion, nor in clothing in general; this attitude reflects on their spending, which is the lowest of all the clusters (40,000 yen per year). They have a clear majority (80%) of mature men, of ages between 40 and 70 years of age.

A typically Japanese segment: the 'Oyaji' A strong block in the development of men’s fashion in Japan is historically made up of the characteristics that distinguish the life style of the oyaji, the personification of a certain profile of the Japanese ‘average man’: employed with a regular salary, serious and very unconcerned with the themes of fashion and of clothing in general. Traditionally, the sensibility to elegance, the right combinations of fabrics, sizes and colors indeed do not belong to the culture and life experience of the oyaji: on the occasions in which he wishes to cut a nice figure he has always been guided by the models imposed by the department stores. Purchasing a suit designed by a European stylist, for example, helps to ensure a sensation of ‘having done the right thing’. With the nonirrelevant price paid for a designer suit there is also purchased the certainty of being elegant – a sort of price for the legitimization of the pleasantness of one’s own image. 78 The Fashion Market in Japan

More recently, the average Japanese man has begun to develop a greater awareness of men’s fashion. Despite this, the lack of confidence with which he usually handles the choice of the clothing represents a strong purchase disincentive: the fear of making a mistake, the general discomfort deriving from having little command of the material, the unfamiliarity of finding one’s own style and abandoning the imposed models can only halt consumption, reducing purchases to the minimum indispensable. The topic, that in a western context may perhaps seem exaggeratedly pushed towards a description of an almost caricature nature – an army of salarymen plastered in their gray and black suits, all rigorously equal in size and fabric – is actually dealt with very seriously in the Japanese entrepreneurial world. Manufacturing businessmen in the fashion industry and commercial businessmen active in the traditional fashion channels – department stores – are in fact clearly and firmly co-interested in the development of the demand in the market segment of men in the age bracket between 35 and 50 years of age, who – if they truly started taking a good level of interest in their own image – would be capable of ensuring totally respectful turnovers for the sector, even in consideration of the very low starting point caused by the traditional frugality in dressing. As evidence of how central the concern to push the consumption of the men’s fashion sector is among the Japanese operators of the sector, the “Dress Up Monday” campaign, arriving at the third edition in 2003, should be cited. The campaign, created in 2000 expressly for the purpose of stimulating sales of men’s fashion in the segment between 35 and 50 years of age, had as its first testimonial the actor Kiton Masuda, viewed as the prototype of the classical male elegance. The 2003 campaign, launched by the Japan Department Store Association, had the theme of the “handsome and intelligent man”, and was not limited to the promotion of clothing in the strict sense, but was expanded to the creation of total look corners, including socks and fashion accessories, and proposed new styles and clothing formulas. The novelty of this year was the collaboration with a magazine targeted to middle-aged men, employed with a regular salary. For this purpose, the communication strategy aimed at pushing the Japanese man to create an awareness of elegance, proposing it as the key for appearing pleasant and attracting women. To further increase the effectiveness of the campaign, the 2003 edition was managed with the supervision of the Japanese Association of Fashion Producers.

79 The Fashion Market in Japan

On this topic, a Japanese specialized periodical 55 recently interviewed Akio Date, chairman of the committee of the “Dress Up Monday” campaign and Ichiro Kishida, chief editor of the campaign's partner magazine. Kishida states: “Many people say that Japanese men do not have any interest in dressing better. I would clarify: it depends on the generation; it is clear that the motivations are very different between those who are in their forties today and those who were in there forties twenty years ago. I do not want to give any type of value judgment, but I would like to give an example. I believe that the generation which has experienced the difficult times of the war and the immediate afterwar period have strong scruples about the idea of building an image through the purchase of consumer goods; it is a generation much more sensitive to the values of the interior and sentimental life. I am fifty years old, and from the time I was little I appreciated the new values of the consumption culture, saying, for example, “I have many more train models than you”. The particularities of the generations change, the sensibilities and attitudes change. In the Taisho56 era the people in Japan were rather elegant. And thus, even the attitude of our oyaji towards fashion can change.” Kishida, on his part, emphasizes the difficulties that the struggling Japanese men encounter when they are forced to deal with the need to dress in an elegant manner. “The thing that is truly missing in Japan is the fashion for middle-aged men. Let’s take a simple example. A man around forty years of age, wanting to be more elegant, dresses in a young style, but then they say that he tries to appear young, that he’s ridiculous, and it finishes there, with a bad image. In Italy it’s not like this, there exists a fashion also for the men who are no longer very young; it is necessary to create a Japanese way for a fashion for the oyaji, so they can show their style, their way of being, even to the young people who are less than thirty years old, those that do not have difficulty with fashion and know how to combine clothes with style and in an autonomous manner.” The following chart provides an interesting orientation regarding the average price at which the Japanese head of the family (a category to which, on average, belong all the oyaji) purchases the three most common articles of clothing – a shirt, a pair of pants and an undershirt57. Concerning the shirts, the results are distributed in a practically equal manner (two groups, each with a percentage weight of about 40% of the subjects) between the ranges of 3,000 and 5,000 yen (respectively 24 and 40 euro); while the percentages are marginal for the subjects that usually purchase shirts with a higher average cost, in the ranges of In Senken Shimbun, 8 October 2003. From 1912 to 1926. 57 Sorce: JaSMEC study, 2002. 55 56

80 The Fashion Market in Japan

10,000 and 20,000 yen (80 and 160 euro). Despite this, the data shows the existence of about 100,000 consumers that usually purchase shirts with an average cost between 100 and 200 euro, which represents a non-insignificant segment in terms of market. AVERAGE SPENDING RANGE FOR THE PURCHASE OF THE THREE ARTICLES INDICATED 100.0 78.7

80.0 % 60.0 subjects 40.0 20.0 0.0 3000 5000 7000 10000 20000

41.7 39.8 23.3 26.3 19.5 16.8 5.9 6.1 3.3 menâ&#x20AC;&#x2122;s shirt 41.7 39.8 5.9 6.1 3.3

10.0

pants 23.3 26.3 19.5 16.8 10.0

15.4 2.3 1.0 0.3 undershirt 78.7 15.4 2.3 1.0 0.3

(The average purchase prices of the articles are in Yen) Source: JaSMEC, 2002.

The data is much more articulated regarding the pants, an article for which the average purchase price is distributed in segments of similar dimensions, included between 23.3% of the subjects that spend on average 3,000 yen and 10% that instead spend around 20,000 yen. The data appears very interesting as it seems to indicate that the average Japanese head of the family pays much more attention to the purchase of this clothing article; the spread of the average purchase values indicates that the more personal preferences are concentrated on the pants, unlike that which occurs for the shirts and even more for the undershirts, articles for which growing levels of homogenization and standardization in the choices are demonstrated. No crazy spending, however, for the undershirts, for which almost 80% of the subjects agree in declaring to spend on average 3,000 yen, with a small group equal to 15% that ventures into the range of 5,000 yen. 81 The Fashion Market in Japan

The segment of the O.L.58 Being able to count on an average income of little more than 270,000 yen (approximately 2,200 euro) a month, the young Japanese workingwoman between 20 and 35 years of age spends about 5% of this income on clothing and footwear, equal to little more than 12,000 yen (about 100 euro). Comparing this figure with the 9,500 yen that represents the average spending of a family on clothing and footwear, it appears evident that this segment represents a primary target for the fashion industry59. Sometimes this segment is defined as the ‘career women’. Actually, this definition seems slightly euphemistic, in consideration of the substantial ‘invisible barriers’ that still stand between the women and a real attainment of outstanding positions for the women within the Japanese economic life. Convenient for understanding these young women generally employed in clerical roles at various levels, the Japanese marketing operators maintain that this is a segment with high exposure and reactivity to the communication coming from the means of information and among these, above all, those specialized in two directions: either specifically orientated on the theme of fashion, or – targeted, with themes of general information, at the world of the young office lady. The effect of this exposure to the media is clearly shown in the purchase behaviors: they are, in fact, women that have very clear ideas on their own preferences both in general terms of individual look as well as in terms of brand. In the choice of articles, they focus their attention for the most part on the style, then examine the materials, and finally evaluate the price. Even in the final assessment regarding the possible purchase, these three variables have equal ‘weights’: thus the price is almost never the decisive factor.

Acronym from the English term Office Lady. Source: Ministry of Public Administration, Internal Affairs, Post and Telecommunications, Single Workers' Household Receipts and Disbursements Survey, 2000. 58 59

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The parasitic singles This term may not seem particularly elegant, but it is the literal translation of the current definition used in Japan to indicate the group of young adults of about 20 to 30 years of age (sometimes even 35) who still live with their parents, choosing to not face the costs and difficulties of the adult life and depending on the family for all the spending regarding the basic needs (fundamentally those connected with food and housing). To the eyes of the Italian readers â&#x20AC;&#x201C; for which this phenomenon represents a condition still well tolerated, at least in several areas of the county â&#x20AC;&#x201C; this definition may perhaps seem cynical, but an interpretation key is indispensable: while in Italy the phenomenon tends, even if slowly, to diminish, in Japan it shows expansion, and the sociologists and economists are concerned about the repercussions in terms of a drop in the birthrate, due to the effects of postponing the age of marriage (or not marrying at all). The estimates assess this segment of the population to include about 10 million persons; they represent a very particular market segment, as they have cash available for luxury spending and tend to be active figures in the demand of high fashion-content goods, consumer electronics, and tourist services. The third age: three segments in one One of the most interesting segments that the Italian fashion sector can rely on in Japan is probably also one of the most unexpected. It is the segment of the third age, whose protagonists have significant savings available on average, but for who there still lacks a suitable offering system capable of providing them with valid and rewarding emotions connected with the purchases. But be careful: this does not mean that there does not exist fertile ground for purchases aimed at self-satisfaction â&#x20AC;&#x201C; on the contrary. By now the times have passed in which the elderly people in Japan proudly practiced the virtue of thriftiness, and saved in order to ensure a good standard of living for children and grandchildren. Today, the savings of the elderly are not always destined to the new generations: on the one hand, the development of the inclination towards socialization, that reduces the isolation phenomenon of the elderly (and thus their abstinence from consumption), and

83 The Fashion Market in Japan

on the other hand the progressive diffusion of services aimed at this market segment represent, together, effective incentives for an increase in spending. Despite this, the value of the bank accounts of the elderly is still quite elevated, so much so as to reach average values instinctively unthinkable in the European or North American scenarios; itâ&#x20AC;&#x2122;s enough to imagine that the balance of the average checking account of a family group in which the head of the family has an age equal to or above that of seventy years is about 25 million yen (about 200,000 euro). It should be noted however that, in this segment, there exists a significant level of inequality between one subgroup, of dimensions equal to about a third of the total, that has available bank savings with average cash on hand of more than 30 million yen, and another subgroup, that includes about half of all the elderly, that lives on a single pension. It is in the bracket of the third age, therefore, that a strong difference appears between the rich and the poor in the Japanese society; and in this scenario, even if the poor inevitably tend to try to save money, the inclination towards consumption of the (rich) elderly shows a significant increasing trend. According to an authoritative Japanese research institute60, the index of the inclination towards consumption of the elderly has grown from 100 in the first quarter of 2002 to 120 in the first quarter of 2003. Thus increasing at a totally overwhelming speed in the world of the socioeconomic dynamics, especially if one considers the fact that in the same period the same index, in the case of the segment of people younger than 29 years of age (the segment most bombarded by advertising and that, overall, spends the most), after a peak in the growth dropped to the value of 96, while the other age brackets registered a practically insignificant increase (from 100 to 102). Therefore it does not appear so unlikely that the elderly are becoming an object of study in the market research and public opinion surveys, in pursuit of information to transmit to the industry world in order produce ever more personalized and tailored products and services. One of the giants in publicity and market research 61 has gone as far as to distinguish three different subgroups in the segment of the third age, accurately representing the differences between seniors (55-65 years of age), super-seniors (65-75 year of age) and the elderly (over 75 years of age). Among these, the subgroup that dictates the purchase trends 60 61

Dai-Ichi Life Research Institute, cit. in J@pan inc., November 2003. Densu; cit. by Darriel Whitten, Behold the Grey Panthers, in J@pan Inc,, November 2003. 84 The Fashion Market in Japan

is that of the super-seniors: active consumers, with a high ability to absorb commercial information. But if the dynamics of the population foresee a future populated by the elderly, whose numbers will become impressive starting from 2025, the near future is of the seniors. By 2010 it is expected that in Japan there will be a population of about 25 million seniors in good health (excluding, therefore, those that probably will need medical care); presently there are little more than 18 million. It is by far the richest segment in terms of financial resources and inclination towards spending, with an average amount of cash on hand in the bank of more then 24 million yen (about 200,000 euro) for each head of the family above 60 years of age 62. The segment of the (rich) elderly in Japan is ready, therefore, to spend, and the offering system of the Italian fashion sector must not underestimate this opportunity. But even the Japanese government itself doesn’t seem to wish for anything better: the development of the exportations and commercial investments towards Japan and aimed at the third age is not only welcomed, but even officially hoped for. In this sense, the words of Mrs. Tani, executive of the Ministry of Economy, Trade and Industry couldn’t be more direct and explicit63: “Another reason for which the Japanese are reluctant to open their wallets is connected with the desire to save money for when they will be old. Those who today are between fifty and sixty years of age, the first generation of the baby boomers64, of the great growth in the birthrate, after having been leading protagonists of the retail purchases now prefer to keep their savings well-hidden in the bank, safe for the old age (…); but is it possible that there are not any specific products that may help to ensure a tranquil old age? In Japan I do not see signs of growth in the development of products destined specifically for the elderly, who have not yet been seen as a promising market segment. We should, however, aim at searching for these types of products and import them – I believe that this is a key for developing the retail market and the present economic climate in Japan, and on this point, one of the things that we can do as a Government is to work hard to simplify the importation procedures.” Source: Tokyo Shoko Research. Midori Tani, from the greetings given at the round table “The construction of a new management strategy for distribution channels in a Japanese style”, Import Distribution Symposium 2002, MIPRO – The Japan Machinery Federation, Tokyo, October 2002. 64 In Japan, an unusual increase in the birthrate was registered between 1947 and 1949, so much so that the people born during that period were defined as baby boomers. An analogous peak in the birthrate was subsequently registered between 1971 and 1974 (the second baby boom). 62 63

85 The Fashion Market in Japan

At the same time, the Japanese industry has already begun to approach the segment of the third age. Darrel Whitten, an active journalist on the Japanese scene, did not fail to grasp a telling sign65. In February of 2003, in the Yokohama headquarters of the Sogo department stores, a women’s clothing shop sold women’s pants for 8 million yen (equal to twice the expected sales revenue). Even though being designed for the younger women with the idea of highlighting attractive silhouettes, in reality the main purchasers were older women in good physical shape. A not-so-young customer (60 years old) showed up at the shop with a newspaper clipping in hand, saying: “I want this, it is exactly what I was looking for”. Kanebo and Onward Kashiyama are designing a line for older and middle-aged women that feel young, careful to provide each article with a high fashion content. Onward Kashiyama, in particular, has developed the Jane Moore line for older women, moving away from the stereotypes of the traditional ‘lady’ styles, registering a constant rise in turnover, corresponding to increases on the order of 25%. But probably the most striking data that demonstrates the overwhelming tendency towards the growth of the spending for fashion products in the third age comes from the sector that instinctively would be imagined as the last to be affected by the spending craze of the third age: underwear. The evidence comes from Wacoal, the Japanese giant of underwear: the Grappi line, designed exclusively for elderly women, continues to grow at an altogether unusual rate. In a market segment in which at least ten years are usually required in order to reach the level of turnover of a billion yen, the new line has reached and exceeded this amount in the first year of life, starting from its launching in March 2000. Last year Grappi reached the turnover record of 2 billion yen, and the growth rate does not yet seem to show any signs of fatigue. Fighting against the natural process in which the female body tends to lose shape from seventy years of age and up, the Grappi line helps to maintain an attractive silhouette without the traditional discomfort of the corsetry ‘for elderly women’. And novelty has its price: a Grappi bra costs on average 6,000 yen, in comparison with the 5,000 yen of the models for young women. Wacoal has estimated that the average value of the spending for underwear for women between 55 and 64 years of age is 57,771 yen (about 460 euro): this is a figure practically 65

Darrel Whitten, "Behold the Grey Panthers", in J@pan Inc., November 2003. 86 The Fashion Market in Japan

equal to that of the young unmarried women between 20 and 34 years of age; it exceeds that regarding the spending of the married women between 25 and 34 years of age by 70%, and that of the women between 35 and 44 years of age by 60%.

87 The Fashion Market in Japan

SIX TARGET-SEGMENTS FOR THE ITALIAN FASHION

Criteria-guide On the basis of the various assessments expressed previously regarding the various feasible types of consumer segmentation, for reasons of comparability of data it has been chosen to conform to the most widespread procedure of the use of registry-type brackets. In reality, within reasonable orders of approximation, in this criteria it is even possible to include other ideal criteria used both in literature as well as in company analyses 66, and therefore it was decided to also orientate in this manner the technique used for the public opinion surveys specifically realized among the Japanese consumers during this research. The subjects and themes used for the description of the six segments are varied, and aim at presenting – for each profile – those consumption attitudes that can make each ‘expert’ capable of evaluating the consistency of each segment with the characteristics of the offering system of its primary interest. In this manner, both the producer and the potential exporter, as well as the operator of the international retail can get the ideas and suggestions necessary for the elaboration of their own strategies and commercial formulas for operating in the Japanese market. The six segments analyzed are the following: -

the twenty-year-olds;

the thirty-year-olds;

the forty-year-olds (subdivided into the ‘young forty-year-olds’, between 40 and 44 years of age, and the ‘mature forty-year-olds’, between 45 and 49 years of age);

These are the cases, for example, of the segmentation proposed by Itochu Fashion System and of the clusters proposed by JMR Science, both already illustrated in this chapter. 66

88 The Fashion Market in Japan

the fifty-year-olds;

the sixty-year-olds.

Below are presented the individual items that contribute to define the set of topics used to build the profile of each segment. The fashion dream and the sign of money a) Attention to fashion The survey assessed, for each of the identified segments, both the level of satisfaction that each subject declared regarding the feeling of being informed on the dynamics and trends of fashion, as well as the pleasure that the subject experiences in dressing well and being fashionable. As was expected, the replies have shown an inversely proportional relationship between the increase in age and the index of fashion sensibility. This dynamic is evident as a tendency, and includes all those who have declared to describe themselves as paying attention to dressing fashionably with an intensity included between ‘a lot’ and ‘enough’. But limiting the observation to the only true fashion-dependents (those that declare to give ‘a lot’ of importance to fashion), it can be noted how the frequencies appear constant (and even in slight, even though insignificant, increase) until 45 years of age, then decreasing progressively. FOLLOWING FASHION: SEGMENTATION BY AGE BRACKET 60.0 50.0 40.0 30.0 20.0 10.0 0.0 enough a lot

Twenties

Thirties

Young 40's

34.4 15.6

29.4 17.6

28.0 24.0

Mature 40's

23.5 17.6

Fifties

Sixties

22.2 15.6

13.6 14.8 Source: Diva Eris, 2003.

89 The Fashion Market in Japan

The fashion dream and the sign of money b) Fashion spending: the real figures The data proposed is provided by the survey realized in 2003 by JMR Science, which indicates the average spending values (subdivided between clothing and footwear and by age-bracket). The fashion dream and the sign of money c) Fashion spending: the emotional experience Measuring the level of agreement with the statement “In order to dress fashionably one must make some economic sacrifice”, the survey dealt with the theme of the inclination to the purchase of articles with high fashion content, exploring the area of the consumer’s emotionality. On the same register, the survey had wanted to ascertain if there exist Japanese consumers, and – if so – how many are there, that are looking forward to purchasing Italian fashion in Japan at more accessible costs in the near future. The results, shown in the chart that follows, demonstrate that about one third of the consumers share this expectation, with peaks that hit 50% in the segment of the mature forty-year-olds. "Soon it will be possible to buy Italian fashion even in Japan at reasonable prices" 60.0 52.9

50.0 40.0 % 30.0

40.0 34.4 29.4

34.6

32.0

20.0 10.0 0.0 Twenties

Thirties

Young 40's

Mature 40's

Fifties

Sixties

Percentages of agreement with the statement by age bracket Source: Diva Eris, 2003.

90 The Fashion Market in Japan

The fashion dream and the sign of money d) Fashion spending: the repressed inclination In this case, the survey moves in the direction of investigating the theme of the ‘repressed spending’ for fashion. Proposing an unlikely, but totally realistic, scenario in which the constraints connected with economic resources are placed in the background, the subject was asked for the level of agreement with the statement “If I won a million yen in the lottery, I would spend almost half of it on nice and fashionable clothes”. The sum indicated, corresponding to about 8,000 euro, was studied in such a manner as to not be so relevant as to cause expectations to arise of ‘important’ uses of the money, but as a whole high enough to act as an effective filter for identifying the real situations in which there emerges the presence of strong drives towards the purchase of fashion clothing. This type of measurement is aimed at evaluating what may be the elasticity of the demand, assuming a scenario in which the current constant exposure of the Japanese consumers to the daily bombardment concerning the negative conditions of the economy could stop, or even change direction. “IF I WON A MILLION YEN, I WOULD SPEND HALF OF IT ON FASHION PURCHASES” 30.0 25.0 20.0 %

15.0 10.0 5.0 0.0

enough a lot

Twenties 9.9 7.4

Thirties 0.0 5.9

Young 40's 16.0 8.0

Mature 40's 11.8 11.8

Fifties 8.9 15.6

Sixties 9.9 7.4

PERCENTAGES AND INTENSITIES OF AGREEMENT WITH THE STATEMENT BY AGE BRACKET

Source: Diva Eris, 2003.

91 The Fashion Market in Japan

Actually, in fact, beyond the more or less objective availability of money, the Japanese consumer is heavily slowed down in the spending by the cautious behaviors indirectly induced by the press and the TV. But when this phenomenon changes, what will be the effect on the spending destined for the fashion sector? Through the analysis of the replies provided to this question, and presented in an analytical manner in the paragraphs regarding the discussion of each age bracket, it is possible to build an indicative representation of the possible dynamics. The values in fashion a) The value of the country image In the sections dedicated to the discussions concerning the six target-segments, the image of Italy as the banner-country of fashion is compared with that of other competing countries, obtaining a comparative picture of the perception of the Italian fashion system in the specific experience of each age bracket. The values in fashion b) The value of the department store image c) The value of the multi-brand shop image During the survey there was identified and quantified the perception of reliability placed in some of the many retail channels by the subjects, as a function of the hypothesis of the purchase of an article of clothing with an elevated fashion content. In particular, the survey allowed for the measurement of the authoritativeness acknowledged by the subjects in two â&#x20AC;&#x2DC;tangibleâ&#x20AC;&#x2122; retail typologies (department stores and specialized multi-brand shops). The choice of the retail categories on which to center the survey was developed by the consideration that, for various reasons, on these typologies there are a greater number of questions of a strategic nature; in light of the development phase of the chain shops, and in a scenario marked by the brilliance of the results of the megastores, it was considered best to discuss the reflection on the other principal typologies in order to obtain from the protagonists of the demand a group of ideas useful in the phase of market analyses and development of strategies of access and commercial presence consolidation. The chart that follows presents, in an overall picture, a symbolic view of the level of authoritativeness in the area of fashion attributed by the consumers to two retail types: 92 The Fashion Market in Japan

the department stores and the multi-brand shops. The measurement was based on the survey of the degree of agreement with the statement “The best way to buy fashionable clothing is to go and buy it from the department stores” (and then in the version “…from the multi-brand shops”). As was expected, the department stores enjoy a growing trust in direct correlation with the age of the subjects, while the level of agreement of the multi-brand shops is not as heavily influenced by the age variable. In the direct challenge, in the end, the final result could be called a tie: in the two younger brackets the multi-brand shops offset, in fact, the advantage acquired by the department stores thanks to the preferences expressed (between intense and mild agreements) by the whole of the more mature consumers. “THE BEST WAY TO BUY FASHIONABLE CLOTHING IS TO GO AND BUY IT FROM THE…” 50.0 45.0 40.0 35.0 30.0 %

25.0 20.0 15.0 10.0 5.0 0.0

Twenties

Thirties

Young 40's

Mature 40's

Fifties

Sixties

Department stores

11.0

11.8

16.0

35.3

26.7

44.4

Multi-brand shops

20.0

17.6

16.0

23.5

22.2

19.8

PERCENTAGES AND INTENSITIES OF AGREEMENT WITH THE STATEMENT BY AGE BRACKET Source: Diva Eris, 2003.

93 The Fashion Market in Japan

The values in fashion d) The value of the perception of reliability of the intangible shops One of the traditional weak points of the ‘non-store’ channels lies in their intangibility, which can lead to attitudes of insecurity or even suspicion on the part of the consumer. The chart that follows shows the results of the survey conducted on a sample of consumers that measured and compared their perception of the reliability transmitted by three ‘non-store’ channels: television, Internet and postal catalogues. The processing of the data gathered has led, perhaps, to disprove the widespread attitude of prejudices against the Internet as a channel for retail sales. Upon the request of an opinion concerning the statement “It is possible to buy good fashionable clothing through the Internet”, with the subsequent variants “…through postal catalogues” and “…through the sales on TV”, it was precisely the Internet that collected the greatest consent, graded between the stronger opinions (“agree a lot”) and those more mild, but positive in any case (“agree enough”). The section dedicated to the various consumer segments presents the variants concerning the opinions on the theme as a function of the ages of the subjects. “IT IS POSSIBLE TO BUY GOOD FASHIONABLE CLOTHING THROUGH…” 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 enough a lot

Television 14.0 9.1

Internet 26.7 15.8

Catalogues 27.1 10.6

PERCENTAGES AND INTENSITIES OF AGREEMENT WITH THE STATEMENT BY CHANNEL TYPE Source: Diva Eris, 2003.

94 The Fashion Market in Japan

The values in fashion e) The value of the pharmacopoeia: brand and price, tranquilizers of the purchase process In the purchase behavior of each of the segments identified, which marketing levers weigh on providing incentives for the execution of the purchase, in the cases involving uncertainty? The survey explored the effect of two endogenous variables, the price and the brand reputation; the incidence of the two factors was surveyed through the technique of the measurement of the intensity of agreement with two specific statements. Concerning the effect of legitimization of the purchase created by the price factor, the statement used was “Fashionable clothing that doesn’t cost much usually is not a good purchase”. There were then analyzed the frequencies of the subjects that confirmed to be ‘a lot’ or ‘enough’ in agreement with the concept expressed. In the case of the brand factor there was instead used the statement parameter “If one buys a brand that is not famous there is the risk of not making a good purchase”. The parallel analysis of the results shows a net majority sensible to the price: in extreme summary, an article of clothing that costs little is suspicious, while an article of a littleknown brand could even be alright. This point is clearly very important for the forming of commercial policies, and the results of the survey are presented in detail inside each of the six sections dedicated to the different age brackets. EFFECTS OF LEGITIMATION OF THE BRAND AND THE PRICE 80.0 70.0 60.0 50.0 %

40.0 30.0 20.0 10.0 0.0 brand price

Twenties 25.0 50.0

Thirties 17.6 47.1

Young 40's 24.0 68.0

Mature 40's 17.6 41.2

Fifties

Sixties

6.7 33.3

8.6 53.1

Source: Diva Eris, 2003.

95 The Fashion Market in Japan

The values in fashion f) The value of the love for the brand In the sections of discussion dedicated to the six different segments of consumers there are presented the results of a recent survey realized by JMR Science 67, concerning the brands preferred in retailing by the female Japanese public. The backstage of the fashion purchase a) The system of the influencers In the process of elaboration of marketing strategies for the retail commercialization, the study of the behavior and of the purchase habits of the consumers covers an importance that is anything but marginal. One of the purposes of the survey is that of studying the system of the influencers of the purchase process: in fact, it is known that the incidence of these actors can sometime play a decisive role not only in the choice of the item to buy, but in some cases, not at all occasional, on the very choice of whether or not to purchase. This last aspect grows in relevance in direct correlation with the fashion content and the price of the articles on which the consumer’s choice is focused, or rather hand by hand as one moves away from the conditions of impulse buying. In the case of an ‘important’ purchase, in fact, it is valid to assume that – as the level of anxiety and insecurity about the purchase grows – the voices of the influencers acquire importance in a proportional manner. SIGNIFICANT INFLUENCERS IN THE FASHION PURCHASES, BY AGE BRACKET 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Newspapers Companion Friends Sales clerk

Twenties

Thirties

75.0 31.3 59.3 68.8

52.9 35.3 64.7 76.5

Young 40's

Mature 40's

60.0 40.0 40.0 64.0

41.2 41.2 29.4 70.6

Fifties 53.3 31.1 40.0 55.6

Sixties 42.0 19.8 32.1 56.8

Source: Diva Eris, 2003. 67

Source: The effect of consumption in the IT era, JMR Science, 2003. 96 The Fashion Market in Japan

The backstage of the fashion purchase b) The system of the companions The survey attempted to verify the circumstance of the fashionable clothing purchase moment: how frequent is the case in which next to the consumer there are one or more other persons present, and – if so – what is their relationship. Probably the most significant data, or in any case the most evident, is the relevant percentage of subjects that declare to carry out their fashion purchases always alone: a habit already present in the twenty-year-olds (40%), and that grows in frequency in a manner that is practically proportional to the increase in age, peaking between 50 and 60% already at 45 years of age. In the analysis of the results broken down by age brackets there is presented the totality of the results, identifying from time to time the persons who are most frequently the companions in the shopping for fashion clothing.

PURCHASES ALWAYS ALONE: PERCENTAGES BY AGE BRACKET 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 %

Twenties

Thirties

Young 40's

Mature 40’s

Fifties

Sixties

40.6

41.2

52.0

58.8

53.3

56.8 Source: Diva Eris, 2003.

97 The Fashion Market in Japan

Six target segments for Italian fashion 1: Twenty-year-olds Psycho-sociological profile Self-sufficient, informal and anti-authoritarian. They spend with determination and independence; they dress only casual, and live without commitment and without values. Demographic impact 17.4 million (8.9 million men and 8.5 million women). POPULATION STRUCTURE BY AGE: TWENTY-YEAR-OLDS

1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 20

Source: General Population Census.

98 The Fashion Market in Japan

"I am fashion conscious and I like to feel fashionable" n.a.

6,3

not at all

9,4

not a lot

34,4

quite a lot

34,4

a lot

15,6 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Segment: 20-year-olds Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money a) Fashion consciousness in twenty-year-olds The twenty-year-olds segment is divided into two clear-cut opposing but almost equivalent factions concerning the general attitude to fashion. The first faction is in favor, with a hefty 15.6% of fashion-addicts (openly declare they love fashion and follow it closely, and that they feel fashionable), and supported by 34.4% of ‘sidekicks’ (share the position, but with slightly less intensity in the statement). The second tends to the negative: guided by a minority of ‘hostiles’ (“I really don’t like fashion at all”), supported by 34.4% of twenty-year-olds who declare themselves to lean to coldness as far as fashion is concerned. Only 6% made no statement regarding their position in this topic.

99 The Fashion Market in Japan

TWENTY-YEAR-OLDS - REAL SPENDING ON FASHION (average annual pro capita spending; expressed in yen )

Calzature - Footwear

Abbigliamento - Apparel

F M

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000 100.000

Abbigliamento - Apparel

Calzature - Footwear

89.159 72.408

25.728 21.268 Source: JMR Science, 2003.

The Fashion Dream and The Influence of Money b) Spending for fashion: in real terms for twenty-year-olds Twenty-year-olds spend for fashion purchases and with little difference between male and female: average spending is quite similar for the two sexes, although â&#x20AC;&#x201C; as was found in all segments â&#x20AC;&#x201C; spending for fashion continues to be prevalently a female expense. Twenty-year-old women invest almost 120,000 yen a year (almost 1,000 euro) in apparel and footwear, with the percentage spent on footwear equal to 29% of total expenditure. On the other hand, men of the same age group spend a little in excess of 90,000 yen (about 700 euro), and again 29% of the total, as for the women, is spent on footwear.

100 The Fashion Market in Japan

"Some financial sacrifice is needed to dress fashionably" 40,0 35,0

34,4 31,3

30,0 25,0 18,8

20,0 15,0 10,0 5,0

0,0

0,0 a lot

quite a lot

not a lot

not at all

20-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money c) Spending for fashion: the emotional significance for twenty-year-olds An undoubted majority (66%) of interviewees declared itself in agreement with the statement that “some financial sacrifice is needed to dress fashionably”. Of these, more than half underscored the size of the sacrifice. The position is generally comprehensible in the light of the difficult condition in which twenty-year-olds find themselves: on one hand they are constantly exposed to messages that pressure them to consume fashion products; on the other hand, they have to deal with a liquidity – especially because of their young age – that is insufficient for satisfying all purchase desires and stimuli induced by the media and by advertising messages. Against this backdrop it seems understandable that keeping up with fashion is correlated to economic sacrifices experienced with significant intensity by 34% of interviewees, and by another 31% with clear awareness, although less exasperated, of the economic sacrifices required for dressing fashionably. 101 The Fashion Market in Japan

"If I won a million yen I would spend half on fashion items" 40,0

37,5

35,0 30,0 25,0

25,0

18,8

20,0

15,6

15,0 10,0 5,0

3,1

0,0 a lot

quite a lot

not a lot

not at all

don't know

20-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money d) Spending for fashion: repressing the tendency in twenty-year-olds As already illustrated in the previous paragraph, the objective of this question was to bring to the fore the true desire for fashion item spending, leading the interviewee away from daily economic worries and hypothesizing a condition where there are suddenly no more constraints on liquidity. In the twenty-year-olds age group, the ‘repressed consumers’ who – in the case of an unforeseen availability of extensive liquidity – would be keen to spend a large amount on apparel and on footwear amounted to about 19%. Nevertheless, the ‘hard core’ was no more than 3% of the total: from a population segment of about 18 million individuals, this would account for a group of about half a million twenty-year-old consumers ready to run wild to purchase their heart’s desire. The datum is especially interesting in the perspective of a turnaround trend in Japanese economy, or at least in the case of a change in attitude in mass communications media: relaxing the continual pressure regarding the crisis theme, and transmission of positive signals that are in any case present, could from this point in time liberate, at least in part, the intent to purchase that is currently held at bay by media-induced concern for the future. 102 The Fashion Market in Japan

"The home of top fashion is..." 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

34,4 15,6 46,9 6,3 3,1 6,3 18,8 3,1 20-year-olds segment - percentage and level of agreement with the statement Source: Diva Eris, 2003.

Fashion values a) Country-image value for twenty-year-olds The results of the survey on this theme in the twenty-year-olds age group are practically one way. The country for fashion is Italy, without the shadow of a doubt: the historical paragon with France casts no shadows in the result both amongst the enthusiasts (very much in agreement) and amongst the ‘lukewarm’ (agree quite a lot) a clear cut majority shares the opinion of Italy. Japan’s runner-up position should be noted: it can count on a percentage of supporters that may not be enormous, but is very significant (those who declare that they ‘agree very much’ that Japan is the home of fashion. The result is very interesting, and proves that Italian fashion has great chances for the future, thanks to the enthusiasm of those 11.5 million Japanese who indicate Italy as the fashion icon country, and who – more important aspect – are part of the twenty-year-olds age group. A market potential that expects nothing except not to have its enthusiasm and willingness to spend squashed. So this is what should be targeted for promotions: those 11.5 million Japanese who could become 11.5 million standard-bearers the Italian fashion system. In any case they are already are; the objective is to gratify them and motivate them further inaction will leave a breach for competitors, and – as the survey shows – Japanese fashion would not waste time watching the gaps left by lack of Italian action to shore up its leader-of-the-pack role worldwide. 103 The Fashion Market in Japan

"The only way to buy fashion garments is to go to a department store" 40,0

37,5

35,0 30,0 25,0 20,0

18,8

18,8 15,6

15,0 9,4

10,0 5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

20-year-olds: level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Department store image value for twenty-year-olds If anyone thought that the era of the department store was dead and gone, they should reconsider this opinion in the light of the results of this table. A third of the twenty-yearolds agreed with the peremptory statement “The only way to buy fashion garments is to go to a department store”; and even if the agreement was expressed with varying levels of intensity, the presence of a ‘hard core’ of 18.8% of interviewees that was very convinced of this opinion confirms that the game is still not over, and that department stores still enjoy credibility amongst the young. Certainly, this cannot lead to underestimating the ‘half empty glass’; the share of twenty-year-olds that does not agree with the statement is greater in number that those who do. It is a scenario, however, where all new retail business formulas seem not to disregard the twenty-year-olds segment target so it would seem to be impossible that positions opposing department stores would not emerge. The datum, therefore, is that of holding on to image: what the survey cannot reveal is the direction of dynamics in progress. What is the percentage of twenty-year-olds that believe the role of department stores as standard-bearers is becoming more important and how many believe the contrary? How fast is this process? The reply will be very much influenced by the actual department stores, and by their capacity to maintain their appeal to younger generations. 104 The Fashion Market in Japan

"The best place to buy fashion garments is to go to a multi-brand store" 30,0

26,7

not a lot

not at all

don't know

25,0 20,0 13,3

15,0 10,0

6,7

5,0 0,0 a lot

quite a lot

Segment: 20-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values c) Multi-brand store image value for twenty-year-olds The revealing datum in the results deriving from this question lie, probably, in the large number of ‘don’t knows’. Twenty-year-olds, probably, do not go to multi-brand fashion points of sale very often (and so, probably, are not very familiar with them); consequently, a direct comparison with department stores – with their long history, fame and a practically unbeatable visibility in the retailing world – is not really possible. In any case, less than 7% of interviewees stated strong agreement with the opinion expressed, perceiving to the full the provocative formula of the interview: so in the twenty-year-olds age group there is also a quota, even if it is very small, that has elected the ‘multibrand’ formula as its preference, despite the offensives by SPA and megastores with griffes of international standing.

105 The Fashion Market in Japan

"It is possible to buy good clothes..." 50,0

43,8

40,0

34,4

30,0 20,0

25,0

Television Internet Mail order catalogues

31,3

21,9

12,5

28,1

25,0

12,5

12,5 9,4 9,4

not at all

don't know

6,3

10,0 0,0

28,1

0,0 a lot 0,0 12,5 6,3

quite a lot

not a lot

25,0 34,4 28,1 43,8 21,9 12,5 28,1 31,3 25,0 20-year-olds: level of agreement with the statement

12,5 9,4 9,4

Source: Diva Eris, 2003.

Fashion values d) Perceived reliability value for virtual stores in twenty-year-olds Internet beats all-comers: which is no surprise really, at least in the twenty-year-olds age group. Precisely two thirds of the interviewees say they are in agreement with the statement suggested (â&#x20AC;&#x153;It is possible to buy good fashion clothes on the internetâ&#x20AC;?), and of these, 12.5% supports the statement with enthusiasm. If twenty-year-olds are not intensely cold towards TV sales, they are certainly not very enthusiastic about them as a channel for purchasing fashion goods. Moreover, 12.5% declare that they have no relevant opinion, probably because they have never even seen TV sales. Only a quarter of the interviewees, and in any case without a great deal of emphasis, declared their agreement with the statement that it might be possible to make a good fashion purchase from a TV sale; what is more, the attitude towards mail order catalogues is not much more enthusiastic, and since the image is probably linked to values and styles of communication that are rather closer to traditional target segments for mailorder sales (consumers in higher age groups). 106 The Fashion Market in Japan

EFFETTI DI LEGITTIMAZIONE DELLA MARCA E DEL PREZZO 60,0 50,0 40,0

30,0 20,0 10,0 0,0

abbastanza molto

"Marca non famosa = rischio cattivo acquisto"

"Abito non caro = rischio cattivo acquisto"

12,5 12,5

34,4 15,6

Segmento dei ventenni - percentuali ed intensità di accondo con le affermazioni

Source: Diva Eris, 2003.

Fashion values e) The value of pharmacopoeia: brand and price, fashion purchase process tranquilizers The results in this table were gathered by asking interviewees how much they agreed with parallel statements: “buying an unknown brand means risking a poor purchase” and “Usually a fashion garment that does not cost very much is not good quality”. By noting agreement or disagreement, as well as the intensity with which the statement is expressed, measured on the basis of the simple scale of semantically different values (a lot /quite a lot), the results were then processed and presented. The basic reasoning is that the concentration of replies on the choice “yes, I agree a lot” identifies and embraces a cluster of consumers and manifest some level of insecurity when they have to make a fashion purchase, and consequently they seek the unconscious support at that moment of ‘legitimators’ of their decision. Traditionally, this role of ‘tranquillizer’ in the purchasing process may be played by the brand’s power to reassure or by the prestige of a store or of a store sign, but even simply by the price (as long as this is sufficiently high). The level of agreement attributed to the brand role divides the twenty-year-olds into two segments of equal percentage weight: those who rely on a brand for good purchase and those who purchase relying on their own personal taste. In the case of the price, however, the aggressiveness of low-cost fashion manufacturers seems to have hit hard: there are few twenty-year-olds who still believe that the equation “high price = could purchase” is unquestionable. What is more, analysis of results in other age groups held some further surprises. 107 The Fashion Market in Japan

BRANDS PREFERRED BY TWENTY-YEAR-OLDS Values expressed as percentages (multiple replies) Burberrys Comme Ca Du Mode OZOC GAP MK 23ku Kumikyoku Beams Muji UNIQLO 0

Source: JMR Science, 2003.

Fashion values f) Significance of brand loyalty for twenty-year-old women The JMR Science survey compared ten brands that are very well-known to Japanese women shoppers, and aimed to register preferences. With the advantage of the freshness of this data, in a market scenario that voluble and changing enough to make results of opinion surveys and brand popularity obsolete very quickly indeed (not to mention the transience of surveys dealing with fashion trend perceptions), the analysis – published in 2003 – seems to highlight evident popularity relationships and comparisons between the ten selected brands. It goes without saying that the success of Uniqlo fears no rival, at least in this age group. Nevertheless, any Italian company wishing to operate in this segment should not fail to perform constant monitoring of all brands indicated, or – at the very least – of those brands that have a double-figure percentage. 108 The Fashion Market in Japan

"When making a fashion purchase, how important is the opinion of..." 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

56,3

18,8

43,8

53,1

a lot

18,8

12,5

15,6

20-year-olds: levels and percentage of significance attributed Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase a) How influencers affect twenty-year-olds In the hypothesis that fashion business is interested in the twenty-year-olds segment, who must it act upon to achieve indirect conditioning of purchases? The results of the survey confirm, within a certain sense, the question is irrelevant. Not who but what: in fact, the most successful influencer of a twenty-year-old male or female, is not a person, but an object – a newspaper, a magazine. In fact, interviewees attributed to the press a primary role in influencing their purchases. So, to operate in this segment, we recommend consulting the section of this research that deals with “Fashion media and their cost” for identifying which press is most focused on the twenty-year-olds segment, and act accordingly. An alternative – if it could ever be implemented – appears to be that of succeeding in manipulating the opinions of sales assistants, whose influencing power over customers is noteworthy. However, before considering this statement as something of a joke, the amount of influencing power the sales force exercises over consumers in other age groups should be carefully observed. 109 The Fashion Market in Japan

Who do you go fashion-shopping with 100,0

percentage values of total inteviews

90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

52,9

41,2

29,4

always

41,2

5,9 0,0 Segment: 20-year-olds

5,9

Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase b) Shopping in company for twenty-year-olds The most important datum in the table: a clear majority (40.6%) of interviewees declare that they always go shopping alone. Then a further 50% also declares that â&#x20AC;&#x2DC;sometimesâ&#x20AC;&#x2122; they go shopping for fashion items alone. So shopping in company is an exception, measured in low percentages registered for answers relative to always going shopping with someone else: 12.5% always goes with a girl or boyfriend, and another segment, with equivalent percentage weight, always takes husband or fiancĂŠ for company. Less frequent is the scenario whereby a member of the family goes along for shopping (6.3%).

110 The Fashion Market in Japan

Six target segments for Italian fashion 2: Thirty-year-olds Psycho-sociological profile Culturally flexible, economically unstable and almost insensible to the allure of fashion; in fact, as children they encountered brands and designer clothes so they have no particular desire to stand out by wearing designer labels. Demographic impact There are 17.7 million (8.9 million men; 8.8 million women).

POPULATION STRUCTURE BY AGE: THIRTY-YEAR-OLDS

1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 30

Source: General Population Census.

111 The Fashion Market in Japan

"I am fashion conscious and I like to feel fashionable" n.a.

2,0

not at all

5,9

not a lot

45,1

quite a lot

29,4

a lot

17,6 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

Segment: 30-year-olds Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money a) Fashion consciousness in thirty-year-olds The chart shows the clear demarcation in the thirty-year-olds segment, governed by the attitude to fashion. On one hand there is a share of 51.0% who are ‘against’, comprising those who are not interested at all in fashion (5.9%) and by a substantial group that ‘tends not to be interested’ (45.1%). On the opposite front, 17.6% are openly trendy, and 29.4% declare a positive but less exasperated attitude. On the whole, the general attitude appears quite similar to that found in the twenty-year-olds age group, and characterized by the clear-cut division into two, large opposing points of view regarding fashion consciousness.

112 The Fashion Market in Japan

THIRTY-YEAR-OLDS - REAL SPENDING ON FASHION (average annual pro capita spending; expressed in yen )

Calzature - Footwear

Abbigliamento - Apparel

F M

10.000

20.000

30.000

40.000

50.000

60.000

70.000

Abbigliamento - Apparel

Calzature - Footwear

74.733 47.811

21.314 19.034

80.000

Source: JMR Science, 2003.

The Fashion Dream and The Influence of Money b) Spending for fashion: in real terms for thirty-year-olds Thirty-year-olds spend less on fashion purchases than twenty-year-olds; but the important datum is that of all the age groups, thirty-year-olds are those who spend least of all. Whilst average spending for footwear is similar for men and women, and hovers around 20,000 yen, apparel spending shows an enormous difference. Thirty-year-old women spend almost 75,000 yen each year on clothes, compared to the 48,000 yen spent annually by men.

113 The Fashion Market in Japan

"Some financial sacrifice is needed to dress fashionably" 45,0

41,2

40,0 35,0 30,0 25,0

23,5

20,0

17,6

15,0 10,0 5,0

0,0

0,0 a lot

quite a lot

not a lot

not at all

30-year-olds: percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money c) Spending for fashion: the emotional significance for thirty-year-olds In this age group there is not a single interviewee who said they ‘did not agree at all’ with the provocative statement made, which declared that to dress fashionably it is indispensable that some economic sacrifice will have to be made. The vast majority (64.7%) of interviewees declared, however, that they agreed that some economic sacrifice was required to be fashionable, and within this majority, more than half underscored that they agreed ‘a lot’ with the idea of facing even relatively high costs.

114 The Fashion Market in Japan

"If I won a million yen on the lottery, I would spend almost half on nice, fashionable clothes" 45,0 41,2

41,2

40,0 35,0 30,0 25,0 20,0 15,0 11,8 10,0 5,9 5,0 0,0 0,0

a lot

quite a lot

not a lot

not at all

don't know

30-year-olds: percentage and intensity of agreement with the statement

Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money d) Spending for fashion: repressing the tendency in thirty-year-olds As already illustrated in the preceding section, the objective of this question was to bring to the fore the true desire for fashion item spending, leading the interviewee away from daily economic worries and hypothesizing a condition where there are suddenly no more constraints on liquidity. In the thirty-year-olds group there are just under 6% of interviewees who would spend almost half of fashion items if they unexpectedly came to find themselves with an extra million yen in their pockets. On the other hand, 82.4% of consumers seems to be against the idea, although the emphasis on the intensity of the statement differs. Of all segments, that of the thirty-year-olds seems, in general, the least inclined to spend for fashion, and is oriented mainly towards a more rational and pragmatic approach, rather than an emotional, passionate slant. 115 The Fashion Market in Japan

"The home of top fashion is..." 50,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

41,2 17,6 29,4 0,0 5,9 5,9 11,8 0,0 30-year-olds: percentage and level of agreement with the statement Source: Diva Eris, 2003.

Fashion values a) Country image value for thirty-year-olds For thirty-year-olds, USA-branded fashion appears not to exist; in reality, the datum that emerges from the surveyâ&#x20AC;&#x2122;s results indicates only that the United States are not recognized as a leader nation for international fashion. For thirty-year-olds, however, the overriding image is that of France, which in overall indications, achieved by adding all the replies with a high level of agreement with the phrase â&#x20AC;&#x153;Best fashion comes from Franceâ&#x20AC;? to all those with an average intensity, France came out on top, overtaking Italy. On the other hand, Italy is in pole position for those giving the most emphatic indications: 11.8% of interviewees attributed with firmness a leadership role to Italy, with double share the share given to France and even to Japan itself, which in this dimension totalized exactly the same number of preferences as France.

116 The Fashion Market in Japan

"The only way to buy fashion garments is to go to a department store" 70,0

64,7

60,0 50,0 40,0 30,0 20,0

11,8

not at all

don't know

10,0 0,0

0,0 a lot

quite a lot

not a lot

30-year-olds: level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Department store image value for thirty-year-olds The results of the survey show that the thirty-year-olds segment is that in which department store image has waned most. No interviewees declared a high level of agreement with the statement that â&#x20AC;&#x153;The best way to buy a fashion garment is to go to department storesâ&#x20AC;?: on the other hand, not even 12% accept this statement, even with lukewarm support. There is a high percentage, however, of those who tend to by against this statement (64.7%), whilst a share of 11.8% declared itself in total opposition to the idea that a department store was the best place to purchase a fashion garment.

117 The Fashion Market in Japan

"The best place to buy fashion garments is to go to a multi-brand store" 45,0

41,2

40,0 35,0 30,0 23,5

25,0 17,6

20,0 15,0

11,8

10,0

5,9

5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: 30-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values c) Multi-brand store image value for thirty-year-olds Quite a significant number (11.8%) of outright admirers of the multi-brand store formula is lined up amongst thirty-year-olds, even if this age group also has an extremely significant percentage against choosing the multi-brand store as a fashion symbol. There is also a level of â&#x20AC;&#x2DC;donâ&#x20AC;&#x2122;t knowsâ&#x20AC;&#x2122;, which is a clear indication that the formula is still not particularly visible (or thirty-year-olds rarely go to this type of retailer).

118 The Fashion Market in Japan

"It is possible to buy good clothes..." 60,0

52,9 47,1 47,1

50,0 40,0 30,0 20,0 10,0 0,0 Television Internet Mail order catalogues

23,523,5

23,5

17,6 11,8 5,9 a lot 11,8 5,9 17,6

11,8

11,8 5,9 5,9

5,9 5,9 quite a lot

not a lot

not at all

don't know

11,8 47,1 23,5 23,5 52,9 5,9 23,5 47,1 5,9 30-year-olds: level of agreement with the statement

5,9 11,8 5,9

Source: Diva Eris, 2003.

Fashion values d) Perceived reliability value for virtual stores in thirty-year-olds At least half of the thirty-year-olds mistrusts direct sales channels, and in particular the three whose reliability they were asked to assess (television, internet and mail order catalogues). Opinions were gathered as to whether they agreed (and how much they agreed) with the statement “It is possible to buy good fashion clothes from the TV”, and subsequently repeating the question with reference to the internet, or to mail order catalogues. Of these channels, TV is the one that is least accredited; two thirds of interviewees, in fact, do not agree with the statement. On the other hand, there is a far from marginal group of ‘possibilists’, whilst the group of ‘enthusiasts’ is almost 12% with regard to television (which, as always, tends to polarize opinions), while the internet garnered almost 6%, with the mail order catalogue option achieving a noteworthy 17.6%.

119 The Fashion Market in Japan

Brand and price legitimazion effects 50,0 45,0 40,0 35,0 30,0

% 25,0 20,0 15,0 10,0 5,0 0,0

"Unknown brand = risk poor purchase"

"Inexpensive garment = risk poor purchase"

quite a lot

11,8

35,3

a lot

5,9

11,8

30-year-olds: percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

Fashion values e) The value of pharmacopoeia: brand and price, fashion purchase process tranquilizers Thirty-year-olds tend to appear aligned with the twenty-year-olds age group with regard to the importance attributed indirectly to the brand and price value as reassurances for the quality of purchases being made. Compared to the younger age group, thirty-year-olds appear more disenchanted towards brand value, whilst 50% in any case continue to feel that a higher price is an indication or even a guarantee that the purchase is of good quality.

120 The Fashion Market in Japan

BRANDS PREFERRED BY THIRTY-YEAR-OLDS Values expressed as percentages (multiple replies) Burberrys Comme Ca Du Mode OZOC GAP MK 23ku Kumikyoku Beams Muji UNIQLO 0

Source: JMR Science, 2003.

Fashion values f) Significance of brand loyalty for thirty-year-olds Uniqlo is also a firm favorite with thirty-year-olds, and in this age group won the absolute majority of consensus (not much below 60%). Way behind the leader brand, and more or less aligned with one another Comme Ca du Mode and Gap, while Burberry shows a much lower appeal level for this age group.

121 The Fashion Market in Japan

"When making a fashion purchase, how important is the opinion of..." 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

29,4

52,9

64,7

a lot

23,5

5,9

11,8

30-year-olds: levels and percentage of significance attributed Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase a) How influencers affect thirty-year-olds The central role played by newspapers in influencing fashion purchase decisions is confirmed by the survey even for the thirty-year-olds age group, 23.5% of whom declare they rely a great deal on the printed press for guidance in their purchase decisions. Despite this, the influencing role played by sales staff in this age group emerges very clearly, appearing as absolute concealed persuaders of buyers: three quarters of interviewees declare that they see the sales assistant as a reliable advisor to turn to for valid advice. The datum appears fully compatible with to the tendency to shop alone, which the survey had already brought to light, and also with what was declared by the businesswoman at the centre of the company case-study presented in Section C of this report, in the â&#x20AC;&#x153;micromarketingâ&#x20AC;? paragraph; and the theme is worthy of further investigation, at least by companies who intend to develop in Japan with formulas that envisage direct management of retailing. 122 The Fashion Market in Japan

Who do you go fashion-shopping with 100,0

percentage values of total interviews

90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

52,9

41,2

29,4

always

41,2

5,9 0,0 Segment: 30-year-olds

5,9

Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase b) Shopping in company for thirty-year-olds In four cases out of ten, thirty-year-olds also go shopping for fashion alone. However, the remaining six out of the ten tend to be no less alone. This datum leaning towards a prevailing solitude, by comparison there is a very low percentage of interviewees who declare that they prefer always to go shopping in company: 5.9% are always with a friend and the same percentage always goes shopping with a member of the family. It is interesting to note that not a single interviewee declared that they always went shopping with their fiancĂŠ/e, husband/wife; they were, however, occasional shopping companions for 41.2% of interviewees.

123 The Fashion Market in Japan

Six target segments for Italian fashion Forty-year-olds: 3 - Young forty-year-olds (40-44 years) 4 - Mature forty-year-olds (45-49 years) Psycho-sociological profile Young forty-year-olds Innovative, individualists, avid consumers of technologic. It is not rare to find the so-called otaku in this age group, wrapped up in a microcosm confined to their own interests and lacking in any attention towards the outside world; women are university graduates and often ‘career women’. Mature forty-year-olds Materialistic, focused on the family microcosm. In their youth they were very fashion conscious, especially tending towards designer items, but were now concentrating on the family, and with relatively low levels of spending liquidity. Demographic impact There are 8 million (3.9 million men and 4.1 million women) ‘young forty-year-olds’; ‘mature forty-year-olds’ number 7.9 million (3.9 million men and 4 million women) POPULATION STRUCTURE BY AGE: FORTY-YEAR-OLDS 900.000

850.000

800.000

750.000

700.000

650.000 40

Source: General Population Census.

124 The Fashion Market in Japan

"I am fashion conscious and I like to feel fashionable" n.a.

4,0

not at all

12,0

not a lot

32,0

quite a lot

28,0

a lot

24,0 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

Segment: young 40-year-olds

"I am fashion conscious and I like to feel fashionable" n.a.

2,1

not at all

35,3

not a lot

21,4

quite a lot

23,5

a lot

17,6 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Segment: mature 40-year-olds

Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money: a) Fashion consciousness in forty-year-olds This chart and many of those that follow will illustrate the reason why it was decided that the forty-year-olds age group should be divided into two subgroups: in point of fact, there are many differences in purchase attitude and behavior between “young” forty-year-olds and “mature” forty-year-olds, that the need for a separate analysis was justified. In this case, for example it can be noted that in the early forties age group, attention to fashion is very lively, but changes direction in the second group. The datum can be read both in the analysis of the frequency of ‘quite a lot’ or ‘a lot’ replies for how much attention is paid to fashion, as well as – conversely – the frequency with which ‘not at all’ or ‘not very much’ is the reply: 52% and 44% respectively of the young forty-year-olds, while the percentages were inverted for mature forty-year-olds: the former drop to 41%, the latter rise to 56.7%. 125 The Fashion Market in Japan

FORTY-YEAR-OLDS - REAL SPENDING ON FASHION (average annual pro capita spending; expressed in yen )

Calzature - Footwear

Abbigliamento - Apparel

F M

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Abbigliamento - Apparel

Calzature - Footwear

84.064 61.398

23.542 19.683

90.000

Source: JMR Science, 2003.

The Fashion Dream and The Influence of Money b) Spending for fashion: in real terms for forty-year-olds In this case, the analysis of spending in forty-year-olds groups the ‘young’ and ‘mature’ sections together. As in all other age groups, women spend more money than men; and if the difference is not significant in the case of footwear spending (on average and annual 23,000 yen for women and 20,000 yen for men), the scissors open noticeably in the case of spending for apparel. In this case, women can even spend as much as 84,000 yen, whilst men spend little more than 60,000 yen a year.

126 The Fashion Market in Japan

"Some financial sacrifice is needed to dress fashionably" 40,0 36,0 35,0 32,0 30,0

25,0

20,0 16,0 15,0 8,0 10,0

5,0

0,0

a lot

quite a lot

not a lot

not at all

Segment: young 40-year-olds - percentage and intensity of agreement with the statement

"Some financial sacrifice is needed to dress fashionably" 25,0

23,5

20,0 17,6

17,6

not a lot

not at all

15,0

10,0

5,0

0,0

a lot

quite a lot

Segment: mature 40-year-olds - percentage and intensity of agreement with the statement

Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money c) Spending for fashion: the emotional significance for forty-year-olds The visual impact of the two tables should not deceive the viewer: in point of fact, it should be noted that the scale of the charts is different, so values relative to a young forty-year-old are actually quite different from those for a mature forty-year-old. In the case of the former, two thirds of the interviewees admit that fashion requires some economic sacrifice, while the percentage drops to 41.1% for the latter. Early forty-yearolds are more sensitive to the allure of fashion, and confirm directly the need to spend for fashion, noting the ensuing economic commitment; for the latter, less affected by the desire to follow fashion, the economic sacrifice is less present and therefore felt less. 127 The Fashion Market in Japan

"If I won a million yen I would spend half on fashion items" 50,0 44,0 45,0 40,0 35,0 30,0 25,0 20,0 20,0 16,0 15,0

12,0 8,0

10,0 5,0 0,0

a lot

quite a lot

not a lot

not at all

don't know

Segment: young 40-year-olds - percentage and intensity of agreement with the statement

"If I won a million yen I would spend half on fashion items" 70,0

64,7

60,0

50,0

40,0

30,0

20,0 11,8

11,8

10,0

5,9

0,0

a lot

quite a lot

not a lot

not at all

don't know

Segment: mature 40-year-olds - percentage and intensity of agreement with the statement

Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money d) Spending for fashion: repressing the tendency in forty-year-olds The analysis of replies to this question offers further confirmation of the divide between the two subgroups for forty-year-olds, showing the drop in interest that can be noted between the two age groups. Young forty-year-olds, when facing the sudden and unforeseen availability of money suggested by the interviewer, were very keen to go off and spend half on fashion purchases; the mature forty-year-olds were a lot less keen to do that, and apart from being a lower number to declare they would be willing to ‘go on a spree’, there was a very compact 64.7% who stated in unison a very convinced ‘no’ in the case of the scenario suggested by the interviewer. 128 The Fashion Market in Japan

"The home of top fashion is..." 50,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

16,0 12,0 28,0 24,0 12,0 8,0 16,0 4,0 Segment: young 40-year-olds - percentage and level of agreement with the statement

"The home of top fashion is..." 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

11,8 11,8 17,6 0,0 17,6 0,0 17,6 0,0 Segment: mature 40-year-olds - percentage and level of agreement with the statement Source: Diva Eris, 2003.

Fashion values a) Country-image value for forty-year-olds Another pair of tables that could be of interest to ‘sector pros’. Young forty-year-olds ‘see’ Japanese and North American fashion; for mature forty-year-olds it would seem that only Italian and French fashion exist. The datum once again shows that a deep divide exists between these two age groups although they are actually one and in the same age group. In the forty-year-olds group, the under 45s were clearly far more interested in fashion and new trends. 129 The Fashion Market in Japan

"The only way to buy fashion garments is to go to a department store" 70,0

64,0

60,0 50,0 40,0 30,0 20,0

20,0 10,0

12,0 4,0

0,0

0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: young 40-year-olds - level of agreement with the statement

"The only way to buy fashion garments is to go to a department store" 45,0

41,2

40,0 35,0 30,0 23,5

25,0

17,6

20,0 15,0

11,8

10,0

5,9

5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: mature 40-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Department store image value for forty-year-olds Once again, in this pair of charts, do not be misled by the scale. The figures actually show clearly what is an evident phenomenon: mature forty-year-olds love department stores much more than younger forty-year-olds. In point of fact, of the latter, only 15.8% acknowledge that department stores play a leading role in the world of fashion, whilst this percentage almost doubles for mature forty-year-olds. 130 The Fashion Market in Japan

"The best place to buy fashion garments is to go to a multi-brand store" 60,0

56,0

50,0 40,0 30,0 20,0

20,0

16,0 8,0

10,0 0,0

0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: young 40-year-olds - level of agreement with the statement

"The best place to buy fashion garments is to go to a multi-brand store" 45,0

41,2

40,0 35,0

29,4

30,0 25,0 20,0 15,0

11,8

10,0

5,9

5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: mature 40-year-olds - level of agreement with the statement

Source: Diva Eris, 2003.

Fashion values c) Multi-brand store image value for forty-year-olds It is also clear that mature forty-year-olds are not that familiar with fashion from the datum relative to the frequency of ‘don’t know’ responses given to the interviewer regarding the role of multi-brand stores. It is quite likely that forty-year-olds (and it should be remembered that these include male and female consumers in this age group) are not great habitués of fashion shopping locations, and have no direct experience of all retailing formulas; obviously the circumstances change for department stores, whose backdrop is dense with history and market visibility to the point that they cannot be unknown even to those who show no interest or even curiosity for the fashion scene. 131 The Fashion Market in Japan

"It is possible to buy good clothes..." 50,0 40,0 30,0 20,0 10,0 0,0 Television Internet Mail order catalogues

40,0

36,0 24,0 16,0 12,0 8,0

a lot

32,0

28,0

24,0

16,0

12,0

quite a lot

not a lot

16,0 12,0 12,0 36,0 8,0 24,0 Segment: young 40-year-olds -

12,0

not at all

16,0 12,012,0

don't know

28,0 32,0 12,0 16,0 24,0 12,0 40,0 12,0 16,0 level of agreement with the statement

"It is possible to buy good clothes..." 47,1

50,0

41,2

40,0

35,3 29,4 23,5

30,0 20,0

17,6

10,0 0,0 Television Internet Mail order catalogues

17,6 11,8

5,9

0,0 a lot

17,6

0,0 quite a lot

not a lot

0,0 23,5 17,6 29,4 5,9 47,1 Segment: mature 40-year-olds -

not at all

don't know

41,2 17,6 17,6 5,9 11,8 35,3 41,2 0,0 5,9 level of agreement with the statement

Source: Diva Eris, 2003.

Fashion values d) Perceived reliability value for virtual stores for forty-year-olds A great many forty-year-olds trust the internet as a channel for fashion purchases, although there is quite a high percentage of â&#x20AC;&#x2DC;donâ&#x20AC;&#x2122;t knowsâ&#x20AC;&#x2122; in among the replies given by the mature forty-year-olds to the question on e-commerce. A part from being in agreement on the e-commerce theme, however, the younger and mature forty-year-olds then diverge on all other themes: the under 45s are more openminded with regard to TV sales, whilst the older group prefers mail order purchasing. 132 The Fashion Market in Japan

Brand and price legitimazion effects 80,0 70,0 60,0 50,0

% 40,0 30,0 20,0 10,0 0,0 quite a lot a lot

"Unknown brand = risk poor purchase"

"Inexpensive garment = risk poor purchase"

16,0

40,0

8,0

28,0

Segment: young 40-year-olds - percentage and intensity of agreement with the statement

Brand and price legitimazion effects 45,0 40,0 35,0 30,0

25,0 20,0 15,0 10,0 5,0 0,0

quite a lot a lot

"Unknown brand = risk poor purchase"

"Inexpensive garment = risk poor purchase"

11,8

23,5

5,9

17,6

Segment: mature 40-year-olds - percentage and intensity of agreement with the statement

Source: Diva Eris, 2003.

Fashion values e) The value of pharmacopoeia: brand and price, fashion purchase process tranquilizers When faced with specific purchase situations (“buying an unknown brand means risking a poor purchase?” “is it a risk to buy a cheap product?”), young forty-year-olds showed up as what they were: trendy, and tending to spend more so as not to make a mistake. The over 45s were far more detached and not only were they less interested in the brand, they are keen to save money and a lot less of this group state that a low price conceals the risk of a poor purchase than those in the ‘younger’ group (41.1% against 68%). 133 The Fashion Market in Japan

BRANDS PREFERRED BY FORTY-YEAR-OLDS Values expressed as percentages (multiple replies)

Burberrys Comme Ca Du Mode OZOC GAP MK 23ku Kumikyoku Beams Muji UNIQLO 0

Source: JMR Science, 2003.

Fashion values f) Significance of brand loyalty for forty-year-old women The survey, limited in this case just to women, and without splitting the group into the under and over 45s, pointed yet again to Uniqlo as the record breaker and â&#x20AC;&#x201C; in quite a similar way as in the thirty-year-olds group â&#x20AC;&#x201C; sharing an almost ex aequo rating with GAP and Comme Ca Du Mode, although there is a clear gap behind the leader position.

134 The Fashion Market in Japan

"When making a fashion purchase, how important is the opinion of..." 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

40,0

24,0

32,0

40,0

a lot

20,0

16,0

8,0

24,0

Segment: young 40-year-olds - level and percentage of importance attributed

"When making a fashion purchase, how important is the opinion of..." 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

23,5

17,6

47,1

a lot

17,6

11,8

23,5

Segment: mature 40-year-olds - level and percentage of importance attributed

Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase a) How influencers affect forty-year-olds The data speak for themselves: young forty-year-olds read the papers and are influenced by them when purchasing. Mature forty-year-olds read less and in any case are not conditioned by the press in an overwhelming way. So who is it that influences this age group? As occurs in other situations, sales staff are powerful influencers and 70% plus of the interviewees declare this. 135 The Fashion Market in Japan

"Who do you do fashion-shopping with" 90,0

percentage values of total interviews

80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

32,0

40,0

44,0

always

52,0

4,0 4,0 Segment: young 40-year-olds

8,0

"Who do you go fashion-shopping with" 100,0

percentage values of total interviews

90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

29,4

23,5

35,3

always

58,8

0,0 11,8 Segment: mature 40-year-olds

0,0

Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase b) Shopping in company for forty-year-olds These charts show yet again that fashion purchases are undertaken alone: a scenario in which it is evident that a growing influence in decision-making is exercised by the sales staff. Moreover, it can be seen that there is a sort of direct correlation between older age groups and the tendency to shop alone. 136 The Fashion Market in Japan

5. Fifty-year-olds Psycho-sociological profile Very competitive, self-centered. They have lived a life of sacrifices so now they start to ‘pamper themselves’ and spend a lot more on their own demands. Demographic impact There are 20.2 million (9.5 million men and 9.7 million women). POPULATION STRUCTURE BY AGE: FIFTY-YEAR-OLDS 1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 50

Source: General Population Census.

137 The Fashion Market in Japan

"I am fashion conscious and I like to feel fashionable" n.a.

6,7

not at all

17,8

not a lot

37,8

quite a lot

22,2

a lot

15,6 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Segment: 50-year-olds Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money a) Fashion consciousness As can be imagined, the level of attention to fashion tends to decrease in relation to age. Despite this, fifty-year-olds do not show a profile that is very different to that of the over45s; probably this age group enjoys a more stable economic position and probably has more free time so is in a condition to start developing interests beyond the working environment, including interest in their appearance. On this theme, it is also interesting to note how the size of the â&#x20AC;&#x2DC;anti-fashionâ&#x20AC;&#x2122; faction decreases in this age group, which is to say those who declare that they have no interest in fashion whatsoever: in the mature forty-year-olds this had reached a peak of (35.3%), whilst in fifty-year-olds the percentage halved and dropped to 17.8%. The share of fifty-year-olds interested in fashion (both men and women) was 37.8%, comprising 15.6% of downright fashion fanatics, and 22.2% of rather less determined observers. 138 The Fashion Market in Japan

FIFTY-YEAR-OLDS - REAL SPENDING ON FASHION (average annual pro capita spending; expressed in yen )

Calzature - Footwear

Abbigliamento - Apparel

F M

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Abbigliamento - Apparel

Calzature - Footwear

81.221 62.035

22.647 21.290

90.000

Source: JMR Science, 2003.

The Fashion Dream and The Influence of Money b) Spending for fashion: in real terms for fifty-year-olds Consistently with what is described in the general profile for this segment, as well as the data emerge from the survey, it does not appear odd that average spending for apparel and footwear for fifty-year-olds is more than that of forty-year-olds â&#x20AC;&#x201C; even if the difference is marginal. On average women spend more than 80,000 yen a year for clothing, compared to the average 62,000 yen spent by men in the fifty-year-olds group. For footwear, on the other hand, they spend not much more than 22,000 yen, more or less the same as that spent by their male peers.

139 The Fashion Market in Japan

"Some financial sacrifice is needed to dress fashionably" 33,3

35,0 30,0 25,0 20,0 15,6

15,6

15,0

11,1

10,0 5,0 0,0 a lot

quite a lot

not a lot

not at all

50-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money c) Spending for fashion: the emotional significance for fifty-year-olds Fifty-year-olds are noticeably more aware (and probably more willing to make) small economic sacrifices for fashion purchases, and 48.9% agreed with the statement made by the interviewers. It should also be noted, however, that in this age group there is a clear decline in resistance to the idea of the â&#x20AC;&#x2DC;small sacrificeâ&#x20AC;&#x2122; compared to mature forty-year-olds, of whom 17.6% declared that they were in no way willing to agree with such a statement; in fiftyyear-olds this share dropped to 11.1%.

140 The Fashion Market in Japan

"If I won a million yen I would spend half on fashion items" 40,0

35,6

35,0 28,9

30,0 25,0 20,0

15,6

15,0

11,1

8,9

10,0 5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

50-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money d) Spending for fashion: repressing the tendency in fifty-year-olds The general description of this segment stated that fifty-year-olds were starting to ‘treat themselves better’ after a life of sacrifices, and were spending more for their own needs. The datum already emerged clearly from the results shown in the survey charts already presented in this section; but the analysis shows with even more strength how the ‘repressed’ tendency to spend on fashion is coming to the fore. The desire ‘treat themselves better’ explodes when provoked by the interviewers: “if you won a million yen on the lottery, would you spend almost half on nice, fashionable clothes?” The percentage of those who answered yes without hesitation rose to 15.6% (it was about 10% in fortyyear-olds), but above all, it was indicative to note the decline in the number of those who were drastically against the idea: 64.7% in mature forty-year-olds, did not exceed 35.6% in the fifty-year-olds group. So only one fifty-year-old out of three rejects the slightly crazy idea of spending 4,000 euros or so in fashion purchases. 141 The Fashion Market in Japan

"The home of top fashion is..." 60,0 50,0 40,0 30,0 20,0 10,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

20,0 8,9 33,3 6,7 17,8 8,9 17,8 2,2 Segment: 50-year-olds - percentage and level of agreement with the statement Source: Diva Eris, 2003.

Fashion values a) Country-image value for fifty-year-olds For fifty-year-olds, fashion is synonymous with Italy, even if France is still the strongest and most daunting competitor, hanging on the heels of the Italian leader. Analyzing the share of those who state that they have very clear ideas on which country is the home of fashion, Italy and France score exactly the same percentage of preferences (about 18%), but Italy moves into prime position thanks to the more positive opinions expressed (“I agree quite a lot”). Moreover, it should be noted that fifty-year-olds clearly pay more attention to fashion than mature forty-year-olds; in fact, they manage so ‘see’ and appreciate Japanese and North American fashion, which is almost invisible to the view of Japanese over-45s.

142 The Fashion Market in Japan

"The only way to buy fashion garments is to go to a department store" 60,0 48,9

50,0 40,0 30,0 20,0

15,6

13,3

11,1

10,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: 50-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Department store image value for fifty-year-olds Fifty-year-olds express divided opinions regarding the choice of department stores as the ideal place for best fashion purchases. About one in ten is firmly convinced, whilst 15% or so agree with the idea, but without being particularly enthusiastic; on the other hand, almost half the interviewees tend not to want to agree with the peremptory statement made by the interviewers, and 13.3% actually say they are totally in disagreement.

143 The Fashion Market in Japan

"The best place to buy fashion garments is to go to a multi-brand store" 40,0

35,6

35,0

31,1

30,0 25,0 20,0 15,0

11,1

a lot

quite a lot

11,1

10,0 5,0 0,0 not a lot

not at all

don't know

Segment: 50-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Multi-brand store image value for fifty-year-olds Even in the fifty-year-olds age group there is a small cluster of strong multi-brand store supporters, to the point that this formula is chosen as the ideal place for fashion purchases by 11% or so of interviewees. Just under half of the fifty-year-olds group tends to be against the idea however, including a small share (11.1%) who discard the hypothesis with noteworthy emphasis (“do not agree at all”), whilst a larger group (35.6%) express disagreement in less emphatic manner (“don’t agree very much”). Three out of ten interviewees, lastly, did not reply to the question, probably because they have insufficient knowledge of this type of retailing.

144 The Fashion Market in Japan

"It is possible to buy good clothes..." 35,0

31,1

30,0

26,726,7

25,0 20,0 15,0

22,2 17,8 15,6 13,3

28,9

26,7

20,0

24,4 20,0

11,1

10,0

6,7

8,9

5,0 0,0 Television Internet Mail order catalogues

a lot

quite a lot

not a lot

not at all

don't know

13,3 22,2 31,1 26,7 6,7 17,8 26,7 20,0 11,1 24,4 15,6 26,7 28,9 20,0 8,9 Segment: 50-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values d) Perceived reliability value for virtual stores in fifty-year-olds A significant datum that emerges from the analysis of replies given during the survey is the high level of trust placed by fifty-year-olds in the three forms of direct marketing mentioned to them during the interview. One in five interviewees was unable to express an opinion as far as internet shopping was concerned, whilst 44.5% said they were more or less convinced that by it possible to purchase good fashion apparel by computer. A share of 42.3% declared they were in agreement with the opportunity of making good fashion purchases through a mail order catalogue, whilst not more than 35.5% rely on TV sales.

145 The Fashion Market in Japan

Brand and price legitimazion effects 35,0 30,0 25,0 20,0

15,0 10,0 5,0 0,0

"Unknown brand = risk poor purchase"

"Inexpensive garment = risk poor purchase"

quite a lot

4,4

20,0

a lot

2,2

13,3

Segment: 50-year-olds - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

Fashion values e) The value of pharmacopoeia for fifty-year-olds: brand and price, fashion purchase process tranquilizers Far more disenchanted than any other age group: this is how the attitude of fifty-year-olds could be described when asked to legitimize the purchase of a famous brand or a high price. As far as the brand is concerned, only 2.2% of interviewees declared it was in agreement with the opinion put forward by interviewers “buying an unknown brand means risking a poor purchase”. In general, however, very few shared this point of view, not even with more possibilist tones: the overall share of enthusiasts and ‘lukewarms’ compared to this attitude did not even reach 7%. The attitude is no difference when dealing with price. Adding together all the percentages for fifty-year-olds who were very sure or quite sure that a high price assures a good purchase, the total share is 33.3%, absolutely the lowest of all those indicated by other age groups. 146 The Fashion Market in Japan

BRANDS PREFERRED BY FIFTY-YEAR-OLDS Values expressed as percentages (multiple replies)

Burberrys Comme Ca Du Mode OZOC GAP MK 23ku Kumikyoku Beams Muji UNIQLO 0

40 Source: JMR Science, 2003.

Fashion values f) Significance of brand loyalty Uniqlo wins hands down even amongst the fifty-year-olds age group, who mention it as the preferred store sign in 33% of replies. GAP and Comme Ca Du Mode, brands preferred by forty-year-old ladies, disappear from second and third position; another Japanese brand steps in (Muji, chosen by 19% of those interviewed) together with a classic, international name (Burberry, indicated by 17%).

147 The Fashion Market in Japan

"When making a fashion purchase, how important is the opinion of..." 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

40,0

15,6

33,3

37,8

a lot

13,3

15,6

6,7

17,8

Segment: 50-year-olds - levels and percentage of importance attributed Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase a) How influencers affect fifty-year-olds That fifty-year-old men and women have recovered some free time also appears from analysis of results relative to this question; the fifty-year-olds age group reads the newspapers, and more than 50% of interviewees declare they have been influenced to some degree. As far as listening to the opinion of husbands, wives, friends is concerned, the share lingers at about 30%, in the first case, and 40% in the second case. However, for this age group, the real counselor is always the sales assistant, consulted by 55.6% of interviewees.

148 The Fashion Market in Japan

"Who do you go fashion-shopping with" 90,0

percentage values of total interviews

80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

26,7

28,9

31,1

33,3

always

53,3

4,4 13,3 Segment: 50-year-olds

13,3

Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase b) Shopping in company for fifty-year-olds Again a clean-cut majority of fifty-year-olds goes shopping alone for fashion purchases: the replies indicated that this was the case for 53.3% of interviewees. The share rises to 80% by adding all those interviewees who declare that they â&#x20AC;&#x2DC;sometimesâ&#x20AC;&#x2122; go shopping alone for clothes and footwear. On the other hand, the overall share of fifty-year-olds who choose to go shopping for fashion items in company does not exceed 31%, with direct preferences for members of the family (husbands, wives and relatives), and with only 4.4% of interviewees declaring that they always go with friends.

149 The Fashion Market in Japan

Sixty-year-olds Psycho-sociological profile Born during World War II: conformist, economically secure. They pay a great deal of attention to their social lives, where they feel appearances to be fundamentally important, with consequent strong tendencies to keep up with the neighborhoodâ&#x20AC;&#x2122;s style and standard of living, avoiding caprice and whim, and showing they are equal to their socio-economic status and image. Demographic impact There are 15.4 million (7.4 million men and 8 million women). POPULATION STRUCTURE BY AGE: SIXTY-YEAR-OLDS

1.000.000 900.000 800.000 700.000 600.000 500.000 400.000 300.000 200.000 100.000 0 60

Source: General Population Census.

150 The Fashion Market in Japan

"I am fashion conscious and I like to feel fashionable" 6,2

n.a.

19,8

not at all

45,7

not a lot

13,6

quite a lot

14,8

a lot 0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

Segment: 60-year-olds Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money a) Fashion consciousness Even amongst sixty-year-olds, the share of fashion fans settles at just below 15%, which is not that different from that registered for twenty-year-olds. On the other hand, there is an increase in the percentage of those who say they have little of no interest in fashion: overall, this is 65.5%, which is the equivalent of two out of three sixty-year-olds. In this case, this is the highest percentage of all the age groups: so, if on one hand there is the statement that interest in fashion consciousness declines with age (at least as a tendency), it also appears that true passion for fashion does not appear to diminish with the passing of time.

151 The Fashion Market in Japan

SIXTY-YEAR-OLDS - REAL SPENDING ON FASHION (average annual pro capita spending; expressed in yen )

Calzature - Footwear

Abbigliamento - Apparel

F M

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Abbigliamento - Apparel

Calzature - Footwear

82.966 53.387

22.640 24.520

90.000

Source: JMR Science, 2003.

The Fashion Dream and The Influence of Money b) Spending for fashion: in real terms for sixty-year-olds Average annual spending for apparel decreases significantly in the males of the sixty-yearolds age group, settling at about 53,000 yen. In the case of footwear, however, sixty-yearolds they spend more than fifty-year-olds: with footwear spending exceeding 24,000 yen. Women in this age group, on the other hand, do not modify significantly compared to fifty-year-olds, confirming spending levels both for footwear (about 24,000 yen a year), and for apparel (about 20,000 yen). 152 The Fashion Market in Japan

"Some financial sacrifice is needed to dress fashionably" 30,0 24,7

25,0

21,0 20,0 15,0 11,1 8,6

10,0 5,0 0,0 a lot

quite a lot

not a lot

not at all

60-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money c) Spending for fashion: the emotional significance for sixty-year-olds What does not emerge from the chart is the fact that there was a high incidence of failure to reply to the question. The phenomenon affected one interviewee in three and probably means that there was some detachment from the theme proposed, perhaps thought by interviewees not to be pertinent or interesting. In any case, a small group of sixty-year-olds (11.1%) was hotly in agreement with the statement whereby “some financial sacrifice is needed to dress fashionably”, whilst the 24.7% agreed ‘quite a lot’ with this opinion. 8.6% of interviewees disagreed totally with the statement, flanked by a further 21%, who said they did not really agree with the idea that any kind of sacrifice at all should be made in order to follow fashion trends. 153 The Fashion Market in Japan

"If I won a million yen I would spend half on fashion items" 60,0

54,3

50,0 40,0 30,0 20,0 10,0

14,8 7,4

13,6

9,9

0,0 a lot

quite a lot

not a lot

not at all

don't know

60-year-olds segment - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

The Fashion Dream and The Influence of Money d) Spending for fashion: repressing the tendency in sixty-year-olds Percentages of sixty-year-olds who would willing spend most of a hypothetical lottery windfall for fashion purchases were strangely similar to the levels found in twenty-yearolds, which is to say â&#x20AC;&#x201C; compared to other age groups â&#x20AC;&#x201C; quite low: hovering around 17%, and precisely divided between 7.4% who were very much in agreement with the idea, and another 9.9% who agreed, but not quite so enthusiastically. 54.3% of interviewees was absolutely against this scenario of using money in this way, as they evidently had far clearer ideas in mind as to how the hypothetical million yen lottery windfall could be spent.

154 The Fashion Market in Japan

"The home of top fashion is..." 50,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Agree quite a lot Agree a lot

France

Japan

Italy

USA

24,7 8,6 33,3 8,6 19,8 3,7 11,1 2,5 Segment: 60-year-olds - percentage and level of agreement with the statement Source: Diva Eris, 2003.

Fashion values a) Country-image value for sixty-year-olds France scored just a tenth of a percentage point advantage, ousting Italy from the world fashion leader position in opinions expressed by sixty-year-olds. However, the French victory was further reinforced by the share of interviewees who expressed the opinion in a very determined way (“agree a lot”), equivalent of 19.8%, compared to a more modest 11.1% that agreed with the same intensity, in stating that Italy was, on the other hand, “te home of top fashion”. It should also be noticed that two-figure percentages relative to the preferences were attributed to Japan and the United States (respectively 12.3% and 11.1%); evidently sixtyyear-olds do not stop at the more impressionistic and stereotyped opinions, but also analyze new fashion trends, and probably – at least as far as Japan is concerned – do not underestimate the value of traditional value either. 155 The Fashion Market in Japan

"The only way to buy fashion garments is to go to a department store" 30,0 25,9

25,9

25,0 20,0

18,8 16,0 13,6

15,0 10,0 5,0 0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: 60-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Department store image value for sixty-year-olds It is no coincidence that several superficial assessments liquidated department stores as having a “rather dusty” image: they are in point of fact and in no uncertain manner, the favorite fashion shopping location for sixty-year-olds, who when faced with the declaration made by interviewers that “the best place to buy fashion garments is to go to department stores” expressed their approval in 44.2% of cases, shared as 18.5% who agreed in full with the idea, and a further 25.9% of less determined supporters, but still in favor of the sense of the statement. Of all the population segments considered, sixty-yearolds are the group that likes department stores the best, and a few visits to some of the more representative names in the category would probably be enough to achieve a general confirmation of this consideration. The opposite faction, the sixty-year-olds who do not agree at all, cannot be overlooked, since this comprises 39.5% of interviewees; but this means nothing more than the fact that this segment does not agree with choosing the department store as its ‘temple of fashion’, and that does not mean at all that they do not ever go to department stores, nor that in general they do not have a good opinion of them. 156 The Fashion Market in Japan

"The best place to buy fashion garments is to go to a multi-brand store" 50,0

44,4

45,0 40,0 35,0 30,0

24,7

25,0 20,0

14,8

15,0 10,0 5,0

11,1 4,9

0,0 a lot

quite a lot

not a lot

not at all

don't know

Segment: 60-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values b) Multi-brand store image value for sixty-year-olds Almost 20% of interviewees chose the fashion multi-brand store formula as the best place to go for good fashion shopping. The percentage is far from negligible and marks a quite determined trend relative to the general image that multi-brand stores project in the sixtyyear-olds age group. However, the most evident limit should probably be sought in their visibility. A very high percentage of interviewees, equal to 44.4%, preferred not to reply to the question and the most reasonable explanation appears to reside simply in an insufficient level of knowledge of this type of retailing to legitimate expressing any sort of opinion about them. 157 The Fashion Market in Japan

"It is possible to buy good clothes..." 50,0 38,3

40,0 28,4 23,5

30,0 20,0 10,0 0,0 Television Internet Mail order catalogues

23,5 18,5

14,8 4,9

28,4

12,3

21,0

24,723,5 21,0

not at all

don't know

11,1

6,2

a lot

quite a lot

not a lot

4,9 12,3 23,5 38,3 21,0 14,8 28,4 11,1 21,0 24,7 6,2 23,5 18,5 28,4 23,5 Segment: 60-year-olds - level of agreement with the statement Source: Diva Eris, 2003.

Fashion values d) Perceived reliability value for virtual stores in sixty-year-olds The quota of sixty-year-olds who show a certain level of trust in direct marketing channels varies depending on which channel is suggested each time: 17.2% of interviewees were in favor of TV sales. Mail order had a higher percentage of 29.7%, whilst it was perhaps less foreseeable that the internet would reap as much success as it did: 43.2% of sixty-year-olds interviewees stated that “good fashion clothing can be bought on the internet”. The survey did not make it possible to ascertain how much this assessment was correlated to objective elements of judgment, or how much it was actually influenced by an image of the internet as the place where ‘everything is possible’. But in marketing terms the quest for the objectivity of the judgment is not particularly important; rather, what counts is the value of perception in itself, which in this case shows clearly that the direction is a positive one. So there is a considerable group of sixty-year-olds who trust the internet as a commercial channel for fashion items, and this is the significant datum emerging from the survey. 158 The Fashion Market in Japan

Brand and price legitimazion effects 60,0 50,0 40,0 % 30,0

20,0 10,0 0,0

"Unknown brand = risk poor purchase"

"Inexpensive garment = risk poor purchase"

quite a lot

4,9

32,1

a lot

3,7

21,0

Segment: 60-year-olds - percentage and intensity of agreement with the statement Source: Diva Eris, 2003.

Fashion values e) The value of pharmacopoeia for sixty-year-olds: brand and price, fashion purchase process tranquilizers It is mainly the price that ‘reassures’ sixty-year-olds about the quality of a purchase: about half the interviewees were in agreement that if a product is not dear, then there is a risk of making a bad buy. 21% of interviewees were strongly in agreement with this statement, whilst a further 32.1% shared the opinion, but not quite so hotly. As far as the brand is concerned, only 3.7% was strongly convinced that a buying a ‘known’ brand will mean risking a bad buy, nor is there a greater percentage of those who share the opinion in a blander manner, since there is a further 5% share there. 159 The Fashion Market in Japan

BRANDS PREFERRED BY SIXTY-YEAR-OLDS Values expressed as percentages (multiple replies) Burberrys Comme Ca Du Mode OZOC GAP MK 23ku Kumikyoku Beams Muji UNIQLO 0

30 Source: JMR Science, 2003.

Fashion values f) Significance of brand loyalty in sixty-year-old women The survey confirms that Uniqlo sweeps across the age divide and garners the same positive opinion here that it did in other age groups of the Japanese female population. It was indicated as a favorite brand by 28% of sixty-year-old ladies interviewed, and even in this female consumer segment beats all competitors hands down. In the sixty-year-olds age group, a new brand does appear however, as a contender for the second place held by Muji, who was strong in the fifty-year-olds age group: this is 23ku68, who was voted by 17% of interviewees.

Pronounced: nee-joo-sahn-koo. 160 The Fashion Market in Japan

"When making a fashion purchase, how important is the opinion of..." 60,0 50,0 40,0 30,0 20,0 10,0 0,0

Press

Partner

Friends

Sales staff

quite a lot

25,9

12,3

24,7

42,0

a lot

16,0

7,4

14,8

Segment: 60-year-olds - level and percentage of importance attributed Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase a) How influencers affect sixty-year-olds Once again, and again in the case of the survey relative to the sixty-year-olds segment, the role of sales staff comes to the fore – shop assistants whether male or female – and stand as in ‘great influencers’ of Japanese consumers who are busy shopping for apparel and footwear. The phenomenon was already noticed during general analysis of data and even subsequently – when each age group was subjected to differentiated analysis – the same high level of incidence was encountered. So it is a very specific aspect of the fashion purchase process; so specific and evident that legitimates the expectation that any Italian company keen to make leeway in the Japanese fashion market should consider this element very seriously when formulating its business strategy. 161 The Fashion Market in Japan

"Who do you go fashion-shopping with" 90,0

percentage values of total interviews

80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

alone

friend

partner

relative

sometimes

19,8

21,0

13,6

21,0

always

56,8

8,6

9,9

8,6

Segment: 60-year-olds Source: Diva Eris, 2003.

Behind the scenes of a fashion purchase b) Shopping in company for sixty-year-olds In a similar manner to that seen in other age groups, the vast majority of sixty-year-old Japanese (56.8%), always go shopping alone for their fashion purchases. Adding this group to the percentage of interviewees who declare that they ‘sometimes’ go shopping alone in fashion stores, the percentage of ‘hermits’ rises to 76.6%. The overall percentage of sixty-year-olds who actually always prefers to go shopping in company when buying apparel and footwear settles at around 27%, with preferences equally divided between husbands and wives (9.9%), other members of the family (8.6%) and friends (8.6%).

162 The Fashion Market in Japan

Fashion product consumer trends

Imported products: values, perceptions, behavior and purchase choices With each passing year Japanese consumers are becoming increasingly familiar with imported products. On the whole, the market tends to be benevolent towards goods coming from overseas, whilst maintaining several nests of resistance which, in a few cases, appear to be linked to prejudices and clichĂŠs, whilst in other cases are connected to issues deriving from real discomfort encountered in the use or consumption of purchased products. In the case of the fashion sector, historically there has been unease that derived prevalently from the unsuitability of models chosen compared to the requirements of what Japanese women (but often men too) consider to be wearable, and also rooted in the fact that some finishes were of poor quality, even in garments from the luxury and designer ranges. Nevertheless, it is also evident that the system of perceptions and judgments that gravitates around the universe of fashion products made abroad cannot, by its very nature, but configure in a very complex, multifaceted and sometimes even contradictory manner. Moreover, the constant evolution of the market scenario and the same progressive modification of how protagonists perceive demand, mean that there is an ambiguous definition of opinions relative to a market phenomenon that is subjected to ongoing transformation within each individual consumer, contributing to rendering the market scenario for imported products live a constantly pitching sea â&#x20AC;&#x201C; sometimes slow and predictable, sometimes violent and angry. Given the objective difficulty of reading a shared Japanese sentiment towards imported products, MIPRO69 - the Japanese state agency set up to support imports â&#x20AC;&#x201C; has organized 69

MIPRO - Manufactured Imports Promotion Organization, Tokyo. 163 The Fashion Market in Japan

a permanent observatory on how Japanese consumers perceive imported products that operates with praiseworthy consistency. The research was actually initiated in 1982, and since then is repeated regularly every two years. Over time only minor modification have been made to the contents of the questionnaire, in order to enable the study of trend dynamics by comparing results. Notwithstanding this – twenty years after the first survey – to allow the research to reflect social and consumer transformations, some further and far from marginal changes were required to the question themes, in the selection of product categories and classification method, so the historical analysis of results could sometimes be made complex due to the modifications applied. Moreover, the authors of the research do underscore and with barely concealed preoccupation about the coming future of the survey, that it is becoming increasingly difficult to effectuate an objective and clear distinction between domestic and imported products. Industry globalization has brought about an increase in the number of Japanese companies who import goods made in the production facilities they have abroad and there are also increasing numbers of instances where foreign businesses decide to license production of their goods to Japan. In this scenario, whose outlines are increasingly blurred, the survey used excellent intuition and at the end of the interviews allowed each interviewee to define as an ‘imported product’ any product whatsoever that they perceived as such. This decision was methodologically more than correct, considering the object of the analysis to be the registering of the system of attitudes, judgments and beliefs expressed by consumers about the imported product; for this purpose the objective datum has no significance whatsoever – that is to say whether the product actually is or is not imported. The last survey was published in November 2002. It presented the results of a survey undertaken nationwide in June of that year and was hallmarked by the scenario of consumers experiencing a widespread sensation of unease in the present and fear for the future. In that not very distant past, deep in the heart of an economic recession phase, individual spending and department store sales showed no sign of recovery, and the unemployment rate continued to be relatively high, also due to the reorganization being undertaken by most large companies. Some of the results of the survey have already been presented in Section of this research report and there follows a reasoned selection of presumed issues of interest for Italian 164 The Fashion Market in Japan

fashion sector operator, alongside several comments from researchers that reflect the prevailing sensation of general economic uncertainty. If attitudes to products and their origin are observed in greater detail, it is actually possible to see that consumers are concerned to some extent about the situation for national industry, in a scenario where China pumps in enormous amounts of low-cost products, and Japanese companies continue to delocalize their own production abroad. These doubts have not failed to arouse resistance to imported products in some consumer groups. The significant tips forthcoming from the study can be summed up in seven key points: 1. A heavy increase can be seen in the use of low-cost imported items for the entire casual wear area of the clothing sector. 2. The preference for imported products has increased in all categories, with the exception of apparel and the fashion sector. The only area of growth is casual wear. 3. Consumers appreciate imported products above all for the color, design, taste and brand image, whilst they appreciate domestic production above all for reliability, wearability and after-sales service. Furthermore, a decisive factor in product choice lies in the availability of information on the product itself. 4. A growing tendency can be seen in delaying purchases, both of imported and national products. 5. Reasons for dissatisfaction with purchased imported products are changing; one reason lies in the dissatisfaction with the price factor. 6. 41% of interviewees declared they wanted to see an increase in imported products, against 16% who wanted just the opposite; the latter segment has increased slightly. The fact is that these statements may well be contradicted by actual purchase behavior. 7. Consumers seem to want a scenario of peaceful coexistence between imported products and those from their domestic market.

165 The Fashion Market in Japan

Critical choice factors for domestic and imported products In the purchase evaluation process, consumers took time to consider aspects of product quality, its features and its durability; and this was the case both for domestic products and for imported products. The chief reasons for choosing imported products are to be sought in the color and in the design, as well as in the availability of a preferred brand. On the other hand, the reason for purchasing Japanese products concentrated on an overall greater perception of reliability, better wearability and higher level of after-sales service. Another reason mentioned for preferring national products was that information could be found about these products: an observation worth considering, underscoring how product information does stand as a decisive factor in consumer choice. Recent statistics covering the Japanese international trade indicated a significant downturn in purchasing not only national products, but also important items; however, imported product categories that still showed good market results are concentrated in the food sector. In point of fact, in the classification of most popular imported product categories, food products are top ranking (1st to 6th: cheese, wine, olive oil, coffee, pasta and cheese); tagging along are cosmetics and fashion accessories (prevalently scarves and ties) and bags. Despite this, it can no longer be denied that imported products have gained a stable presence on the Japanese market, and they will continue to increase their presence in the future. MIPRO researchers asked interviewees explicitly if in the future they would be pleased to see more imported products: 41% replied positively, 30% said they were happy with things as they are now, and 16% expressed the preference for reducing this presence. Analysts underline that a more careful reading of these data would point to a vague unease in consumers caused by the effect that imports might have on domestic industry; the level of connected anxiety nevertheless, is not search the influences purchasing behavior. As had already emerged in the survey undertaken the year before, 80% of consumers declared that they would agree to an increase in imports positively, explaining that their attitude was a determined by the wish to see a greater range of offering; furthermore, several even stated that there were many excellent foreign products that they would like to see on say in Japan. What is more, compared to the previous survey, there was a drop in

166 The Fashion Market in Japan

the percentage of those requesting imported products simply because they were looking for better prices. The main users of several fashion-content products are arranged as clusters in the table below, sketching out an interesting â&#x20AC;&#x2DC;mapâ&#x20AC;&#x2122; that makes it possible to identify the location of the main admirers of a product, product by product, and which age group they are part of. Consultation of the chart is intuitive, and for instance shows peaks of concentrated interest for perfume in the Tokyo Metropolitan Area; a slight prevalence of women as purchases of casual fashion; and, again for perfume, an unexpected equal rating for twenty-year-old and fifty-year-old users. IMPORTED PRODUCTS WITH FASHION-CONTENT: PROFILE OF USERS WITH BIGGEST USE RATIO Product

Region

Sex F (65.2%) M (61.7%)

Age group

Casual wear

1 2 3

Chukyo/Hokuriku Keihanshin Hokkaido/Tohoku

1 2

1 10-20 (73.1%) 2 30-40 (68.6%) 3 20-30 (65.7%)

Scarves and ties

1 2 3

Tokyo Metropolitan Area Keihanshin Chugoku/Shikoku/Kyushu

1 M (44.6%) 2 F (43.9%)

1 50-60 (54.4%) 2 40-50 (50.3%) 3 60 + (50.0%)

Belts, wallets, accessories

1 2 3

Keihanshin Tokyo Metropolitan Area Chukyo/Hokuriku

1 M (44.6%) 2 F (41.7%)

1 20-30 (47.9%) 2 60 + (47.0%) 3 10-20 (45.0%)

Bags

1 2 3

Keihanshin Tokyo Metropolitan Area Chukyo/Hokuriku

1 F (52.8%) 2 M (21.4%)

1 20-30 (40.8%) 2 30-40 (39.4%) 3 10-20 (45.0%)

Perfume

1 2 3

Tokyo Metropolitan Area Chukyo/Hokuriku Chugoku/Shikoku/Kyushu

1 F (43.7%) 2 M (20.8%)

1 20-30 (40.8%) 2 50-60 (39.1%) 3 10-20 (31.9%)

Cosmetics

1 2 3

Tokyo Metropolitan Area Keihanshin Chugoku/Shikoku/Kyushu

1 F (43.9%) 2 M (16.3%)

1 20-30 (40.2%) 2 50-60 (32.0%) 3 10-20 (30.6%) Source: MIPRO, 2002.

167 The Fashion Market in Japan

Where is imported fashion purchased In the case of apparel and fashion-content products, interviewees stated they purchased imported items as follows70: 1. in department stores (36.5%); 2. in specialty stores (33.9%); 3. purchased abroad (25.0%); 4. received as a gift 71 (16.4%). The analysis on the historic trend series show was, in any case, that the drop in preference for department stores, is offset by â&#x20AC;&#x201C; even if not very sparkling â&#x20AC;&#x201C; upswing in preferences for specialty stores. The latter, especially during the last two years however, do seem to have felt the effects of competing sales channels whose strength is concentrated in the price factor, currently accounting for 7% of the market, and win the apparent intention of continuing their campaign in order to achieve double figures. The question was also posed with an even more microscopic intent, focusing on several of the more widespread product categories. In this case, the table makes it possible to see in greater detail the preferences expressed in the choice of the type of structure the consumer prefers to use for each specific product-type purchase. The results presented show a multifaceted scenario that highlights how the former absolute predominance of department stores, seen as temples of fashion, has now been undermined by other retailing typologies. It is also interesting to note the significant amount of fashion content products purchased abroad: when analyzing how many items they possessed, consumers confirmed that one product in four, of those made abroad, was actually bought on a trip overseas. The use of other direct sales channels, such as door-to-door, mail order catalogues, and internet sales, on the other hand, is still relatively modest. Source: MIPRO, cit. Obviously it is not possible to trace the origin of gifts received, which - for recorded datum analytical purposes â&#x20AC;&#x201C; are nevertheless correctly classified as such. 70 71

168 The Fashion Market in Japan

PREFERRED RETAIL STRUCTURES FOR PURCHASING VARIOUS IMPORTED PRODUCTS WITH FASHION CONTENT 72 Product

1st point of purchase

2nd point of purchase

3rd point of purchase

Women’s overwear

Department stores

53.1 Specialty stores

41.2 Abroad

15.6

Men’s overwear

Specialty stores

48.5 Department stores

45.1 Abroad

17.2

Scarves and ties

Department stores

50.7 Specialty stores

27.5 Abroad

26.8

Lingerie and legwear

Supermarkets

42.0 Department stores

29.5 Specialty stores

28.8

Bags

Department stores

42.2 Abroad

39.6 Specialty stores

32.6

Non casual footwear

Specialty stores

48.3 Department stores

35.7 Abroad

19.6

39.0 Abroad

30.0 Specialty stores

29.7

Belts, wallets, acc.ries Department stores

Source: MIPRO, 2002.

Products received as gifts were excluded from the total. 169 The Fashion Market in Japan

Fashion themes, colors, materials, applications For each consumer, the final garment purchase choice is the result of an evaluation method where a series of variables interact â&#x20AC;&#x201C; the image of the producing company, the brand, price, materials, functionality, style and color, the fashion component. Decoding and analysis of the mental processes in a consumer about to make a purchase are made even more complex by a at least three more variables: the first, which implies that each consumer has, so to speak, their own analysis algorithm, which is to say a completely personal system whereby specific importance is attributed to each of the aforementioned variable. Furthermore, the analysis algorithm is not restricted to being individual; each consumer modifies their system of assessment for the type of garment that is being considered. So, for instance, the same consumer might feel that the fashion component is very important for a jacket but far less so for an overcoat, and so on. Finally, as each consumerâ&#x20AC;&#x2122;s tastes and opinions change in time, so the analysis algorithm will also vary with time, even within the evaluation system for the same garment: for instance, after reading an article in a technical tailoring review, the same consumer may give further specific importance to the analysis of materials when deciding about a coat or cardigan. The development of motivational research has never been hindered by the consideration of how complex it is to study of purchase mechanisms. It was decided to draw the attention of Italian readers to the results of a survey recently undertaken by JaSMEC73, centered on the analysis of the specific weight of each of the variables that intervene when determining apparel and footwear purchases; an interesting aspect of the research was that it is possible to obtain results segmented not only by consumer gender, thus mapping out two different profile directions when assessing a fashion garment, but also achieving an extensive range of product types. The results, which are particularly interesting for marketing operators who want to put together a specific strategy for promotion in the Japanese market of an offer system of personal interest, are shown in the tables that follow. "Analytical study of consumer behavior for apparel products", Textile-Garment Information Centre, JaSMEC (Japan Small and Medium Enterprise Corporation), 2003. 73

170 The Fashion Market in Japan

Relevant variables and their specific weight when choosing garments to purchase (women) underwear pants t-shirts shirt sweater, cardigan suit overcoat 0%

20%

40%

60%

80%

100%

overcoat

suit

sweater, cardigan

shirt

t-shirts

pants

fashion

2,1

2,2

4,0

4,1

4,6

4,2

underwear 0,3

color/design

46,9

50,1

44,7

42,9

41,2

49,3

13,8

functionality

5,2

7,5

3,4

7,4

6,9

10,9

19,8

materials

19,8

12,1

25,7

18,8

19,1

12,5

39,3

price

19,1

21,4

19,6

24,7

25,4

20,6

24,2

brand

5,2

5,6

1,9

1,6

2,1

2,3

2,2

source

1,7

1,1

0,7

0,5

0,7

0,2

0,4

Relevant variables and their specific weight when choosing garments to purchase (men) underwear pants t-shirts shirt sweater, cardigan suit overcoat 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

overcoat

suit

sweater, cardigan

shirt

t-shirts

pants

underwear

fashion

1,0

0,6

1,2

0,5

2,4

1,0

0,3

color/design

32,1

32,7

32,9

24,7

34,6

30,0

6,2

functionality

9,5

9,7

8,0

11,0

8,2

12,0

9,7

materials

17,3

13,9

19,7

20,3

12,8

17,4

33,8

price

29,1

31,6

33,5

39,6

37,9

34,2

47,0

brand

8,5

8,9

3,5

3,0

3,5

4,5

2,1

source

2,5

2,6

1,2

0,9

0,6

0,9

Source: JaSMEC, 2003.

171 The Fashion Market in Japan

Sales seasonality The seasonal cycle of retail fashion sales in Japan can be analyzed by using the data provided by the Japanese association of department stores 74. In the pages that follow, data are presented as charts; the first shows an overview of retail fashion sales dynamics; the tables that follow will be a more interest to Italian companies targeting the Japanese market as they illustrate the percentages of monthly sales in the each out of the chief fashion sector segments. All charts included here were developed using data from JDSA75. Sales seasonality: percentage share per month 12 10

9,8 8,4

8,1

8,8 7,7

9,3

7,7

6,2

5,8

6 4 2 0

Fashion apparel and accessories Source: JDSA, 2003.

74 75

Japan Department Stores Association. Annual reports (2002), JDSA (Japan Department Stores Association), 2003. 172 The Fashion Market in Japan

Sales seasonality: percentage share per month 12

10,2

9,9

8,5

8,1

8,9

9,2

8,1

7,3

6,2

9,2

8,5

5,9

6 4 2 0

Women's wear

Sales seasonality: percentage share per month 14,0

11,6

12,0

10,0

10,5

9,9

9,2 8,3

8,2

8,8

8,3

8,2

8,0

6,3

5,8

6,0

4,8

4,0

2,0

0,0

Men's wear Source: JDSA, 2003.

173 The Fashion Market in Japan

Sales seasonality: percentage share per month 16

13,6

14 12 10

9,9

9,4

8,3

6,5

6,2

7,9

8,1

8,9

5,4

6 4 2 0

Children's wear Sales seasonality: percentage share per month 11,3

9,5

8,5

8,3

8,4

7,8

8,5

8,1

8,3

8,2

6,7

6,3 6 4 2 0

Footwear and accessories Source: JDSA, 2003.

174 The Fashion Market in Japan

SECTION C MARKET ENTRY AND EXPANSION STRATEGIES

175 The Fashion Market in Japan

Target Maps

The pages that follow present a series of 'target maps', each of which focuses on a specific consumer segment, defined by age group. In the previous section a method was implemented for familiarizing with the complexity of possible segmentation in a market as complicated, dynamic and vast as Japan, and several segments were mapped out as being of some importance for Italian businesses in the fashion sector. Using these â&#x20AC;&#x2DC;target mapsâ&#x20AC;&#x2122;, Italian companies will be able to initiate implementation of the most suitable considerations for progressively developing access strategies for the Japanese market; subsequently, following the examples and themes for reflection that are suggested, they can assemble a general first hypothesis, on the basis of which the first operative contacts can be made for assessing the feasibility of business projects. The data presented in this section of the survey were gathered and processed throughout 2002, in the ambit of an investigation promoted by the Japan corporation of small and medium businesses (JaSMEC), and recently collected in an interesting volume published in March 2003.76

Analytical study of consumer behavior towards apparel products, JaSMEC (Japan Small and Medium Enterprise Corporation), 2003. 76

176 The Fashion Market in Japan

TARGET MAP Segment: Twenty-year-olds

1 2 3 4 5 6 7 8 9 10

MOST IMPORTANT ASPECTS IN FORMAL WEAR BRANDS Critical aspects Mentions in % Must be Japanese 22.8 Must be European 10.9 Must be Chinese 0.3 Must be very well-known and famous 24.3 Must be positioned at the top end of the market 21.0 Must be innovative, ahead of fashion trends 7.4 Must be environmentally aware and acknowledge eco themes 2.4 Must have social credibility 19.5 No aspect is of interest 51.2 Other themes 0.6 Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

MOST IMPORTANT ASPECTS IN CASUAL WEAR BRANDS Critical aspects 1 2 3 4 5 6 7 8 9 10

Must be Japanese Must be European Must be Chinese Must be very well-known and famous Must be positioned at the top end of the market Must be innovative, ahead of fashion trends Must be environmentally aware and acknowledge eco themes Must have social credibility No aspect is of interest Other themes

% 13.3 5.9 0.3 16.0 5.6 11.5 3.8 14.8 67.2 0.9

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

177 The Fashion Market in Japan

20-year-olds: where they purchase Other

0,6

Secondhand stores

1,5

Outlets and discounts

10,2

Mail order catalogues

11,7

Multistores

6,6

Department stores

21,0

Non-specialist hyper spaces

12,0

Flagship stores

8,8

Chain stores

19,2

Private shops, boutiques

8,4 0,0

5,0

10,0

15,0

20,0

25,0

20-year-olds: where they glean fashion information Various opinions

15,7

Specialist press

11,8

TV advertising

15,1

TV programs

19,2

Road

23,4

Printed press advertising

12,7

Internet

34,3

Fashion magazines

56,5

Newspaper small adds

34,3

Window dressing

76,0 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Source: JaSMEC, 2003.

178 The Fashion Market in Japan

TARGET MAP Segment: Thirty-year-olds

MOST IMPORTANT ASPECTS IN FORMAL WEAR BRANDS 1 2 3 4 5 6 7 8 9 10

Critical aspects Must be Japanese Must be European Must be Chinese Must be very well-known and famous Must be positioned at the top end of the market Must be innovative, ahead of fashion trends Must be environmentally aware and acknowledge eco themes Must have social credibility No aspect is of interest Other themes

Mentions in % 27.9 15.2 1.4 19.8 18.4 5.5 2.3 24.4 49.7 1.1

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

MOST IMPORTANT ASPECTS IN CASUAL WEAR BRANDS Critical aspects 1 2 3 4 5 6 7 8 9 10

% 16.7 9.2 2.6 14.1 4.0 7.8 4.9 16.4 69.8 1.1

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

179 The Fashion Market in Japan

30-year-olds: where they purchase Other

0,9

Secondhand stores

0,5

Outlets and discounts

12,0

Mail order catalogues

15,0

Multistores

2,3

Department stores

17,7

Non-specialist hyper spaces

18,8

Flagship stores

7,4

Chain stores

18,9

Private shops, boutiques

6,6 0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

20,0

30-year-olds: where they glean fashion information Various opinions

12,6

Specialist press

21,0

TV advertising

18,4

TV programs

23,0

Road

15,2

Printed press advertising

16,4

Internet

29,0

Fashion magazines

44,8

Newspaper small adds

42,5

Window dressing

74,4 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Source: JaSMEC, 2003.

180 The Fashion Market in Japan

TARGET MAP Segment: Forty-year-olds

1 2 3 4 5 6 7 8 9 10

MOST IMPORTANT ASPECTS IN FORMAL WEAR BRANDS Critical aspects Mentions in % Must be Japanese 33.8 Must be European 11.1 Must be Chinese 0.7 Must be very well-known and famous 29.3 Must be positioned at the top end of the market 22.3 Must be innovative, ahead of fashion trends 2.4 Must be environmentally aware and acknowledge eco themes 2.4 Must have social credibility 27.2 No aspect is of interest 45.0 Other themes 0.3 Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

MOST IMPORTANT ASPECTS IN CASUAL WEAR BRANDS Critical aspects 1 2 3 4 5 6 7 8 9 10

% 17.1 5.2 2.1 15.0 5.6 7.0 6.3 20.2 67.6 0.3

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

181 The Fashion Market in Japan

40-year-olds: where they purchase Other

1,0

Secondhand stores

0,6

Outlets and discounts

9,9

Mail order catalogues

14,1

Multistores

1,6

Department stores

18,4

Non-specialist hyper spaces

23,6

Flagship stores

6,5

Chain stores

18,4

Private shops, boutiques

6,0 0,0

5,0

10,0

15,0

20,0

25,0

40-year-olds: where they glean fashion information Various opinions

12,2

Specialist press

16,0

TV advertising

17,4

TV programs

17,8

Road

15,7

Printed press advertising

17,1

Internet

30,3

Fashion magazines

35,9

Newspaper small adds

52,3

Window dressing

80,8 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

Source: JaSMEC, 2003.

182 The Fashion Market in Japan

TARGET MAP Segment: Fifty-year-olds

1 2 3 4 5 6 7 8 9 10

MOST IMPORTANT ASPECTS IN FORMAL WEAR BRANDS Critical aspects Mentions in % Must be Japanese 48.0 Must be European 15.3 Must be Chinese 0.8 Must be very well-known and famous 24.6 Must be positioned at the top end of the market 25.4 Must be innovative, ahead of fashion trends 4.0 Must be environmentally aware and acknowledge eco themes 5.7 Must have social credibility 32.2 No aspect is of interest 35.5 Other themes 0.3 Percentage values of total preferences expressed (multiple replies). So0.3urce: JaSMEC, 2003.

MOST IMPORTANT ASPECTS IN CASUAL WEAR BRANDS Critical aspects 1 2 3 4 5 6 7 8 9 10

% 29.0 9.3 3.0 16.1 7.7 6.8 13.3 20.8 62.3 0.5

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

183 The Fashion Market in Japan

50-year-olds: where they purchase Other

1,0

Secondhand stores

1,1

Outlets and discounts

8,6

Mail order catalogues

10,5

Multistores

0,9

Department stores

22,6

Non-specialist hyper spaces

23,1

Flagship stores

5,3

Chain stores

17,2

Private shops, boutiques

9,7 0,0

5,0

10,0

15,0

20,0

25,0

50-year-olds: where they glean fashion information Various opinions

11,2

Specialist press

21,6

TV advertising

18,9

TV programs

18,0

Road

19,9

Printed press advertising

23,2

Internet

17,2

Fashion magazines

36,1

Newspaper small adds

53,3

Window dressing

77,3 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

Source: JaSMEC, 2003.

184 The Fashion Market in Japan

TARGET MAP Segment: Sixty-year-olds

MOST IMPORTANT ASPECTS IN FORMAL WEAR BRANDS 1 2 3 4 5 6 7 8 9 10

Mentions in % 50.4 14.1 1.1 27.8 19.0 2.8 6.7 32.7 37.0 1.1

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

MOST IMPORTANT ASPECTS IN CASUAL WEAR BRANDS Critical aspects 1 2 3 4 5 6 7 8 9 10

% 28.9 9.2 4.9 18.3 7.4 5.6 12.2 26.8 59.9 1.4

Percentage values of total preferences expressed (multiple replies). Source: JaSMEC, 2003.

185 The Fashion Market in Japan

60-year-olds: where they purchase Other

0,6

Secondhand stores

0,7

Outlets and discounts

6,2

Mail order catalogues

11,0

Multistores

1,2

Department stores

25,5

Non-specialist hyper spaces

23,0

Flagship stores

5,4

Chain stores

17,6

Private shops, boutiques

8,8 0,0

5,0

10,0

15,0

20,0

25,0

30,0

60-year-olds: where they glean fashion information Various opinions

16,2

Specialist press

22,5

TV advertising

15,8

TV programs

12,7

Road

18,3

Printed press advertising

30,3

Internet

18,7

Fashion magazines

31,7

Newspaper small adds

48,9

Window dressing

81,3 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

Source: JaSMEC, 2003.

186 The Fashion Market in Japan

Distribution strategies An analysis of the strategic efforts made by overseas companies who want to access the Japanese market shows a particular recurrence of three main operating patterns â&#x20AC;&#x201C; the direct presence strategy, the alliance of the channel strategy, and the licensing strategy. After identifying at least an overall method, the relevant target segment and verified which is the preferred retail typology for fashion garment purchases, on the basis of these indications the Italian company interested in accessing the Japanese market can begin a period of contemplation and orientation to define its own strategy. Is it possible to begin to attempt rationalization of experiences acquired on the market, with the intention of providing a reference pattern that would bring useful indications for any Italian company wishing to develop its own strategy for entering the Japanese market? In reality, the idea of schematization of the best path to be taken on the basis of the companyâ&#x20AC;&#x2122;s characteristic appeared as an attractive objective, but is probably equally impossible to achieve objectively with really efficient results. In fact, on one hand, significant variable must be identified and isolated to build a model, and even just those that interact within a company are incredibly numerous and assorted; and even if a grid was successfully isolated for the most significant quantity components (micro sector, size of the company, turnover, resources, and so on), the complexity of managing those variables affecting only quality aspects. Just thinking of how many quality variables there are and how complex they are, and how fundamental they are for the purpose of defining an efficient and coherent strategy for the company overall, as well as how they weigh heavily on strategic slant, which in the daily management of a company, and perhaps more than ever if the company operates within the fashion sector. 187 The Fashion Market in Japan

Just thinking of the area encompassed by entrepreneurial expectations, motivations, energy, and too often underestimated operating power of actual enthusiasm 77 ; then adding to this the dose of courage and/or prudence required from the owners and management, which is reflected in terms of strategy in the tendency to seek greater reassurance through application of models, or to pursue market opportunities following the diktat of Heraclites, and exploring new, ambitious roads78. In consideration of these objective difficulties, it was deemed preferable not to provide such rigid models, which inevitably would suffer from the forcing required to combine the mechanical aspects to strategic orientation datum; despite this, it was thought that a few hints to mull over, examples and experiences supplied by the direct intervention of several of the sector’s privileged subjects, provide in the awareness of their modesty and constant subalternity to analysis, the entrepreneur’s intuitions and reference management. Direct presence strategy The company produces in line with current methods, and draws up a business plan to distribute directly to the market. Two methods are available: a. Total downstream integration. The Italian company manages all the links in the distribution chain (import – storage – internal transportation – managing points of sales – after sales management) through a small, 100%-owned commercial company, or in partnership with a Japanese company. This is the path taken by companies who intend to develop a sales network under their own store logo, using the direct management formula and if necessary, experimenting with franchising formula – as an alternative or to integrate direct management. b. Direct conventional presence. The company delegates an agent to find business-to-business clients in the Japanese market. It is a feasible path both in the objective of reaching consumers who purchase via direct marketing channels (mail order catalogues, internet, TV sales), and in the objective of reaching purchasers who go to multi-brand stores and private boutiques. Direct presence, achieved by setting up a business venture in Japan, is undoubtedly a tough road to take, but if the manufacturer’s economic and financial situation allow it, 77 78

Ralph Waldo Emerson: "Nothing great was ever achieved without enthusiasm". Heraclites: "If you do not seek the unexpected, you will never find the truth". 188 The Fashion Market in Japan

then it could turn out to be worthwhile in a period marked by noticeable changes in the distribution scenario. The direct approach to seeking improved formulas for transporting goods, logistics, marketing and sales problems, the search for a direct contact with consumers mean an equal number of market challenges which, if handled with suitable managerial ability may allow the company to achieve a swift capitalization of the experience acquired. The need to create a mixed bilingual team of staff must also be considered, although this is a complex commitment, which requires mature management that is aware of the conditions required to generate a spirit of collaboration in a small work group where approach to life and work are often totally different. Despite the many, objective difficulties, direct market presence means a strategic chose that in theory is able to ensure extensive freedom to maneuver on the market. With direct market presence the parent company is free to set up the best commercial business formula, trying out new methods or adapting its situation to cases of evident success, integrating downstream as far as the direct management of retail sales or assessing the hypothesis of a franchising network. The costs inherent to this strategic option could turn out to be higher than the budgets prepared in Italy, considering that there will be various cost items that are so specifically Japanese that they cannot be budgeted for without some direct experience on this market. For this purpose, the interactive tools designed by Jetro 79 and made available in its website appear to be very useful – if managed carefully as should always be the case with any standardized instrument – for providing a slant that is precious to the company that is taking its first steps in the development of a business plan for accessing the Japanese market. The Italian group, Benetton are definitely in favor of this strategy. Benetton in recent years made an unequivocal decision to be autonomous on the Japanese market, actually after experimenting with other formulas too, without finding them perfectly compatible with group philosophy and policies. On this theme, Fabrizio De Nardis, president of Benetton Japan, made this statement, which offered Italian entrepreneurs three principles to be applied always for achieving headway in Japan. “A good product, a lot of patience and a solemn commitment: never get married. We did it, at the beginning, and we ended up getting divorced".80 JETRO – Japan External Trade Organization. He refers to the agreement that Benetton initially signed with the Seibu Group for the development of sales throughout the Japanese market. 79 80

189 The Fashion Market in Japan

The costs of direct presence The constitution of a representative office is not difficult and does not require high costs, but the operability in this case is very limited. It is not possible to carry out economic activities, not even non-profit making activities, and consequently it is not necessary to pay tax. The function of a representative office may be coherent with the companies that aim to study the market for a limited period of time, reserving themselves the right to subsequently decide which steps to take; if the company simply needs to carry out public relation activities in Japan, this formula may be satisfactory. A representative office cannot open a bank account, except for a hybrid formula, with the account, for example, opened in the name of "Mario Rossi, Representative Office of the Company Acme in Japan". Furthermore, it may not be very easy to rent an office, unless resorting to temporary furnished offices, by signing contracts on a monthly basis with the Italian company. On the other hand, the constitution of a company, with mixed capital or one hundred percent Italian, requires some formalities that cannot be immediately overcome; for example, the administrator (or at least one of the administrators, acting as president) must necessarily reside in Japan. Some initial references are listed in the following two tables to start developing a budget for a direct company presence in Japan. Apart from renting costs indicated, the commission of an estate agent which is the equivalent of one monthâ&#x20AC;&#x2122;s rent must be taken into consideration together with the fact that the guarantee deposit, even if it is paid back at the end of the renting period, bears no interest and may amount 10-15 monthly instalments; deposits for an amount below 6 monthly instalments are not normally negotiated.

190 The Fashion Market in Japan

Office rent 82 Common services83 Air conditioning84 Cleaning Other costs

MONTHLY AVERAGE COSTS (yen) Downtown Tokyo business district. Medium-sized office building. 3 to 5 staff members. surface cost 81 tsubo s.m. p/tsubo Total 20 66 20,000 400,000 40,000 Repairs and maintenance of shared area 20,000 Added to electricity costs for air conditioning and heating 700 14,000 20,000 Electricity, gas, water, etc.

Total

494.000 INCORPORATION COSTS (yen) Representative Office

Registration tax 87

90,000

KK 85

YK 86

150,000

60,000

Duties

40,000

Costs for registering the company's statutes

50,000

2,000

1,500

10,000

1,000

25,000

7,500

278,000

170,000

2 copies of the incorporating act of the new company 10 copies of the commercial register 2 copies of the seal certificate registration Banking fee for the deposit of the capital88 101,000

1 tsubo = 3,3 square meters. Negotiable. 83 Hall, elevators, toilets (usually shared in office buildings), etc. 84 Basic fee. 85 Kabushi Kaisha: limited company. 86 Yugen Kaisha: incorporated company. 87 0.7% of paid capital (minimal fee: 150,000 yen for KKs, 60,000 yen for YKs). 88 Usually, 0,25% of paid capital. 81 82

191 The Fashion Market in Japan

Strategy of the alliance of the channel In this strategic option, the Italian manufacturing company seeks a Japanese ally within the commercial channel (an importer and/or a wholesaler). The Italian company's activities exclude direct sales, which may be managed by the allied Japanese company or even through a joint venture commercial company constituted for the purpose. This strategy is effective in targeting department stores, direct sales companies, chain stores. Any strong and famous name in the world of the Japanese trading companies may undoubtedly constitute a solid and reliable partner for an Italian company, admitting it can rely on a sound notoriety at least on its domestic market level. However, a shosha is not a suitable companion for launching a new brand â&#x20AC;&#x201C; no matter how promising it can be â&#x20AC;&#x201C; as it has not achieved important levels in terms of market notoriety ads well as in terms of turnover and, more generally, in terms of financial stability. The strategy of Itochu, the previously mentioned trading company - one of the leading shosha in the Japanese world of fashion â&#x20AC;&#x201C; must be indicated as an example to support this potential trend. At least in principle, Itochu tends to evaluate the possibility of investing in a new foreign trademark according to the fame and success that the product has achieved in its country, rather than searching for brands with a high potential but that are still within a progressive consolidation stage on their original markets. In this regard, choosing a trading company as a possible ally to obtain access to the Japanese market is not suitable for all Italian companies, no matter how valid and reliable its product system is. The availability of a high range product, even if supported by a good quality/price ratio simply represents a prerequirement. In fact, the best credential for starting a profitable business relationship is shown by the level of fame achieved on the Italian market, able to leave the creation of a balanced and harmonic business relationship to the imagination.

192 The Fashion Market in Japan

Fabrizio De Nardis, President of Benetton Japan, is however openly sceptical to the possibility of creating a strategy of penetration in the Japanese market through the collaboration of a trading company. But, despite the numerous clichĂŠs to the contrary, he is convinced that this is the right time to slowly start entering and undertake a trade rooting. "Yes, this is the right time. As long as you are not in a hurry and are prepared. As far as the rest is concerned, today it is possible to do something that yesterday was impossible. The crisis, which continues, has transformed Japan; it is now an almost normal country. Today with the right product and the possibility to move, direct access can be made to distribution. The role of the trading companies, just as the role of department stores, has fortunately been redimensioned. The long strike of Japanese consumers has been successful; it is not that they do not buy anymore. The fact is that 18 million people travel, they go abroad, and as they are a very cultured, intelligent and curious population they buy if it is convenient otherwise they take a walk around the shop, smile and go away."89 Managers of numerous Western companies who entered the market by avoiding any contact with Japanese importers and distributors, agree with the opinion of De Nardis. But a substantially sceptical voice with regards to this â&#x20AC;&#x2DC;autarchicâ&#x20AC;&#x2122; decision belongs to Kensuke Hosomi, a manager of Itochu90, who sustains that such an initial process can be supposed, in virtue of the extreme attention and curiosity of the public towards the novelty of import; but it is just as important to take into consideration that often, in these cases, there is a rapid decrease in interest, due to the very short amount of time of the peak of interest that consumers have for new products. In this case, the trade experience of a Japanese company specialised in distribution is well able to handle these situations as they manage to avoid coming out with substantial failures, after an apparent period of success. In general, again according to Hosomi, the general complexities, and specificity, of Japanese distribution leads the Italian company that has decided to enter this market to avoid the choice of doing it alone.

Relations with importers and agents Planning, setting up and operating a serene and productive business relations with a Japanese partner is not easy. Beyond the very best intentions, there are many differences Fabrizio De Nardis, interviewed by Pio d'Emilia for Viste, a periodical issued by the Italian Chamber of Commerce in Japan, May-June 2003. 90 Kensuke Hosomi, Brand Marketing Manager of Itochu. 89

193 The Fashion Market in Japan

in mentality, management styles, character and expectations in business development, which are often worsened by language barriers which often generate in misunderstandings and disillusions. Therefore extreme patience, availability, humility and once again patience are required; but this subject is discussed in further detail in this section and in the next section of this survey. Beyond the cultural difficulties illustrated up until now, it must be said that it may not be too easy for a small or medium sized Italian fashion company to start collaborating with a large Japanese importer, especially if the brand name is not yet very famous. In this case a more suitable partner may be a chain of shops or a department store. On this subject, a suggestion provided by Kensuke Hosomi of Itochu to small and medium sized Italian companies that are not yet famous: "an idea that can work to test the market and become well known is to participate in one of the â&#x20AC;&#x2DC;Italian fairsâ&#x20AC;&#x2122; periodically organised by large stores and shopping centres, normally in collaboration with famous importers. In this way the company can establish direct contact with the market without the need for huge investments and if this experience turns out to be positive it is reasonable to imagine that the relationship may continue on a regular basis and lead to a more stable agreement." Hironobu Uchida, a manager of Tomen91, goes straight to the heart of many problems that exist in relationships between Italian manufacturers and Japanese trade operators. "We from Tomen Fashion Express are open to a collaboration with new Italian companies and in this sense the best direction is direct contact. But, if an institutional and qualified organisation presents the company to us, such as for example in the Italian case of ICE, we believe that the company is more reliable. In order to create a good collaboration it is important for Italians to understand some logics that are very important at this point. Every time I have the impression that Italian companies, and not only Italian companies as it often happens with companies from other European countries too, are not able to understand the reasons for the commitment and rigidity with which the key concepts of a sales agreement are considered by Japanese companies, therefore Italians underestimate commitments undertaken and do not respect them. There are often delays in deliveries and deliveries in which one of the colours ordered is missing. But if we are waiting for three colours, for example, according to the order accepted and confirmed, it means that we have already presented all of our customers with an import programme based on the three colours ordered. In these cases Italian companies sustain that the blame belongs to somebody else, for example, the manufacturer of the dyes who has increased the price of a colour. But if a Japanese company was in a similar condition it would not hesitate to order that specific colour at any price, as long as it was able to deliver exactly what had been ordered. This is not a paradox: our company may also be 91

Hironobu Uchida, Brand Manager of Tomen Fashion Express Co. 194 The Fashion Market in Japan

forced to sustain unexpected costs but the important thing is to maintain all commitments undertaken with a customer. We do not expect Italians to become like us but it is very important to understand that the positions of customers and suppliers in Japan are not the same." On the Italian front there is a lot of evidence of various difficulties, even at the highest levels. Fabrizio De Nardis, President of Benetton Japan, speaks about the breakdown with the importer with which Benetton began its presence in Japan: “They wanted to do it their way: we do it our way here, Japan is different, et cetera, et cetera. It came to the point that we were stuck with one and a half million unsold garments. Instead of dropping our prices, which is what we would have done, they suggested we changed brand name. We pulled out our wallet and we bought them out. It isn’t true that the Japanese get bored with a brand or that they are always looking for something new. They get sick of a brand that doesn’t update. But the logo does count. Definitively.” And with regard to the objective difficulties of operating in such a different market, rendered even more complex by unique traditions and habits, De Nardis has very clear ideas about how to approach defining a partnership, prudently: “There are plenty of ways to ‘sniff each other out’ and – if it works – set up a project together. Nevertheless: I recommend getting advice first. Then a local partner. But holding on to decision-making authority is fundamental. The Japanese are remarkable performers, teamwork here is frighteningly efficient, but a hell of a lot is required to get things off the ground”. 92 The licensing strategy The company underwrites a licensing agreement for use of its brand, achieving a turnover that will vary in relation to global turnover and a percentage value of royalties. If the Italian company that is interested in entering the Japanese market can count on an important image that justifies the possibility of granting use of the trademark to local companies, this solution will probably constitute the fastest and cheapest channel to bring positive economic results from this operation to the company. This is, in fact, the easiest solution from a technical point of view for companies that have already acquired notoriety on the market to follow, so much so as to reasonably start Fabrizio De Nardis, interviewed by Pio d'Emilia for Viste, a periodical issued by the Italian Chamber of Commerce in Japan, May-June 2003. 92

195 The Fashion Market in Japan

negotiations on the basis of the value of the trade-mark and the high level reached in the perception of quality transmitted to the public by the offer system of the company. Despite the relative technical simplicity of the strategy, the operative applications are often very articulated and complex. Despite all of this it is still a very common solution adopted by fashion protagonists in all leading countries; another factor that sustains this reasonableness lies in the possibility of creating production dedicated to the Japanese market, and therefore which is much less vulnerable to possible dissatisfaction that the Japanese consumer often expresses even with regards to products considered totally acceptable in Western markets in terms of quality. The negative aspects of the choice made include the fall in the competitive advantage of made in Italy, which may probably only be neglected by a limited group of trade-marks with a level of notoriety and visibility on the market that can motivate the acquisition by objectively restricting the effect of any other marketing lever. From the point of view of Japanese entrepreneurs, this formula tends to be favourably welcomed as it is normally confirmed that the contribution margins of licence production tend to be superior to the ones related to import activities. In all probability, this is the position of one of the Japanese protagonists of this entrepreneurial formula: going back to far off times (little less than a century ago) when it was just a small clothing manufacturer, the Onward Kashiyama company has now become the most important Japanese operator in his field, by radically diversifying his business. At the moment the Onward branches of activity expand to the field of licence sales and retail trade. In this last field, company dynamism is backed by the number of sales points available (more than one thousand). In the licensing business, the portfolio of the trade-marks managed by Onward has increased even more, year after year, and it now has not less than 50 between national and international names. With prominent names on an international level (Polo, Donna Karan, Calvin Klein), Onward also operates through GibĂ˛, an Italian associated company which, among other names, produces garments for Giorgio Armani. But among direct imports and licensed activities the names in the Onward carnet include, apart from the ones already mentioned, many more important designer labels such as Missoni, Gianfranco FerrĂ¨, Ralph Lauren, Cerruti 1881, Jean Paul Gaultier and Paul Smith. The growth of the company obviously indicates excellent management skills in the field of licensing, just as the positive performance in the field of retail sales. 196 The Fashion Market in Japan

Mixed strategies A route that appears to be feasible - at least from a theoretical point of view - may be to search for a reasonable formula which includes a combination between export and licensed products. Starting from a comparison analysis of contribution margins, through the use of business plan tools, and simulating the development of the distribution in two different business scenarios, the integral originality of some made in Italy products may be maintained, while other products may be licensed and manufactured in Japan or in other Far East manufacturing countries. Trussardi is an Italian company that has confided in licensing strategies right from the beginning, but which up until now has not managed to conceal some of its structural limits which - according to the specific company market profile - are not suitable to enhance its complete potential. According to the President of the Group: "The most important high level Italian companies tend to look for mixed formulas in the definition of distribution strategies in Japan, operating towards the integration of three classical models: direct presence, presence through a distributor and presence through licensed products. The objective is to increase the strength of made in Italy, and progressively abandon licenses. This is because the true value of brands today is down to the quality of production processes and materials which are produced directly in Italy and have a greater technical know-how and control. Furthermore, as indicated in the information data prepared by Yano, the market of licenses has undergone a structural fall since the beginning of the nineties." 93 The events of the Trussardi Group in Japan have often been marked by positive radical changes in direction. After the break-up with the trading company Itochu, which came about in 1999, and gradually reducing the percentage of sales of licensed products in favour of direct exports, it set up a joint-venture with a Japanese textile company. The words of Francesco Trussardi state: "The trend is to operate through an integrated business, which allows for the control of distribution; a greater presence throughout the Taken from intervention by Francesco Trussardi, President of Trussardi SpA, in the General Assembly of the Italy-Japan Business Group, Bergamo, October 2002. 93

197 The Fashion Market in Japan

territory with the acquisition of the control over joint-ventures and the repositioning of brands with the selection of licenses with the objective of controlling the image. This will lead to higher margins, greater flexibility in changes in tastes and a reduction in production cycles, as well as staff dedicated to cost controls. Furthermore, the repositioning of the trade-marks includes an improvement in the quality-price ratio and concentration on niche products with a distinguishing image. During the last decade, this was the strategy adopted by Trussardi: a reduction in the number of licenses and the constitution of a joint-venture with a local partner allowing for greater control of the position of the trade-mark."94

Strategies of manufacturing countries with low labour costs: the case of Vietnam With regards to progressive internationalisation of competition in the field of fashion, Italian economic operators should not underestimate the steps made by emerging countries, or at least they should be updated. An interesting case is the Vietnamese textile industry, which still plays a marginal role in the international world of competition, but it is best to carefully monitor the dynamism and aggressiveness with which it tends to conquer new clients and new markets, and which has recently led to important success in the Japanese market. The Vietnamese position has been incredibly strengthened in this market and has laid the foundations for a presence that is still very far from the position of sheer subcontractors, but which aims at gradually undertaking a more independent role even in the field of fashion. In Vietnam the promotion of the textile-clothing field is handled by Vinatex, a government organisation, which is made up of 64 companies from this sector. Through the head office in Hanoi it controls the activities of associates, it provides consultancy for the organisation of production, for managerial and technical training and for the development of foreign trade. After having opened offices in Hong Kong, the United States and in Russia, Vinatex recently opened an office in Tokyo, with the objective of supporting associate companies 94Francesco

Trussardi, cit. 198 The Fashion Market in Japan

in sales negotiations and spreading information on investment opportunities in Vietnam in the textile-fashion industry. Vietnamese clothing exports represent the most important figures in worldwide export of the country; flows of export towards Japan are currently concentrated on jackets, trousers and underwear. The Japanese specialised periodical "Senken" recently commented on the opinions of the Vietnamese organisation during the signing of an agency contract with Mitsui Bussan, a historical name in the field of imports in Japan95. "Our strong point is the quality of our labour force. With regards to sewing techniques we are afraid of being compared with China, which has a greater advantage over us with regards to the Japanese market in its geographic position. Even if they cannot be considered as weak points, we must improve the quality of our dies and company organisation. At the moment in the field of clothing our industries process between 30 and 35% of Vietnamese materials and our objective is to double this percentage by the year 2010. We are currently studying an investment programme for the polymerization of polyester; I hope that more and more Japanese companies in this field of high technical and technological levels will decide to invest in us in Vietnam."

From an interview with Doi Tee Tu Tui, vice-governor Vinatex. 199 The Fashion Market in Japan

The business system in Japan

From FOB prices to window prices: a tormented and long chain of value In such a complex and articulated distribution system as in the case of the Japanese one, it is not easy to create outlines related to the chain of value of imported products, from the time they leave the factory up until they are purchased by the end user. The often incomprehensible, and in some cases apparently unjustified, articulation of roles and duties of the individuals that interact in the distribution chain is built on the basis of specific specialisations, which are often linked to the sole execution of a single trade operation. Each of these activities or functions represents a ring in the chain of the distribution value: from marketing right through to packaging (or re-packaging), from financial services through to sales returns (a procedure that was regularly carried out by retailers and currently accepted by wholesalers, and which today is even more common), from labelling through to warehouse storage, from internal transport through to deliveries to each sales point and so on. On this subject the opinion of Hironobu Uchida, a manager of one of the most famous Japanese trading companies96, is important as it highlights in great detail the advantages offered by the traditional organisation of distribution in Japan. "In the structure of imported brand-name products, returns are still the basic rule. Within the sales channel it is important to decide who will take this risk: just one individual, or if it is to be divided between various individuals. Moreover, an advantage of the traditional system includes the fact that in this way the objective is to avoid sales, which represent a loss with regards to the brand image. But if these logics are not respected and nobody wants to take on the responsibility of returns, the weakest ring, the retailer, is forced to launch a sales campaign. This consequently results in a weakening in the brand image and a reduction in profit margins for the retailer. There are also retailers that do not respect the traditional 96

Hironobu Uchida, Brand Manager of Tomen Fashion Express Co. 200 The Fashion Market in Japan

structure and import goods directly. In order to avoid the risk of breaking the stock of products on sale, the retailer often abunds his purchases and at the end of the season he is faced with the problem of unsold stock. In this case there are three disadvantages: they are forced to have sales, therefore they damage the image of the brand and consumers tend to avoid the shop that sells at a full price today and at a much lower price tomorrow." Despite all of this, Uchida is very attentive to the market dynamics underway at the moment and is convinced that the variables at stake in the field of fashion in Japan will be the sales channels that will bring about the most important changes. The complexity of distribution in Japan should not, in any case, be underestimated by an Italian company that intends to operate in the market. Consequently, it is best to carry out a careful analysis of the role of the possible collaborator and study his position within the distribution channels, the type of clients that he has and the functions that distinguish his activities in general, with the objective of finding the most harmonious and coherent distribution formula with the image that the company trade-mark intends to transmit to the public: a choice of strategic positioning on the market, in other words, must include a general evaluation of distribution politics. In general a layout of price structures may be articulated as follows:

FOB price Insurance costs and intercontinental transport Duties Consumer rate Importer: margin and costs Retailer: margin and costs Final consumer price

Incidence %

Value

20% 15% 5% 30% 60%

20 18 7 43 112

Increasing costs 100 120 138 145 188 300 300

The request for payment with an irrevocable letter of credit is to be considered as an acceptable solution in the case of new contacts and, in any case, in the case of all contacts that have not yet been consolidated through long term relationships or some kind of friendly relation. It is also possible, considering the incidence of costs connected to the letter of credit, to decide on the possibility of organising a simple direct advanced payment by bank transfer, 201 The Fashion Market in Japan

especially at the beginning of negotiations with a new client, and most of all if payment refers to the liquidation of trial orders, therefore for modest amounts which may not necessarily be repeated. The financial scissors is therefore rather unfavorable to intermediate protagonists in sales channels, and this represents one of the less visible cost factors among the ones connected to the onerousness of the Japanese distribution system. From an internal point of view the importer issues invoices at the end of the month while the client, retailer or distributor, is obliged to pay in instalments according to the various expiry dates of between 30 and 120 days. However, the trend in reducing payment terms is becoming more and more frequent and cash payments are becoming more and more popular.

How to avoid Italian companies falling into the most dangerous traps

Dealing with mistakes so as not to loose customers The most common reasons for dissatisfaction highlighted by Japanese importers in the world of fashion is always and inexorably connected to mistakes in incomplete deliveries in terms of colours, models and sizes compared with the specifications of the order. The importance of underlining how this kind of mistake must be avoided at all costs in the Japanese market is never enough; but with this objective in mind it is also vital to ask the Italian manufacturer to understand the reasoning behind why it is unacceptable or at least to ask them to accept and comply with rules of extreme precision. The reason for which a mistake made by the Italian manufacturer represents a very serious problem for the Japanese customer (importer or distributor) lies in the absolute principle of reliability that each supplier must maintain, at all costs (and in Japan “at all costs” means “even loosing out”, in a delightfully literal sense). Reliability, a good name, respecting delivery dates of an order received from a customer are precious values in Japan. Yet a Western entrepreneur, who is used to greater flexibility in the handling of mistakes, can hardly evaluate the proper importance of this issue in the Japanese business world. 202 The Fashion Market in Japan

For example, from the point of view of a Japanese businessman this kind of concept may not be completely impossible: a Japanese importer finds himself in a condition that he cannot deliver the goods ordered to his customer due to a mistake made by the Italian supplier that is due to deliver the garments. 30 blue garments size 38 are missing; then the importer sends one of his employees around all of the shops in the hunt for 30 missing garments; but the important thing is that he does not make a bad impression on his customer and he is ready to invest the time of his collaborator and the money required to purchase 30 missing garments at retail prices as long as he honours a complete and precise delivery. It is obvious that even though the Japanese importer has managed to save his face with the client in an improvised and costly manner, he is not willing to accept too much fair play with regards to the apologies of the Italian manufacturer who, in similar cases, normally tends to be treated in a half-hearted informal manner. Moreover, in such cases the Italian manufacturer almost never acts on his own initiative, without commenting on the occasions in which apologies are not even given. A frequent and probably the most common reaction to this kind of situation is the following: the Japanese importer stops buying, he conceals his anger due to lost profit (or due to extra costs borne) and does not provide the Italian company with any reason whatsoever. Therefore the Italian company will never understand the reason for this interruption in the collaboration, but may believe that it is down to the most probable causes according to Western mentality: preference to another supplier, or a general fall in requests from the Japanese market. Does a method exist, within this inflexible Japanese system of total dependence on the supplier with regards to the customer, with which it is possible to correct a mistake made and guarantee the continuation of business relations? No formulas currently exist that can provide any certainty, but consolidated procedures from trade folkways exist which should presumably be followed in these circumstances. The following five tips are not rigid or obligatory but they are born from collaboration experience with Japanese clients and they are aimed at rebuilding (and even consolidating) a business relationship that has been jeopardized due to mistakes made by the supplier. 1. Making the first move After having made a mistake, never wait until the customer complains (obviously only when you are aware of the mistake in advance). A Japanese economic operator is 203 The Fashion Market in Japan

convinced that no time should be lost to prevent the effects of a problem that is about to arise such as (in the case of the example made) the problems that may arise when he is not able to deliver the 30 garments ordered. The rapid communication of a mistake by proposing a solution should be considered as an attitude towards collaboration: silence should be considered as an irresponsible defeatist attitude and in any case totally inconceivable. 2. Making formal apologies A telephone call is really not enough. A formal letter is required, signed by somebody who covers a position of responsibility within the company. An e-mail is not acceptable; a fax is tolerable but only if it represents an anticipation of a letter that will be sent immediately by priority mail. A letter signed by a foreman is not sufficient; normally the more serious the mistake, the higher the role of the person in charge of apologising. 3. Admitting the mistake The mistake must be recognised without any reserves, and sharing total unacceptability. Any attempt to minimise the mistake ("yes, we delivered 30 yellow garments instead of 30 blue but we assure you that blue is very fashionable in Italy at the moment so you can be sure that your customers will be very pleased") â&#x20AC;&#x201C; even though this statement is very coherent with the stereotypes of Italian attitudes, it would be totally inappropriate and counterproductive as the consignee may consider this kind of argument as completely disrespectful and it would only lead to further irritation. 4. Avoid repeating this mistake in the future It is necessary to formally undertake and activate procedures that will avoid similar mistakes in the future. Attention: in this case vague and infantile promises ("we assure you that this kind of mistake will not be repeated in the future") are simply not satisfactory. It is vital to indicate the measures taken to increase efficiency in the control of orders to be dispatched, and to define how these measures will be introduced to the productions processes; if the company has a quality certification system it would be best to present the formal modification made to the manual of the control procedures related to that specific project. 204 The Fashion Market in Japan

5. Paying for damages A mistake is a problem for a customer, and a mistake is almost always connected to an economic loss. Therefore, it is important to declare total willingness to pay for any damages caused; and in this case, the declaration should not be limited to a vague availability but it should be backed by a request for a detailed list of costs sustained. But in order to avoid running the risk of having to honour the request at all costs (and the arrival of an objectively excessive request may possibly occur) it may be best to propose in advance a donation which should be offered as a symbolic recognition of damages sustained. An example: "as a sign of our understanding of the inconveniences caused unintentionally due to the incomplete delivery of 30 blue garments, we kindly ask you to accept â&#x20AC;&#x201C; as proof of our commitment in serving your company in the very best way possible â&#x20AC;&#x201C; 30 free garments in any colour chosen by yourself and not initially delivered by mistake, and at the same time we kindly ask you to evaluate our improved control plan of orders which we have immediately activated following this unpleasant mistake. If you decide to accept our proposal, we would be honoured to carry on serving you in the future". The procedure described up until now may appear to be excessive or maybe too servile in the eyes of an Italian economic operator; or simply the result of an exasperated vision of the scenario of Japanese entrepreneurs. Evidence provided by a Japanese manager that has been working in the field of fashion for more than ten years dealing with European manufacturing companies does not appear to be less severe: "There is no point in speaking about this subject, these are the rules, this is the procedure. In Japan there is a profound inequality between the role of a customer and supplier, and the position of the customer is always the one that lays down the law."97 But if perplexities on the above are put forward by an entrepreneur who is evaluating the opportunity of starting to work in the Japanese market, this matter should not be put aside but should be faced immediately and with total intellectual honesty. If the idea of having to move in coherence with the five points mentioned above comes across strong resistance for having made a mistake which may even appear to be venial, it may even be the case to reconsider in toto the idea of starting an activity in the Japanese market.

Hironobu Uchida, Brand Manager di Tomen Fashion Express Co. 205 The Fashion Market in Japan

It is always best to know beforehand Japanese consumers are said to be fussy and hypercritical. There is no doubt that in this case what may appear to be a common rule often represents truth that is underestimated by the events. A faulty product is often returned to the storekeeper with an explicit money-back request, and an implicit promise to cancel that specific shop from future shopping sprees. But even when the client does not demand his money back he will definitely remove that shop from his list due to the disappointment. The Italian manufacturing company must take these consolidated habits into consideration because any dissatisfaction whatsoever by the end user will be presented to the retailer and will be, without a doubt, in turn sent to the distributor, and from the distributor to the importer and will always end up on the desk of the manufacturer who may be called upon to pay for any damages. Therefore, it is best to move in at least two directions. 1. Personalisation of procedures for quality control The opportunity of activating a specific quality control procedure for orders destined for the Japanese market is recommended. In this case, collaboration with the Japanese importer, or distributor or retailer, may play an important role: according to their experience they will be able to issue a list of faults which Japanese customers normally come up against with the objective of correctly directing the quality control check list. At the beginning of the Nineties, an Italian company in the field of underwear was forced to face a very inconvenient problem in order to close long and laborious negotiations, but potentially very profitable, with a Japanese distributor. This distributor insisted in underlining the constant perplexities of the Japanese consumer with regards to the danger of finding pins in the package and therefore leading to possible injuries (possible judicial action activated by the injured consumer, in reality, appeared to worry the same distributor just as much). In order to underline the seriousness of this event he spoke of similar events that had already arisen on the market and which had alarmed consumers. The Italian company, however, underlined the fact that pins were not used in production or in packaging and that any cases that may have arisen in Japan may have referred to shirts, products not manufactured by that company.

206 The Fashion Market in Japan

Negotiations appeared to concentrate around this problem when the Japanese distributor asked the Italian entrepreneur to contact a company specialised in the production of electronic control systems to see if it was possible to create a small metal detector that could be applied to the quality control line. Exasperated by this request, the Italian entrepreneur put a stop to the negotiations which were never reopened as he considered this request completely unfounded. Following an analysis of this question after the event, it was possible to ascertain that the cost of a small metal detector would have been very reasonable indeed. The application of the metal detector at the end of the quality control would have provided a tangible reassurance to the distributor who would have used the pin detector â&#x20AC;&#x201C; with abundant technical data, photographs and statistics of quality control â&#x20AC;&#x201C; as a final sales support for its customers. In this case impatience, intolerance and the poor attitude to active cooperation between the manufacturer and the distributor had interrupted business relations which were ready to start during the last stage. 2. Standardizing complaint procedures It is possible to design the standardization of a procedure aimed at customer complaints. The undersigning of an explicit agreement with a customer (importer, distributor or retailer) for the replacement of faulty goods, for the activation of any repairs or re-machining and for the collection of replacements will definitely improve the quality of the collaboration and will put the customer in a position to handle any complaints made by end users with extreme tranquillity. 3. Respecting delivery times One of the most common complaints is for delays in delivery times. Delays do not only affect sales and promotion campaigns but the entire logistic chain. Time planning is one of the most important company functions in Japan and there is definitely a reason for this: the lack of storage spaces and high costs do not allow for even the smallest mistake. The safeguarding of contribution margins is often based on the capability in reducing times and costs of intermediate storage (and it is not by chance that the most detailed studies based on just in time are Japanese). Besides the predictable commercial damages related to the lack of promotion or campaign articles on shop shelves, besides the additional costs due to the need to 207 The Fashion Market in Japan

search for transport and storage with suppliers of these services outside of the previously calculated plans (and therefore leading to extra costs), a third factor must not be forgotten: image. It is difficult to quantify the entity of the damage to the image of a retailer who has presented a product in a brochure but is not capable of supplying it to his customer: this kind of behaviour is not considered as very professional and the sales point is considered as unreliable, an image that is very difficult to recreate.

208 The Fashion Market in Japan

Marketing

The position of Italian fashion in Japan: the country image Throughout the survey between Japanese consumers carried out for this report, the people interviewed were asked to express their comments on the country that is the most successful in identifying the image of fashion. The general results, presented in the following table, are flattering for the image of our country, which beats the historical competitor, France, even if by just a little. As already illustrated in detail, in the section regarding the analysis of the behaviour of consumers according to age groups, a decisive role in this success originates from the judgements of the younger generations for which the image of France is a little more unclear compared with the image of Italy. Despite all of this the very small distance that separates the Italian position from the French position suggests that it is not the case to rest on oneâ&#x20AC;&#x2122;s laurels. A careful analysis of data shows that if the analysis of the results is limited to the segment of extremists in favour of one or the other country, the image of France turns out the be the winner. The image of Italy, however, wins thanks to a general but certainly not â&#x20AC;&#x2DC;incandescentâ&#x20AC;&#x2122; agreement: in the absence of historical data related to this survey, it is not possible to say if this condition will bring about a fall in public opinion for the future, or a trend aimed at an increase in our popularity. Whatever the state of things, it appears to be important not to loosen tension on the subject of the institutional promotion of Italian fashion, even through modern and experimental intervention. If market surveys are not required to identify the level of popularity of our country in Japan, it is probably not useful to operate again and again with a repetitive emphasis on the generic made in Italy concept: for a public with a bulimic and incessant hunger for novelties, it may be sufficient to present, step by step, guidance

209 The Fashion Market in Japan

towards the numerous aspects of the Italian fashion system, along a course that would not even risk ending too soon. If, for example, we think of the construction of new forms of promoting Italian companies and tourism, organised, for example, according to local itineraries along the routes of the Italian industrial districts; and how full of attraction the presentation of a group of Italian companies through the social and cultural history of their territory and the evidence provided by old and new protagonists of economic development may be, compared with the usual predictable and tedious presentations of products and companies. The key words of Yoshihiro Taijima 98 on this subject re-echo: "So they say that the Japanese consumers do not spend as much as they used to; (...) however, they still do spend on things in which they find inspiration. I am sure that the foreign retailers will know where to look". "The home of top fashion is..." 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Agree quite a lot Agree a lot

France 20,7 14,3

Japan

Italy

USA

9,7 28,6 4,3 13,4 Percentage and levels of agreement with the statement

5,8 1,8

Source: Diva Eris, 2003.

The President of the Japanese Institute of the Economy of Distribution and professor at the University Gakushuin of Tokyo; cit. 98

210 The Fashion Market in Japan

Recommendations on product and price policies

The guarantee of a wide choice of sizes According to what used to be a likely statement, the morphology of the Japanese body is very much standardized, therefore a scale of relatively small sizes is sufficient to satisfy the majority of consumers. One day is enough to observe passers-by along any road to realise that this is nothing more than a common place statement. The huge number of different kinds of body morphology of Japanese female consumers is not very different from the current situation in Europe or America; and if it is true to say that the percentage distribution in sizes still presents important differences between one continent and another, it is just as true to say that the number of tall women, well-built women and women with different sizes between the top and lower part of the body are increasing, therefore creating a unique effect on the market: the request for a wider assortment of sizes. The world of department stores has already created huge attention to this trend in demand, which is rapidly expanding. The flagstore of Isetan department stores, in Shinjuku, has 53 brands with customized sizes (for tall large women, young large women and so on). The same sensitivity towards size differences can also be found in Marui and in other department stores. This phenomenon has recently been analysed by Mayumi Morimoto, a management consultant specialised in fashion trends, who described her experience on this subject in a specialised magazine99. Morimoto explains how each time she guides a focus group made up of middle-aged women, a very common experience arises each time from these consumers: "when I go shopping and I observe women that are younger than myself who are trying on beautiful clothes, I always ask myself: I would like to try it too, but I bet it will be too small". Similar thoughts arise in the case of underwear, where the assortment of small and medium sizes is large, but the lack of large sizes available seems to create discomfort. But, in general, the phenomenon does not appear to be limited to larger sizes, but it can be Mayumi Morimoto, consultant for Papier Colle and a collaborator of the fashion periodical Channeller, in Fashion Hanbai, November 2003. 99

211 The Fashion Market in Japan

found in all cases of sizes far from the most common ones: at the beginning of each season, for example, smaller sizes of fashion shoes are immediately sold out and therefore consumers with small feet rush to shops as soon as the new collections are presented. The capability of a brand or a shop of providing a customer of a ‘difficult’ size with the guarantee of finding just the right ‘wearability’ represents an extremely strong confidence factor which and, without any hesitation whatsoever, it also avoids any price-aggression by competitors. The professional advice of Morimoto is very clear on this subject: if a sales point can count on a valid and competitive assortment of sizes it is vital to invest in optimising communication to customers in this aspect. The production of posters, special tags on the products on display which highlight the availability of special sizes of a specific model, organising corners of the shop dedicated to special sizes, and so on: communication can short-circuit potential lost sales connected to self-censure of clients, who do not always decide to ask staff if their size is available and they prefer not to buy.

Retail prices according to consumer experience It is not necessary to go too far back in time to remember the stereotype of a Japanese consumer who was not very attentive to the correct value-for-money ratio when evaluating imported products, being reassured in her purchasing procedure by justification deriving from the presence of a prestigious designer label. But if the phenomenon of consumer reassurance in purchasing worldwide famous brands (the designer label effect) is not drastically falling, it is true to say that the Japanese consumer is more and more updated on the technical characteristics of a product, and is more and more aware of the quality/price ratio. Three interesting facts are related to the progressive acquisition of attention to the intrinsic characteristics of the product in the purchasing behaviour of Japanese consumers. 1. Consumers are no longer looking for the guarantee that they have made a good purchase just because they have bought a designer label or because they have paid a high price. Often the choice of designer label or costly products tends to represent criteria 212 The Fashion Market in Japan

for justification of the acquisition ("I have definitely bought a good product because it is a designer labelâ&#x20AC;? or "because it is expensive"), and this mechanism has been exploited by many manufacturers in marketing principles. 2. The consumer is now often interested in evaluating products that are not so famous. Consultation of the products on offer from foreign fashion, mass access to new trademarks in the market, the same collective phenomenon towards a general increase in the quality of the analysis of the value of fashion products result in public attention moving towards new and unknown brand names. 3. Prejudices towards low price products are eliminated. Constant innovation in the offer system has drastically accelerated the transformations of the orientation system of values by consumers. The promotion campaigns carried out by Uniqlo, and, outside of the fashion world, the same irresistible success of the Japanese chain 100 Yen Shop have contributed to the development of sensitivity towards the key-factor of market evaluation: quality/price.

213 The Fashion Market in Japan

A thought on marketing

From the perception of product value to the perception of experience value Consumers tend to search for the ‘value of experience’ more and more. The propensity of consumers to making an acquisition is not only related to buying a specific article but to a scenario made up of the right moment, a pleasant place and emotional contents. This new consumer value can be defined as an experience value or the economy of experience, in contrast with the traditional concepts of product value or product economy. For example, the value offered by Starbucks coffee bars is not only related to the value of a cup of coffee. The consumer also pays for the pleasure of enjoying his coffee in a special Starbucks atmosphere. The value of this experience can be defined as 'the value that implies a pleasant physical or mental situation, or an aesthetic satisfaction", and it will become an increasingly important factor in consumption and in the economy of the twenty-first century; the world of fashion will not only be exempt from this phenomenon but it will also succeed in overtaking it with excellent results thanks to the application of good and creative marketing strategies.

The influence of testimonials The fact that the sales dynamics of testimonials in Japan has always been successful should not be doubted and the phenomenon does not appear to lose its traditional efficiency. In general, Japanese personalities and sportsmen are the first to benefit from public attention, and admitting that the individual is very famous – there is no doubt that the publicity campaign will definitely be successful. Once again, attention must be made to the Japanese systems and parameters used for the evaluation of notoriety: Italian personalities (with very rare and extremely expensive 214 The Fashion Market in Japan

exceptions) are unknown to the Japanese, therefore the possible use of relatively unknown testimonials must be carefully considered; and in any case the notoriety of testimonials should not be considered in an absolute sense, but should be tested with regards to the segment-objective of the publicity campaign. An empirical rule of international effectiveness exists in Japan: if, observing the publicity message proposed to be launched, a focus group made up of representatives of the segmentobjective of consumers to which the message is aimed, feels the need to complete the message with a title that suggests the name of the testimonial, it would be best not to continue with the campaign.

Listening to the opinion of customers: the CRM100 according to Wacoal It is not excessive to state that, in the Japanese market of underwear, â&#x20AC;&#x2DC;the name is Wacoalâ&#x20AC;&#x2122;. The company has been operating since 1946, and was founded in 1949 with its current name, initially giving work to ten employees. With a turnover, despite any dynamic in economic trends, that has constantly been around 160 billion yen (approximately 1.3 billion euro) and always having provided shareholders with sound dividends, the Japanese colossus in underwear is confirmed as one of the most attentive companies that uses marketing to continue satisfying and consolidating its success in the market. CRM does play a role in Wacoal's success formula on the domestic market. The new CRM model experimented by the company should therefore be carefully analysed. It is a decisively modern interpretation of how to handle customer relations which, elsewhere, is often neglected and activated with very little creativity, limited to searching for customer opinions in a lazy and occasional way. In this field, the most modern and profitable experience of Wacoal lies in the Wear at Home market, casual indoor clothing which can also be worn outdoors and which, according to some consumers, appears to have remarkable success thanks to the diffusion of the strange concept: "these are just the right clothes to wear when you are in a hotel room with your boyfriend ". 100

Customer Relationship Management. 215 The Fashion Market in Japan

The real use of Wear at Home products was the subject of discussions launched in a very popular community-site in Japan, CafĂŠ Globe. This is not an internet site created by Wacoal: the site is pre-existent and it catalyses the attention ad trust of the main target of this range of products (women aged between 25 and 35). The debate is animated and stimulated by Shiho, a famous Japanese model who is an animator in discussions on fashion. She wears new Wacoal garments and backs the concept that "time spent in your bedroom is yours and it is just as important as you: you should spend this time wearing something that you like, and you should feel completely at ease". Thanks to these comments, Wacoalâ&#x20AC;&#x2122;s CRM receives ideas, stimulations and proposals from which designers manage to create articles that are closer and closer to customer desires. Thanks to the formula recently experimented and already in use, Wacoal can collect opinions from customers on the products used, he can ask customers questions regarding the weak points of the product and he can stimulate the transmission of advice and suggestions on how to create efficient improvements101. The system clearly brings about at least two benefits: the first is the global reconstruction of the project department which is now capable of collecting direct news from female users. "Organisation of the department is being radically transformed. The traditional model was structured according to an ideal flow that started with the project unit, through to production, distribution and finally reaching sales; today however the new model is organised according to the dynamics of interaction with customersâ&#x20AC;Ś imagine the sea of our customers, with a constant movement of waves that drops new subjects and useful comments for the project on our beaches". A second benefit is represented by the drastic reduction in the amount of time for planning, preparing prototypes and engineering new models. Traditionally, the complete cycle used to be eleven months; through this new organisation, the department can reduce the amount of time from when input arrives from customers to the launch of the new model on the market to just two and a half months. The results of the experience matured through this new CRM formula has been evaluated with success, and it can be found at the basis of a new collaboration plan between Wacoal and Takashimaya, one of the famous names in the gotha of Japanese department stores.

101

The case is described by Hiroyuki Miyamoto in Toyo Keizai, 2nd August 2003. 216 The Fashion Market in Japan

New marketing techniques for an old philosophy: the kaizen102 applied to CRM Nissen is a leading company in the field of mail order sales and, recently, also on-line internet sales. Nissen is very sensitive to comments made by customers and this is backed by the characteristics of the company trade formula; despite this, Nissen’s interpretation of the CRM concept highlights the absolute centrality that company management attributes to the analysis of customer desires, due to the awareness of the direct correlation that exists between the capability to interpret correctly the point of view of the customer and the result of the economic management of company business. Nissen’s CRM work is organised with an extremely Japanese meticulousness, so much so that it would probably be difficult to re-propose it in an Italian context. Every year Nissen receives approximately three hundred thousand letters from its customers. Each of these letters is analysed in detail by a very strange office called "The Committee for the voice of customers". All of the employees of the head office take part in the Committee in shifts and cover a six month period. Each member of the Committee must read each letter; in all cases of products returned by unsatisfied customers they must make a note of the reasons why the goods have been returned; they must analyse every message and code each problem in one of the 500 preexistent problem areas. Only at this point will the customer’s request really begin, with an attempt to resolve any problem whatsoever. The long registration of consumer opinions, traditionally written in pencil on forms, has now been automated with the use of a computer (in reality, just recently). 8,400 category codes have been created for the possible problems highlighted by customers and each employee is now capable of checking all data related to each complaint on the computer and can handle each single case the day after the customer’s telephone call. This computerised system has led to company savings of approximately 10 million yen per year, excluding the obvious benefits deriving from greater efficiency of the system. The Nissen case has recently been commented by a specialised Japanese magazine 103, which also includes a specific example. A client wrote to Nissen saying: “the label indicating the size and washing instructions is rough and irritates me. This is not how it 102 103

Literally, ‘improvement’. In Toyo Keizai, 2nd August 2003. 217 The Fashion Market in Japan

should be, considering that it is something in contact with my skinâ&#x20AC;?. Following comments on this opinion, the Committee agreed to proceed and modify the material of the label, deciding that from that moment it would have been made in satin instead of nylon. But at that point, despite the fact that the result has already been achieved, the organisation machine of the Committee did not stop there: after a meeting with the Committee all employees are informed of the decision made and, in particular, all of the call centre operators are informed that they must advise all customers that call Nissen that the products have been improved thanks to customer opinions. The author of the abovementioned article sustains that in a period of economic recession the meticulous attention to customer requests, and in general constant and excessive customer courting are extremely important factors for success. The management logics that Nissen applies to CRM is connected to kaizen, one of the traditional key-principles of Japanese management, which - as in many cases - is born from product development policies, one of the applications of the area of production organisation in which the Japanese school of business management has provided excellent results since the end of the war. The objective of kaizen is to find a way to create a product, or to carry out an activity, in the very best or efficient way possible compared with the system currently used. Even though it is not so different, from this point of view, from the techniques used in quality control, the main point that characterises kaizen lies in the means and methods used. Bunji Tozawa, an expert in this field, represents it with an efficacious metaphor: "Imagine the difference between a bicycle and a car. They are both means of transport, but according to specific requirements one is chosen instead of the other. Anyone can use a bicycle, there is no need for a driving license, you can even ride along narrow roads, it is free and easy to use. In the same way, kaizen is used to bring about even the smallest of changes, yet useful and important, and the huge advantages are to be found in its easy and simple use. In other words, everybody, even those not directly involved in this kind of work, can do a good kaizen."104 The main reason for the success of Nissen appears to be correlated to the constant application of the kaizen principle â&#x20AC;&#x201C; constant product improvement rather than periodical re-planning in toto â&#x20AC;&#x201C; enhanced by brilliant Copernican innovation: listening to customer opinions rather than the opinions of company employees. The fields of application of the 104

Bunji Tozawa, "Kaizen: Tips for achieving your targets easily and efficiently", Asia 21, January 1997. 218 The Fashion Market in Japan

principle of constant improvement are unlimited: from methods of delivery of products, the compilation of presentation letters, packing and so on. The sense of direction of customer requirements appears to permeate the entire Nissen philosophy, as described by the company: “Create a committee in which almost the entire company participates in order to analyse consumer requests → organise a procedure for the active management of customer opinions → develop the quality of work of call centre operators and improve catalogues”. Through this approach Nissen has managed to develop an entrepreneurial idea that is born from the management of a customer data base rather than investments in publicity and promotions; and new business ideas are being studied which have been created from further development in management skills of information related to customer opinions.

The power of customer service Customer service has the same effect as a master key to enter in the Japanese market. Keeping this concept in mind, it is possible to develop a visibility and trade-mark attraction strategy with relatively low costs; the strength of this component of the offer system of the company represents a pillar in the strategy of one of the largest names in worldwide fashion. The following case is described with the objective of entering into the subject in detail and pressing for each entrepreneur ready to face the Japanese challenge not to neglect the service-component, even more important when the name in question is Louis Vuitton. The Japanese figures of Louis Vuitton without a doubt represent the sign of success without any apparent sign of fatigue. It entered the market in 1978 by opening a trade company and Louis Vuitton saw its turnover constantly increase during its twenty five years in Japan. Its turnover exceeded 100 billion yen (approximately 800 thousand euro) in the year 2002 and in the year 2003 it reached 135 billion yen (a little less than 1,100 million euro) with an increase of 15% compared with the previous year 105.

105

In Emerging Business Opportunities in Japan, MIPRO, Tokyo, 2003. 219 The Fashion Market in Japan

The success of Louis Vuitton in the Japanese market represents a very interesting case, for many reasons. Even though Louis Vuitton products have rather high prices, the products are purchased by a very wide range of customers which may be defined as coherent, in terms of income and life styles, with the prices applied by the French company. LV bags and accessories are regularly purchased by secretaries with a fixed wage, therefore registering a penetration in these market segments that appear to be inexplicable with the only reason being attraction to the name (which is more or less comparable with other famous names international fashion, normally far away from the shopping basket of customers with an average income). The original alchemy of the attraction of the French label appears to be connected to the specific capability of combining the cry of the fashion-factor with the intrinsic quality of the product and its functionality. But a decisive reason appears to lie in communication related to the product, which – according to a promised made by Louis Vuitton – is destined to last 'a lifetime'. The promise is backed by facts, interpreted according to the most popular standards of the Japanese public; the quality and efficiency of after-sale assistance. The five repair and assistance centres in Japan guarantee the same efficiency and functionality as the service provided in Paris, with approximately 200,000 repairs carried out each year. A further reinforcement of the perception of product value related to duration and performance is provided by the second-hand market, which has interesting results in Japan thanks to the activities carried out by distributors. They buy second-hand bags and accessories from customers and periodically put the rarest and most unusual models back on the market at full prices. Under the thriving second-hand market, the perception of Louis Vuitton products manages to create deep roots in middle-class consumers. When a customer buys a ‘good’ second-hand product she does not feel guilty for having purchased a luxury product connected to short-lived fashion, and she has a rational justification for having bought a Louis Vuitton bag ("it is expensive but it is elegant, it lasts a lifetime and will never loose its value"), even though it is a middle range product with a market price that is definitely not in line with her income.

220 The Fashion Market in Japan

Marketing costs

The media in fashion and their costs Some useful tables are indicated below for an initial orientation within the crowded and speckled world of communication means of magazines not only useful for planning publicity campaigns but also for programming press releases; if carried out professionally, PR activities aimed at the most common media in the fields of consumers may bring about results that are not only effective but also distinguished by an excellent cost/benefit ratio. By connecting the descriptions of the "six target segments" and the relative "target maps", it is possible to identify the most interesting segments for the company and to carefully examine direct acquaintance with the headlines which can be correlated with the company's economy and the consumer segments selected. FASHION MAGAZINES Title 25ans An-An Baila Biteki Can Cam Cutie Domani Ä&#x2019;f Ego * System Elle Japon Figaro Japon Ginza Hair Catalogue Harper's Bazar Hi-Fashion Luci

Periodicity

Target

monthly weekly monthly monthly monthly biweekly monthly monthly monthly monthly twice a month monthly four-monthly monthly bi-monthly monthly

20-years-old, 30-years-old 20-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old Teen-agers 30-years-old, 40-years-old 20-years-old, 30-years-old teen-agers, 20-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old

Advertising rates (yen) Circulation (1 page, 4c) 2.000.000 2.000.000 1.800.000 1.500.000 2.200.000 1.500.000 1.600.000 1.450.000 600.000 1.450.000 1.600.000 1.600.000 650.000 1.600.000 1.200.000 1.500.000

196.000 550.000 300.000 200.000 362.000 700.000 160.000 120.000 200.000 120.000 180.000 110.000 65.000 140.000 70.000 250.000

221 The Fashion Market in Japan

Marie Claire Japon Mina Mini Mode Et Mode More Nicola Non-No Oggi S-Cawaii! Seventeen So-En Spring Spur Sweet Vingtaine Vogue Nippon Waraku Zipper

monthly twice a month monthly quarterly monthly monthly twice a month monthly monthly twice a month monthly biweekly monthly monthly monthly monthly monthly monthly

30-years-old, 40-years-old 20-years-old 20-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old teen-agers teen-agers , 20-years-old 20-years-old, 30-years-old teen-agers, 20-years-old teen-agers 20-years-old 20-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old, 40-years-old 40-years-old, 50-years-old 20-years-old

Title

Periodicity

Target

Anatani Yell Ar Asahi Graf Person Baby Age Bessatsu Esse Kurihara窶ｦ Bridal Note Caz Classy Como Cosmopolitan (Japan) Crea Croissant ﾄ値an Esse Fine Frau Fujin Gaho Fujin Koron Fujin-No-Tomo

monthly monthly monthly monthly four-monthly six-monthly biweekly monthly monthly monthly monthly bi-monthly monthly monthly monthly bi-monthly monthly bi-monthly monthly

40-years-old, 50-years-old, 60-years-old 20-years-old, 30-years-old, 40-years-old 30-years-old, 40-years-old future mothers, mothers 30-years-old, 40-years-old, 50-years-old 20-years-old, 30-years-old 20-years-old 30-years-old to 60-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old 20-years-old 20-years-old, 30-years-old, 40-years-old 40-years-old, 50-years-old, 60-years-old 20-years-old, 30-years-old 20-years-old 20-years-old, 30-years-old 40-years-old, 50-years-old, 60-years-old 20-years-old, 30-years-old, 40-years-old 30-years-old, 40-years-old, 50-years-old

1.500.000 1.500.000 1.300.000 750.000 2.500.000 1.000.000 2.800.000 1.800.000 1.350.000 1.000.000 900.000 1.300.000 1.800.000 1.300.000 1.800.000 2.350.000 1.500.000 1.500.000

150.000 160.000 450.000 180.000 720.000 210.000 667.000 250.000 250.000 200.000 60.000 450.000 150.000 300.000 202.000 225.000 100.000 257.000

LADIES' MAGAZINES Advertising rates (yen) Circulation (1 page, 4c) 700,000 1,000,000 1,200,000 980,000 1,200,000 800,000 1,200,000 1,600,000 1,600,000 1,200,000 1,500,000 2,100,000 1,500,000 2,400,000 1,350,000 1,500,000 1,600,000 1,400,000 400,000

50,000 160,000 250,000 160,000 300,000 70,000 220,000 165,000 110,000 110,000 165,000 390,000 180,000 430,000 367,000 160,000 187,000 182,000 120,000

222 The Fashion Market in Japan

Gli Grand Magasin Grazia Jj Josei Jishin Josei Seven Junie Junon Katei Gaho La Vie De 30ans Lee Lettuce Club Maple Maternity Miman Mine Miss Misty Monique Mrs. Muffin My 40's Ohayo Okusan Olive Orange Page Oz Magazine Petit Enfant Pichi Lemon Popolo Pumpkin Ray Say Seda Sesame Shufunotomo Shukan Josei Suteki-Na-Okusan Thank You Very Vivi Voce Watashi No Country With

monthly monthly monthly monthly weekly weekly monthly monthly monthly monthly monthly twice a month monthly monthly monthly monthly monthly monthly monthly monthly monthly monthly monthly monthly twice a month bi-monthly bi-monthly monthly monthly monthly monthly monthly monthly bi-monthly monthly weekly monthly monthly monthly monthly monthly four-monthly monthly

20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old 30-years-old 20-years-old, 30-years-old 20-years-old 20-years-old 20-years-old 20-years-old 20-years-old, 30-years-old, 40-years-old 30-years-old, 40-years-old 20-years-old, 30-years-old - married women 20-years-old to 40-years-old, housewives, OLs 40-years-old, 50-years-old, 60-years-old pregnant women 50-years-old, 60-years-old 30-years-old, 40-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old 30-years-old, 40-years-old 30-years-old, 40-years-old, 50-years-old 20-years-old, 30-years-old 40-years-old, 50-years-old 30-years-old, 40-years-old, 50-years-old 20-years-old 20 to 50-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old - young mothers Teen-agers 20-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old 20-years-old 20-years-old Mothers with children 3-10 years old 30-years-old, 40-years-old 20-years-old, 30-years-old, 40-years-old 30-years-old 20-years-old, 30-years-old, 40-years-old 30-years-old 20-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old, 40-years-old 20-years-old, 30-years-old

1,500,000 1,250,000 1,500,000 2,300,000 2,400,000 2,150,000 1,200,000 1,500,000 2,000,000 1,600,000 2,100,000 2,200,000 1,600,000 700,000 1,000,000 1,500,000 1,500,000 700,000 1,000,000 1,850,000 1,500,000 1,500,000 1,500,000 1,200,000 2,500,000 1,100,000 650,000 800,000 1,300,000 1,400,000 1,650,000 1,600,000 1,250,000 850,000 1,800,000 1,700,000 2,000,000 1,700,000 1,800,000 1,900,000 1,500,000 800,000 2,700,000

130,000 173,000 140,000 640,000 437,000 480,000 270,000 280,000 246,000 100,000 340,000 720,000 110,000 115,000 180,000 290,000 95,000 220,000 245,000 200,000 210,000 150,000 550,000 100,000 700,000 250,000 140,000 161,000 400,000 255,000 400,000 246,000 188,000 140,000 282,000 345,000 378,000 430,000 320,000 450,000 170,000 145,000 643,000

223 The Fashion Market in Japan

MEN'S MAGAZINES Title Begin Best Gear Boys Rush Brio Fineboys Flash Flash Exciting Friday Gainer GQ Japana Men's Club Dorso Men's Club Dorso Men's Ex Men's Non-No Mr.Hi-Fashion Newsweek Nihonban Rekishi Kaido Shukan Gendai Shukan Jitsuwa Smart Tokusengai Voice Warp Magazine Japan Weekly Post Weekly Takarajima

Periodicity

Target

monthly monthly monthly monthly monthly weekly bi-monthly weekly monthly monthly four-monthly monthly monthly monthly bi-monthly weekly monthly weekly weekly biweekly monthly monthly monthly weekly weekly

20-years-old 20-years-old, 30-years-old 20-years-old 40-years-old 20-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 20-years-old, 30-years-old 30-years-old, 40-years-old 30-years-old, 40-years-old 30-years-old, 40-years-old 30-years-old, 40-years-old 20-years-old 20-years-old, 30-years-old 30-years-old, 40-years-old all ages 30-years-old 30-years-old 20-years-old 30-years-old 30-years-old, 40-years-old 20-years-old 30-years-old, 40-years-old 20-years-old, 30-years-old

Advertising rates (yen) Circulation (1 page, 4c) 1,400,000 1,400,000 1,200,000 1,500,000 1,350,000 1,800,000 1,000,000 2,200,000 1,500,000 1,300,000 1,200,000 1,300,000 1,400,000 1,500,000 1,000,000 1,200,000 500,000 1,850,000 1,100,000 1,300,000 700,000 400,000 1,200,000 2,000,000 1,300,000

153,000 153,000 180,000 80,000 130,000 461,000 440,000 570,000 140,000 70,000 70,000 142,000 78,000 310,000 80,000 111,000 150,000 643,001 151,000 550,000 84,000 150,000 300,000 657,000 500,000

Economic and efficient methods to create brand visibility The subjects explained here below are suitable for use by the Italian companies interested in entering and becoming â&#x20AC;&#x153;visibleâ&#x20AC;? on the Japanese market without necessarily having to sustain huge investments in communication. The key concept is, therefore, to work with a good press office, capable of arousing the interest of the media towards the company so that television, newspapers and magazines 224 The Fashion Market in Japan

decide to speak about the company and therefore achieving an extremely efficient visibility throughout the means of communication. But in order to achieve this objective, besides the specific capabilities in public relations and in handling relations with the press, the company must really have an interesting story to tell and to exploit. With this objective two themes have been found in which the Japanese public has shown extreme interest. By using the subjects described as a basis for building efficient business communication, the company may soon be ready to have the Japanese media start talking about it.

The kodawari factor Even though it may be imaginable or predictable, the attention that the Japanese pay to small details of products is higher than any other kind of scenario that an average Italian consumer may ever imagine. Small imperfections in the stitching, in the cleaning of the threads of the garment, in the cut of a pocket, in the fixing of buttons (micro-faults that, according to European standards, are often considered within the limits of production tolerances) are noted and evaluated by the most difficult customers in the world. But this fussiness may also hide a potential critical success factor, if re-elaborated in marketing with attention paid to the 'kodawari-factorâ&#x20AC;&#x2122;. This Japanese term refers to the attention to particulars and details, to the pride of the craftsman who is capable of enumerating the many small aspects of his work which, in his opinion, make it better than that of other craftsmen; the plus of products enumerated by manufacturing companies and so on. In a social-cultural environment that is very sensitive to the kodawari-factor, the marketing suggestion is very clear: the creation of products which are very special and different â&#x20AC;&#x201C; traditional craftsmanship, materials chosen with special care, a specific reason for an unusual shape.

225 The Fashion Market in Japan

Therefore, developing products that transmit the kodawari emotion: stories to be passed onto salesmen, so that they can tell them to their customers almost secretly, in a confidential and inspired nature, as if they were giving away a small company secret. The cycles of fashion-product consumption often change in Japan; after the boom of standardized average and average-low products, a range that exploits the small diversities hidden in the kodawari logic, if well developed, and transmitted even better, may deserve a small golden niche in the market.

Micro-marketing Listening to customer opinions represents constant attention in the marketing culture of Japanese companies; but there are numerous methods with which it can be carried out and it is not always necessary to apply techniques with a high level of technology and innovation. Maybe a little out of fashion, apparently far from the logics of modern distribution, in reality the case described transmits stimulations and comments that can be easily collected and - if necessary â&#x20AC;&#x201C; re-interpreted by protagonists of retail distribution; the validity of the formula appears to be able to provide its very best, especially during a period of recession, in which it is considered almost impossible to sell products to the public that are not characterised by a very high level of desirability and a convenient price. Experts will, in this case, find support that may be very useful in creating a new successful entrepreneurial formula for a small-medium sized Italian company with the desire to face the scenario of the Japanese retail market. The techniques of micro-marketing - or ad personam marketing, already marginal in specialised literature, appear to be in perfect harmony with the characteristics of the offer system described in the following case, recently strengthened in its non-marginality by the prestigious legitimation by a Japanese magazine specialised in this field 106 that indicated it as an example for reflection by operators in the field, and telling readers the story of the "Mini Zoo". â&#x20AC;&#x153;Mini Zooâ&#x20AC;? is a fashion boutique that opened 11 years ago, located in a residential area far 106

In Fashion Hanbai, November 2003. 226 The Fashion Market in Japan

from traditional shopping centres, run by a lady with a lot of experience in this field – as a journalist for a ladies' magazine and also as a fashion-coordinator for a company. When starting the company, considering the poor results achieved by traditional means of promotion – publicity sent by post, distribution of leaflets – the entrepreneur attempted to analyse the reasons why despite the limited assortment of garments, the difficult location and the quite poor décor of the shop, customers continued shopping there and showing true loyalty to the shop. By concentrating attention on this point, and often facing the subject in greater detail with her customers, the entrepreneur discovered the reason for this impregnable loyalty, confidentially explained by one of her customers with the following kind of confession: "Madam, the thing is that you know me very well, much better than any other assistant in any other shop". The entrepreneur explains: "Without even realising it, I have always chatted a lot with my customers – that’s the way I am. Then, little by little, I realised that my clients enjoyed spending time in friendly chit chat and so – if they had to buy clothes – they preferred to come to me. Other fashion shops were not able to give them the 'time to chat’. As soon as I realised this concept I made more effort in chatting with my customers and the number of customers that I have has increased day by day, purely by word of mouth." Convinced of the effectiveness of the method, the owner of "Mini Zoo" has thought about rationalising it, transforming it into a formal and coded technique, and she describes it as follows. "The first point to be achieved is the acquisition of an excellent level of familiarity with customers. In general, the reason why a customer returns to a shop is due to the quality of the products and of the service; in other words, a good offer is simply not enough. Therefore, in my case, I must be capable of becoming the very best shop assistant that you could ever imagine, capable of listening to everything that the customer wants to tell you, understanding her personality, encouraging her or maybe sometimes even telling her off; in any case, giving her advice on what she should do. Many customers say that my shop has the same atmosphere of a pub, and my role is similar to the role of a bartender107. Then, I also consider the fact that the weight of my life experience helps me to conquer trust in my customers: lots of love stories to tell, my divorce, my second In the translation and most of all in the transition of the statement into the Italian scenario, the meaning of this statement is diluted. The entrepreneur refers to the typical atmosphere of Japanese pubs that were traditionally men only which are almost always run by a woman; the strong point of each pub is the quality and relational skills of the waitresses and the owner, who know how to create an intense and confidential relationship with regular customers. 107

227 The Fashion Market in Japan

marriage, the story of my five children. In any case, speaking with my customers I discover all of the aspects of life styles. We speak about work and wages, family stories, human relations, secret love stories, everything. I listen to their intimate stories, without forcing them. Sometimes they even come to visit me without the need to buy something, just for a chat. I would like my shop to be very similar to professional consultancy, just like a doctor or an analyst. But my job is in fashion: I am not a bartender or a psychologist. I try to improve the life of my customers through their clothes, thatâ&#x20AC;&#x2122;s all. But I do it with zeal and professionalism, thatâ&#x20AC;&#x2122;s my mission. I have helped a lot of people with difficulties in their relationships to gain confidence and to recover their family or social relationships through the clothes they wear. If necessary, to solve customer demands I can dedicate days and days to the search for the right article and one of the greatest satisfactions is when a customer confesses: "I would never be able to buy clothes from anywhere else".

228 The Fashion Market in Japan

SECTION D DEALING AND SELLING WITH JAPANESE COMPANIES

229 The Fashion Market in Japan

From A to Z, an initial ABC guidance book on how to handle business relations in Japan

In alphabetical order, this section includes twenty-five subjects which are important and useful to know and apply in order to increase the possibility of success in activating a plan for access to the Japanese market. This collection of ideas is not intended (and in any case could not be, even it wanted to) to be exhaustive of the numerous good rules and wise suggestions that may be collected during constant contact with the market and its protagonists. This glossary should be simply seen as an initial memorandum to be taken into consideration during the companyâ&#x20AC;&#x2122;s passage towards this market, in the hope that the company may succeed, as soon as possible, in considering this list of points little more than an ABC for beginners, thanks to the experience matured directly.

230 The Fashion Market in Japan

Aisatsu Literally aisatsu means 'greetings’. But in the field of company contacts, aisatsu means a lot more. It is the word required to create a context of good relations and harmony (see "Wa"), vital conditions to allow for business relations not only to be successful but simply to be able to start. According to aisatsu, before starting negotiations, the person with the highest level of responsibility in the company must start direct relations with the person at the same level in the other company; the person that should begin initiatives, with the utmost formal respect, should be the person that will have the role of the ‘seller’. In this meeting they will not start to talk about work immediately, but they will dedicate their time to creating a good personal relationship, a direct contact that will be useful in the future to avoid the inevitable difficulties that will arise along the way. Useful support for a aisatsu meeting includes: family photographs, a photograph album that describes the tourist attractions of the area and a sincere desire to ‘create a friendship’ that will not be intrusive and which will maintain the utmost respect in the formalities normally encountered in a first meeting. The Japanese individual will normally introduce work into discussions at some point and, unless you are asked direct questions, it is always best to maintain your role of ‘president’: face general and strategic subjects and explain your desire for a stable and serene collaboration between the two parties. A gift is always welcome, especially if it is not a valuable gift but something related to the traditions of your land (a book of photographs, a bottle of typical liqueur). B

Bottom-up "From the bottom upwards": this is the principle generally used for decision-making procedures in Japan. In meetings held in the offices of Japanese companies, or during their executives' visit to your company, you will always find a “boss” surrounded by a variable number of collaborators. Unless it is an aisatsu meeting, business meetings will always include a variable number of collaborators. Each of them is there to play a role and with a specific objective, and must prepare a (written) report on the meeting. The 231 The Fashion Market in Japan

opinion of each collaborator will effect the final decisions made: evaluations made by intermediate members are important and the choice of the boss is normally a ratification of the opinions of his collaborators. The boss never normally makes a decision that may go against their opinions, as in this case it would create difficulty in handling the relationship: harmony would be broken (see "Wa"), and it would be difficult for the â&#x20AC;&#x2DC;bossâ&#x20AC;&#x2122; to explain to his superior why he had made a decision that did not comply with the opinion of the group. Consequently, it is best to avoid the possible attitude of underestimating any member of the staff in a meeting: not answering their questions will not create good results. Answering (in writing, if requested) all questions, providing all information requested, even the most unusual, listening to all of the ideas proposed, is the right behaviour required to build a good line of conduct to continue negotiations. C Contacts Sooner or later your Japanese interlocutor will invite you to dinner or maybe you will invite him to dinner first if negotiations are held in Italy. This passage is an unavoidable component in business relations and you must be prepared to be treated with extreme attention and respect, and (if you make the invitation) avoid mediocre or anonymous places. The dinner invitation is an important formality, in which you should have maximum respect for the person that you have invited; it is just as important to manage to create a good level of conversation, to show your appreciation for the food and for the attention and leave work discussions to the end of the evening. At the end of the dinner the evening may continue in a club, normally used by the Japanese company, where it may be possible to discuss some strategic aspects of the agreements under way between idle talk. D Data The Japanese have a passion for data. Having data available means that they are prepared, it proves that they have done their homework, and it shows that they are not superficial or careless or irresponsible. Making a decision without having studied huge amounts of information is unthinkable; attending a meeting without a plethora of information (written) on the company and on the product system (from company brochures right through to the quality manual, from production tests right through to the brochures of their suppliers) is considered as bizarre behaviour. But whatever amount of information you 232 The Fashion Market in Japan

manage to present, you will always be asked for more. Take a note (in writing) of the requests and do your very best to answer (once again in writing) within three days at the latest; if for any reason whatsoever you need more time inform the counter-party (in writing) within three days that you are doing your best to collect all of the information requested and make an estimate of how much time you will need to satisfy the request (in writing). E Excursions Studies, analysis, time and money are invested in the search for the most suitable location for retail sales. But the presence of a good offer system and the construction of a good image have enormous attraction power on consumers, ready to cover large distances in the hope to find novelties, fun and the perception of convenience. The phenomenon is well know to Japanese operators in the modern retail system, who attempt to constantly analyse the factors that influence the dynamics that increase the level of attraction of a sales point. This analysis is possible thanks to the study of the traces left by consumers through the use of fidelity cards, which allow for movements and distances covered by clients to be kept under control, the times and days of the week that they prefer to do their shopping, the average amount spent and even exploration and movements within large stores (through the analysis of receipts, comparing times and the type of products purchased throughout the same day); not by chance, the use of fidelity cards is very much promoted with benefits of all kinds. The phenomenon of shopping excursions - which is definitely not limited, as can be seen imagined, to the metropolitan area of Tokyo, but which can be found in all provinces of Japan â&#x20AC;&#x201C; is now seen and commented with attention even by the specialised press108. For example, the information provided by the head offices in Kobe of Daimaru and Sogo, two leading names in the world of large Japanese stores, provide figures that clearly indicate the dimension of the phenomenon; throughout the last few years, Daimaru and Sogo have seen their number of clients from the other four provinces of the island of Shikoku increase, an island connected by a system of motorway and railway bridges to the metropolitan area of Kobe. Sogo, in particular, declares that clients from Shikoku reach almost 4% of the total number, while clients from Daimaru already represent 7% (in figures, these percentages represent more than 20,000 customers). But it is sufficient to reduce the ray of observance to note even more important values: in the case of Daimaru, clients from outside the province amount to 30%, for Sogo the percentage is 44%, and in both cases the percentages are constantly increasing. 108

In Senken Shimbun, 1st October 2003. 233 The Fashion Market in Japan

F Fairs Participating in an international fair in Japan with the idea of concluding contracts is an expectation that risks disappointment and frustration. A fair is a meeting point, an event to consolidate business relations, a chance to compare your products with those of your competitors, a forced exhibition, and so on. Consequently, and in general, a fair is not the ideal first step for access to the Japanese market; it will be a useful passage when the company has already started some business contacts and, in any case, it is important to participate in fairs, year after year. For the first steps, a very useful strategy is the organisation of specific work missions to be held in Japan, concentrated on potential interlocutors selected. The ICE offices in Tokyo and Osaka provide complete assistance in order to carry out efficient work missions with a â&#x20AC;&#x2DC;turn-keyâ&#x20AC;&#x2122; service that includes the selection of companies to be invited through to the Japanese translation of the company brochure, and also includes hospitality for the meetings, coming together with professional advice and the technical support of interpreters, if needed. G

Ganbari no seishin It can be more or less translated as 'the strength never to give up", which represents an important component of the character of a business man, but also the attitude that is expected of any employee and of the counter-party. Proving that you have these skills, showing that you can face sacrifices in order to reach the predefined objective (such as, for example, respecting a deadline even if unexpected circumstances arise) may play an important role in your favour in handling relations with a Japanese company. Honesty, zeal and commitment are the skills considered to be essential in carrying out business and the attitude towards total comprehension and tolerance of human mistakes and weaknesses, frequently found in the scenario of Italian companies, is not favourably considered in Japan not only by business men but also by any employee or intermediate. H

Hanashi kata "The right way to speak". The Japanese language is very difficult, and the type of language used immediately transmits a lot more than what the words themselves mean. There is a 234 The Fashion Market in Japan

specific style of language for each occasion; it is necessary to use the right words, the most suitable intonation and so on. Somebody compared this scenario with a well coded system, even if extremely impalpable, to the widespread communication codes in some koiné in Southern Italy, where communication includes voice tones, language that is not verbal, words that are said and not said; this similarity may help to capture the general sense of the concept which, fundamentally, invites us to consider that it is not sufficient to ‘state facts’ in order to achieve the desired results. Unlike what happens in Southern Italy, however, hanashi kata is not an ascribed dowry, which can be learnt through life experience: it is a ‘high’ skill, that requires a very high social level or a strong application to studies and exercise. Hanashi kata cannot be vital in any kind of business relationship or to discuss, for example, the optimisation of the volume available in a container, but it definitely does not play a marginal role in the construction of stable relations on a top management level or in the case of company agreements. Therefore, it is very useful to resort to expert and sensitive interpreters and their role may turn out to be very precious if they are capable of catching the meaning of negotiations. Some years ago, the owner of an Italian fashion company that was very active in European markets expelled his irritation towards a Japanese interpreter who, in his opinion, was wasting too much time in translating sentences expressed by him in just a few seconds, and in dramatically summarising his long and articulate aspects of the negotiation. Useless to say that the interpreter was not only innocent but she was doing an excellent job, helping not only to translate the words of the Italian entrepreneur but his thoughts, proposing them with grace and full command of hanashi kata. I Bows (Inchini) Bows represent an immediately visible aspect of Japanese communication and social life, and for an Italian observer who is just starting contacts with the Japanese scenario, this may appear ridiculous or embarrassing according to the circumstances. In reality there is a specific code that governs the system of bows: the inclination to be reached, the position of the hands, the sequence (brief or repetitive), and so on. But no Japanese person expects an Italian to be able to understand this code, therefore it is useless to try to teach him without creating fun and embarrassing comments by the Japanese counter-party. The important principle to know is that in a meeting between a more important person and a less important person, the latter is obliged to do a much lower bow. But how is it possible to know the importance of a person during the first meeting? The question automatically leads to an explanation of why Japanese visiting cards are so important in Japan and are exchanged at the beginning of a meeting and have been carefully designed: they are used 235 The Fashion Market in Japan

to ‘measure’ up the interlocutor and to know how to behave by simply reading the card. For an Italian an efficient rule may be: in meetings never attempt to shake hands but make a respectful bow with your head, move onto hand shaking only if the Japanese takes the initiative. J

Just-in-time Despite the anglosaxon name, the term indicates a typically Japanese production organisation technique, born from the demand to reduce costs in intermediate storage. Unfortunately, in the informal dictionary of some Italian companies, just-in-time is interpreted in this way: "we will do out best to respect the delivery deadline, even at the last moment, because we normally always manage, but be sure that we will not disturb you by sending you boring written reports on the development of the work; have trust in us and let us do our work instead of bothering us five times a day with requests for information of the state of the project”. If the reader recognises some aspects similar to current situations in his company in this interpretation, it is best to know that maybe he is not yet ready to face the Japanese market with success. K

Keishiki Literally, formality. But nothing in Japan has more substance than the form itself: often conversations that necessarily precede real business subjects are only keishiki necessary to break the ice and to create just the right atmosphere to face the subjects of the meeting. A very common mistake that entrepreneurs and Western managers make is to start business meetings with Japanese interlocutors (maybe for the first time) by introducing company presentations or samples and by facing emblée matters related to characteristics, performance and prices of products. No huge and real opportunity for collaboration may ever be created due to a ‘cold start’ of this kind but investing time in small chat on the weather in Italy, experiences with Japanese food, or any other inoffensive subject may help to prepare the Japanese interlocutors in your favour. In order to illustrate the discomfort that a Japanese manager may suffer (if he is not accustomed to American or European negotiations) if he is forced to face technical details of a negotiation without even a little preliminary keishiki, imagine the enthusiasm of an average Italian forced to start his meal with dessert: It is definitely not a small obstacle that cannot be overtaken, but the gastronomic experience would definitely be much more appreciated if it began with a starter.

236 The Fashion Market in Japan

L Letters, correspondence In general Italians love the verbal form: in greetings, in correspondence, in best wishes. In Japan the attitude is the opposite, and every event is valid (in reality, obligatory) to resort to the written form (for greetings, by hand only). But it is necessary for Italian companies to change their habits and should impose on themselves the principle 'I must do it in writing’. This principle should be valid in every circumstance – a request for clarification, details, updates, appointments. 'Forget the telephone' is the rule, sealing the receiver with a strip of tape and a message "break the seal only in a true emergency". Without, throughout all of this, forgetting that all correspondence should be kept tidy, in chronological order. In the case of misunderstandings or complaints, the Japanese have an exceptional ability to put the counter-party ‘to the ropes’ thanks to this technique, and it is definitely not the case to grant them this advantage. If the company has a quality manual, steps should be made to strengthen controls on communication procedures; and, if necessary, rewrite them in a more rigorous manner, demanding their correct application. Never leave a request unanswered: generally, a successful technique is to activate a procedure for which each message is ‘assigned’ a person, who must read the message within 4 hours from its arrival, leaving a written indication in a register (it may even be the same fax or e-mail received, on which the person in charge signs his initials and indicate the time). At all costs they should send a reply within the next working day: if, with this objective, more time is required, it will be necessary to answer stating that the request has been received and indicating the amount of time required for the answer. At the same time this day will be indicated in the bill-book and the person in charge will be obliged to respect the deadline proposed.

Meishi They are our business cards, which represent an important instrument in Japan for any kind of activity. They are used to recognise the status of the interlocutor (see “Bows”), but also to check to see how to read the name (a Japanese name may be read in different ways, or perhaps you are not familiar with an ancient or rare letter; therefore it is always best to carefully read the name of the interlocutor and repeat it out loud to have confirmation of the correct pronunciation of his name). But they are also very important in order to handle correspondence (see "Letters"), with the objective of writing correctly 237 The Fashion Market in Japan

and completely the address so that, in a country in which the names of roads do not exist, each letter can reach its addressee. Remember that your own visiting card should be presented to the interlocutor face up, holding gently between two hands, with a small bow of the head; and, most of all, make sure that when you are given the meishi by your interlocutor you do not put it directly in your pocket as this would be considered very impolite. You should look at the visiting card carefully, and if it is only written in Japanese perhaps there is an English version on the back; if not, it is not impolite to ask your interlocutor to pronounce his name in order to write it on the card. During the meeting, the visiting cards should be on the table and can be â&#x20AC;&#x2DC;positionedâ&#x20AC;&#x2122; in front of you so that you can remember the name of the person you are speaking with.

Nemawashi Originally, nemawashi is a gardening term that indicates the hoeing of the area that surrounds a tree trunk to be transplanted, with the objective of carefully cutting secondary roots, with the exception of the main root, to allow for strong radical activities to begin after the transplant. The term was then used as a metaphor in the careful, attentive and constant activities of land preparation, in view of an important result for which an important decision was necessary; to avoid the risk of a proposal being refused, or even postponing the final decision, a careful nemawashi action is recommended; or rather sensitisation of all of the company individuals involved, at all levels, in the final decision towards our opinion on the subject (see "Bottom-up").

O Organisation and planning They are two key-words for working in Japan. Without organisation and planning there is no space for manoeuvre, or at least without an extremely concrete reason: everything that is not organised and planned in Japan cost more, much more. Transport, hotels, photocopies â&#x20AC;&#x201C; fundamentally, time has such a value that it almost becomes tangible, and therefore is much more respected than it could ever be in Italy. Every meeting, for example, requires transfers which are never brief or rapid and therefore must be planned in advance. It is not recommended, for example, to fix an appointment for the day after, unless in the case of very special circumstances. But useful planning even from a strategic 238 The Fashion Market in Japan

point of view is recommended to capture the medium term institutional opportunities; as an example, knowing how to plan in order to take full advantage of the opportunities recently presented by a government representative, who – on the subject of the foreign presence in the Japanese market, made a specific invitation to Western companies. "I believe that investments and imports are two aspects of the same coin. There are some foreigners among you. You must know that in order to sell anything in Japan you must create a structure for sales operations, for distribution and for after-sales assistance. Today, all of this rather difficult; despite this, at least property costs have fallen due to deflation and I hope that you will take this opportunity to invest (…). I expect your full collaboration to develop the development of retail consumption in Japan, which will benefit the entire nation. In the name of the Government, I guarantee our maximum support.".109

P Patience In the trousseau of the numerous endowments necessary to begin a successful story, patience is the queen virtue. Italian entrepreneurs, or Westerners in general, often expect to conclude business in Japan in a short period of time. Illusions of this kind should be cancelled immediately. The decision-making mechanisms within the Japanese entrepreneurial world are changing rapidly, so unexpected changes are to be expected, and any rapid success achieved should be considered as an exception in a scenario that is still characterised by bottom-up processes (see) which require long periods of time and by a generally poor attitude to the typically Western managerial style of ‘instinctively catching the opportunity and make a flying start’. In the eyes of the Japanese, this attitude is often considered to be irresponsible and disrespectful of the value of the group (the company and its collaborators), which requires the time necessary to analyse the proposal in detail and to reach a general agreement (see "Ringi") before proceeding with strength (see "Ganbari no seishin") which can be applied in a context in which the group carries out team work thanks to the harmony achieved through the agreement (see "Wa").

Midori Tani, an executive of METI (Ministry for Economy, Trade and Industry), from the course of the round table "The construction of a new management strategy of distribution channels in Japanese style", Import Distribution Symposium 2002, MIPRO – The Japan Machinery Federation, Tokyo, October 2002. 109

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Q Qualifications In Japan levels and positions are important in company organisation as well as in social relations. To complicate matters further, an unambiguous criteria does not exist to translate roles and company positions from Japanese into Italian, therefore it is always best to ask for an explanation on the area of activity and the role of each interlocutor. Generally, the kaicho is normally the equivalent of our president, even if his power and influence may vary in each specific case; this should not be confused with kacho, which is a high level role (equivalent in Italy to a division manager). The shacho is a vice president, normally with functions similar to those of the administration manager (opportunely called daihyo torishimariyaku). Torishimariyaku, in general, is a manager, who is almost always a member of the board of directors; bucho is a very common term, and it indicates a top level manager. When a term is followed by the word dairi, it indicates that the role is carried out by an assistant or deputy. R

Ringi The term ringi (pronounced reen-gee) refers to the traditional method used in Japanese companies to build total agreement around an idea or a proposal. From an operative point of view, the activation of a ringi system implies the distribution of papers and proposals, in writing only, to all of the members of a work group, and each member is asked to examine the aspects that involve him specifically, and provide an opinion together with observations and suggestions. A ringi procedure increases the amount of time required for a decision-making process even though, once the decision has been made, activities will begin immediately thanks to the level of preparation already reached on the subject. During the last few years the ringi procedures, once backed by numerous papers and heavy files, notes and comments, tend to be standardized on electronic modules and handled within the company intranet. S

Shikata Defined as the "secret weapon of Japan", shikata is the principle that guides the social and economic organisation of the country. Literally, it means "the way of doing things". 240 The Fashion Market in Japan

Diametrically opposed to the Latin thought for which "there is always more than one way to do something", shikata means no improvisation, it means planning and planning respect, it means specific roles, procedures, standardization, compliance control, it means quality control, it means respecting deadlines and so on. Therefore it is not a surprise if the constant application of shikata may, indirectly, attribute the reason for the majority of difficulties in business relations between Italian and Japanese companies. T

Teishoku Also known in Japanese as setto menu (from the English words set menu), it is a key word used to maintain company mission costs at acceptable levels in the budget of an average Italian company. The menu of the day, as we say in Italy, represents a procedure that is common to everybody working in Japan: present and visible from twelve oâ&#x20AC;&#x2122;clock onwards, always illustrated in a photo or in a shop window through a perfect wax copy, with a cost that never exceeds 1,000 yen (8 euro) it provides the possibility of an efficient and functional lunch break. U Location (Ubicazione) This means the â&#x20AC;&#x153;location of the sales pointâ&#x20AC;?, a critical factor for the success of any retail sales strategy. The analysis of the phenomenon of shopping excursions (see "Excursions") may lead to at least two thoughts that may be useful to Italian operators interested in elaborating direct access strategies and market consolidation. A thought is born from the study of the kinds of purchases made by excursionist customers: they are mainly customers interested in high level fashion products (costly cosmetics and female clothing); fashion, therefore, attracts the public, considering that two conditions must be satisfied. The first is that the offer system must be organised with marketing skills: at least, so that it is perceived as reasonably acceptable in price-quality terms, and with a sophisticated donation system to customers as tangible and intangible gratification (the availability of structures for relaxation, such as coffee bars, body care services, wellness areas; a refined atmosphere with just the right lighting and background music; a widespread pampering strategy of clients by all of the staff). The other condition, however, is connected directly to the consideration for which the analysis of the phenomenon of shopping excursions cannot be carried out without taking into consideration an aspect related to the socialurban profile of the Japanese urban areas. Always characterised by long physical distances, 241 The Fashion Market in Japan

vital transfers throughout the metropolitan areas are covered by public transport and not by private cars. Consequently, each transfer is not evaluated in terms of the amount of kilometres but in terms of the amount of time required. It is completely improbable that a commuter that travels within the Japanese metropolitan area is capable of giving an answer on distances, indicated in terms of kilometres, of the journey that he does by train twice a day, and even less able to evaluate the kilometres that separate – for example two important areas within Tokyo – the area of Shimbashi from Kanda, while he will be very happy to quickly answer, and with an excellent level of approximation, the answer related to the number of minutes required to move by train from one area to another (including any possible line changes). These considerations underline how the Japanese consumer is used to tracing his own personal map of the territory according to the network of public services (and most of all the railway). The results in terms of sales location strategies are clear and invite us to reflect (with regards to the choice of location of the sales point) not only on the location in a traditional sense (the search for areas, for example, within ‘central’ locations or characterised by an elegant and refined image) but also in terms of access. If a good offer system presents a potential for public attraction, in other words, it is important to make sure that the public can easily reach this location (thanks to a nearby railway station and any connections from the station with pedestrian roads and possibly fitted with tapis roulant, etc.). By developing this concept even more, we can say that it is probably possible to escape the predictable and apparently obliged choice of Omotesando or Ginza; therefore, that it is possible to activate modern and successful location strategies but on the condition that access aspects are not neglected and presenting these locations to local consumers for their analysis (therefore, in other words, eliminating any presumption of being able to judge the accessibility of an area within the Japanese metropolitan area even if you were born in Rome, Naples or Milan). V Vagueness Speaking of communication in Japan, vagueness and ambiguity do not represent a pathological aspect, but (at ‘high levels’) a true art in the use of language. The cultural imperative of the importance of maintaining harmony and the agreement of a group does not get on with a hard and direct language, for which the demand to avoid collisions has developed, in managerial classes and in the Japanese aristocracy, an extremely sophisticated capability of maintaining good relations, learning to control and hide personal feelings in the name of the value of harmony (see "Wa"). Consequently, on a more widespread level, the ‘face’ language is indicated by the term tatemae: things that you say not because they are things that you think, but because they are the right things to say 242 The Fashion Market in Japan

to maintain good relations and harmony. On the other hand, the term honne indicates the true hidden thoughts, what we really must keep inside, and that would be embarrassing if we could not manage to hide, betraying the interest of the group to which we belong to surrender to a moment of individual and socially detestable weakness. In one of these moments, backed by repetitive and frequent recourse to a bottle of sake, a Japanese business man confided: "if a Japanese with which you have business relations, at one point, starts to talk to you in a confidential tone and uses the words “frankly speaking”, you should know that in reality he is about to begin a well studied tatemae procedure". Each reader is free to evaluate the reliability of this advice, given in an atmosphere contaminated by a high level of alcohol; but constant attention must be given to the attitude of Japanese businessmen in applying tatemae procedures, difficult to remove, in the name of harmony, stability and the success of the company. W

Wa The letter, "wa" (pronounced wah) means "harmony". It is a very important principle in Japanese culture, and it often represents a value that must be defended at all costs: where ‘at all costs’ may even mean ‘at the cost of saving face’. In reality, conflicts do exist in Japanese companies and it is difficult to sustain whether they are more or less than in Western companies. But the cultural procedure is that everything should be done to maintain harmony throughout every step of company life: from here the ringi procedure is applied (see ringi), aimed at not making a step forward unless there is total agreement (in writing) of all parties involved. But harmony is considered a very important and precious value, even in relations with suppliers, who become a part of the company system, so much so that it is legitimate to state that once a company enters into the system of suppliers of a Japanese company (especially in the case of a traditional company) – it becomes more and more difficult to get rid of them, unless for serious reasons. In order to back the diffusion of this approach and the deep seriousness with which it is carried out and respected, Kensuke Hosomi, manager of Itochu, underlines the company philosophy with regards to relations with the manufacturer: "Western groups often open branches in Japan, controlled 100%, excluding collaborations with Japanese trade companies, and they begin market penetration operations. Itochu however considers the Western manufacturer as a partner, and sales operations are activated on the basis of a very close collaboration. According to the ideology of our Group, the trade-mark is a common and precious patrimony that belongs to all of the individuals that collaborate towards the development, and the only possible solution to increase its value is to cultivate and develop the partnership that has been created with mutual efforts. 243 The Fashion Market in Japan

X Dame No, this is not a mistake. The gesture of crossing tense hands to form an X, or simply crossing index fingers of two hands to form an X, only has one meaning in Japanese: "dame" (pronunciation: dah-meh), which means "no way". It may be an exasperated request to be left in peace by a young lady with an intrusive and impolite Italian; but if, from the corner of your eye, you suddenly notice one of the members of the Japanese group speaking with a colleague and obviously referring to you, cross his fingers, even if you really do not understand the meaning of this word be aware that your negotiations are really becoming difficult. Y

Yes Yes: a term that is understood in every country throughout the world, the word that everybody would always like to hear. But in Japan "yes" does not always necessarily mean "yes". In Japanese culture, it is offensive and frustrating to answer with a no to a request for a favour. The various ways of saying no include words such as "I will think about it", ore "let me think about it" (which mean: "I am not interested"), and so on. For a Japanese they are explicit ‘no’ expressed in a kind and non offensive manner; but for an Italian, especially with an optimistic temperament, it may mean "I have almost made it". As long as we know, therefore: often, for example, the word "hai" (the most common word used to translate "yes") is often simply pronounced with an interjection equivalent to our "mmmh", or the anglosaxon "I see": but it means nothing more than "I am with you". On the other hand, it is good to know that the answer "I will do my best" may, under some circumstances, mean: "I am convinced that it is not possible and I will not even waste a minute of my time in this lunacy". Z Zen The zen – an ancient Eastern philosophy, introduced in Japan by China in the XIII century – applied to business management it concentrates on being rather than doing. It is based on people rather than on techniques. It focuses on searching for perfection in every 244 The Fashion Market in Japan

gesture and in every passage. It requires self-discipline and the capability to control the environment. It requires perseverance, patience, attention. It helps to combine tradition and innovation and to find the right direction for the East and the West to live together in harmony.

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DIVA ERIS International Marketing Consultants Headquarters I-70125 Bari, corso Alcide De Gasperi 435 Tel. +39 080 501.1174 - Fax +39 080 501.2317 info@divaeris.it Tokyo Office Mure 2-18-11, Mitaka-shi, Tokyo 181-0002 Tel./fax +81 3 5384-8986 tokyo@divaeris.it www.divaeris.it

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