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Japan’s Urban Research Expanding

Opening 50 to 60 new stores per year and driving sales growth above 20 percent, Urban Research, one of Japan's fastest growing fashion retailers, is tapping new opportunities. JapanConsuming reports.
Urban Research S/S 2014 | Source: Urban Research
By
  • JapanConsuming

OSAKA, Japan — Japan's Urban Research has been one of the fastest growing fashion retailers of the last decade. Sales have risen from just ¥3 billion (about $30 million) in 2001 to an expected ¥35 billion (about $340 million) in FY2013 and the Osaka-based firm is projecting an increase of 20 percent, to ¥43 billion, this year. The retailer plans to continue growing its retail footprint at a rate of roughly 50 to 60 stores per year. (In the last financial year, ending January 2014, it opened 50 stores, but this year aims to open 60 new stores, bringing its total footprint to 210 stores).

This spring alone, the company will open 22 stores across 10 brands, including important Urban Research Store flagships in Tokyo’s Omotesando Hills and Kichijoji neighbourhoods. Both stores will have a higher ratio of imported fashion labels than is typical in suburban shopping centres and will act as a testing ground for the potential conversion of other stores' merchandise mix to a higher ratio of international labels.

Urban Research Doors is also being repositioned and shifted to a lifestyle mix of homeware and accessories; the stores will also carry a new line of own-brand groceries called Doors Groceries. Having rolled out the Doors chain in several major cities — two more opened in Tokyo in late March — the company is now targeting young families in regional cities.

Meanwhile, Rosso Urban Research is moving further upmarket, again with a product offering that includes more imported brands, selling high contemporary and designer labels like 3.1 Phillip Lim, Golden Goose and Chloé, as well as more own-brand product, such as a new line of footwear and accessories called Rodesko, with reasonable prices of ¥10,000 and up for bags and ¥13,000 for shoes.

One of the company’s key sources of growth — and a major focus of investment — will be the new mass market chain, Sense of Place, expected to become the firm’s third major chain alongside Urban Research Store and Urban Research Doors. Sense of Place is an entirely new business with its own planning departments, supply chains and branding. Unlike Urban Research’s other chains, which are based on the select shop format, Sense of Place is a mass-market chain with prices around ¥1,500 for tops, ¥4,000 to ¥9,000 for bottoms and dresses, and ¥6,000 to ¥12,000 for shoes. Much of the product development is handled outside the company, with help from external partners, while leading UK-based designer and co-founder of the Tomato design group, Simon Taylor, is managing design direction (he also created the initial brand concept).

Urban Research plans to build a network of large-format Sense of Place stores in the centres of major cities over the next 18 months before rolling out smaller stores in suburban shopping centres. By the end of this spring, Sense of Place will have 15 stores. And, this autumn, it will open a 900-square-metre store in Nagoya and another 500-square-metre store in Shinsaibashi. Next spring, a 1,000-square-metre flagship store will open in Meiji Dori in Harajuku.

There is one more potential source of growth for Urban Research: a new foreign franchise business. The company recently signed licensing deals with US store Freeman’s Sporting Club and Denmark’s By Malene Bilger for the Japanese market in a tie up with Yagi Tsusho. Freeman’s Sporting Club emphasises local production and handmade quality and has been operating since 2006. As well as opening stores selling imported lines, Urban Research has a license for apparel and accessories. For By Malene Bilger, Urban Research plans around five stores in Japan over the next three years.

In addition to physical stores, e-commerce accounted for ¥7 billion, or 20 percent of Urban Research’s sales last year, one of the highest ratios among Japanese fashion retailers and up 40 percent year-on-year. The company continues to work on online-to-offline marketing, driving use of the smartphone app "UR-Style" that includes staff photo blogs and recommended items, as well as geo-targeted coupon offers which activate when a user enters a store.

To cope with all this expansion, in January, Urban Research also set up a new distribution centre in Osaka to handle roughly 70 percent of its merchandise.

JapanConsuming is a leading provider of intelligence on Japanese retail and consumer markets.

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