High-end clothing companies struggle as consumers change

TOKYO (The Japan News/ANN) - Major players in Japan’s apparel industry, dealing mostly with the sales of their brands in department stores, are struggling as consumer needs are changing.

 These companies have discontinued some of their labels or reduced their workforce.

 Though the companies have made efforts to reinforce their sales channels via the internet, there are few fundamental measures that can solve their issues.

Sluggish brands

 Sanyo Shokai Ltd. expects that after-tax profits for the fiscal year ending December 2016 will be in the red for the first time in five business years. It is estimated that products from British label Burberry accounted for about a quarter of the company’s total sales, but after Sanyo Shokai’s license to produce the brand in Japan ended, the company introduced the Mackintosh London label as a successor. Sales for the new brand have been sluggish, however.

 To reorganize its management, Sanyo Shokai will discontinue sales of a total of seven brands by summer next year. The company also solicited voluntary retirements from about 250 employees.

 Onward Holdings Co., the largest firm in the apparel industry, estimates that its revenue for the fiscal period ending February 2017 will fall 6.3 percent.

 In September last year, World Co. implemented early retirements for about 500 employees, who accounted for about 25 percent of its workforce.

 According to market research firm Yano Research Institute Ltd., the domestic clothing market was worth ¥15.3 trillion in 1991, but shrank to ¥10.5 trillion — about two-thirds the former figure — in 2013.

 An Economy, Trade and Industry Ministry estimate shows that unit purchase prices fell to one-third of their previous prices.

 The industry grew in the 1960s and 1970s by selling foreign clothing brands in department stores. During the bubble years, the same types of clothes as those worn by entertainers became hot sellers.

 Since the bubble economy burst, so-called fast fashion brands have led the industry amid long-lasting deflation. One of the most well known of these is Uniqlo.

 Fast fashion companies make their own products and sell them at low prices.

 However, high-end brands sold in department stores are costly at each stage of the process, from production and planning, to distribution and retailing.

 Thus, it is difficult for companies selling such brands to lower the prices of their products.

Online retailing

 In addition, many apparel companies do not have their own retail channels, so it is difficult for them to grasp consumers’ needs. As a result, it is thought that these needs are not likely to be reflected in their products.

 These companies, which had previously relied on department stores as their sales channels, are reinforcing online retailing efforts as a way to break the deadlock.

 From spring next year, Sanyo Shokai will sell products on its website priced relatively lower than those in its conventional lineup.

 Onward will also attempt to expand its sales channels, aiming to use e-commerce websites for Chinese consumers in conjunction with its warehouses in Japan.

 However, these companies are newcomers in the e-commerce field that has many forerunners. It is unclear whether they will be able to regain lost ground.

 “Drastic changes are necessary,” said Atsushi Izu, a consultant of Nomura Research Institute Ltd. “For example, companies may consider letting consumers try on products in-store before buying them online.”


  • High-end clothing companies struggle as consumers change