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As Competition Grows, Japanese Apparel Chains Go Global

A spate of Japanese fashion retailers are planning new brand launches aimed at the mass market at home and overseas. JapanConsuming reports.
Campaign by Mila Owen, a new brand by Pal Group of Japan | Source: Mila Owen
By
  • JapanConsuming

TOKYO, Japan — Over the last decade, Japanese womenswear fashion retailers like Cross Company, Pal Group, Baroque Limited and Mash Style Lab have grown from tiny wholesale and retail businesses into highly efficient fashion chains that generate sales as high as ¥100 billion (about $974 million). However, with their core markets becoming increasingly saturated amidst intense competition, they have all decided to set up entirely new businesses to break into either lower priced markets at home or expand overseas – or both.

These homegrown fashion retailers have recently announced new chains aimed at broader audiences and new categories beyond youth-oriented womenswear. These new launches, which will debut in the coming months, will target the mass market at home and abroad, including Europe and the USA; some retailers have projected sales of as much as ¥1 trillion.

Baroque Japan, operator of brands like Sly and Moussy, has recently set up a new business called Frame, with plans to launch three new chains over the coming year targeting entirely different markets than its core Baroque business. Products will be designed to appeal both to home and foreign consumers. The company has set a sales target of ¥20 billion within three years.

Direction for two of the three new brands will be led by Eddie van Narc, formerly art director at Celux and Restir Holdings, with the aim to bridge the gap between the fashion and career apparel markets. The third chain will target the younger market by taking the essence of Japan’s ‘kawaii’ (cuteness) culture to create a global womenswear chain. Reona Nozaki, the former art director of casual fashion brand Bonica Dot, will lead the design and creative direction for this third launch. The first collection is almost ready and Baroque is planning an exhibition this month to give shopping centre developers a preview, hoping to open the first stores as soon as possible.

Baroque Japan has long had ambitions to expand overseas. It originally hoped to list on the Hong Kong Stock Exchange but slower than expected sales in Japan scuppered those plans. Baroque’s largest shareholder, CLSA, then sold its stake to CDH Investments and Asian footwear business Belle International last year, with CDH taking a 23 percent stake and Belle International a 32 percent stake. With its two powerful Chinese backers, Baroque hopes to develop into a major Asian apparel, accessories and footwear retailer. Belle itself has long wanted to expand beyond footwear into apparel and accessories, as well as tap into the Japanese market for its shoes. Belle owns mid-range brands like Staccato, Joy & Peace and Millies, in addition to distributing foreign brands such as Nike, Clarks, Merrell, Adidas, Puma and BCBG. Given Belle’s reach in China – it reportedly has more than 100 distribution centres across China already – and access to funding, Baroque finally has the backing to match its long-held aspirations to grow beyond the young fashion market within Japan.

Osaka-based Pal Group has announced its own breakout chain to launch this Autumn in Tokyo. Pal says that the chain, named Colony 2139, has been designed to help Pal move beyond the specialty fashion market. Colony 2139 will be what Pal calls an ‘apparel supermarket’ or the ‘IKEA of apparel’, offering quality contemporary apparel basics, comprising 65 percent of merchandise, as well as accessories, travel goods, sportswear and home goods, with a high level of design at reasonable prices. In essence, the store’s concept – dubbed ‘Modern Home, Work, and Life’ – sounds like a colourful version of Muji, with added emphasis on apparel and some of the fun of Pal’s own 3Coins chain. While none of Pal’s existing chains other than 3Coins have sales of more than ¥10 billion, Pal Group has set a minimum sales target of ¥50 billion within five years for Colony 2139.

There will be two store formats, a 400-600 square-metre apparel-only model and a 700-1,200 square-metre full-line store. Prices will average around ¥3,800 for apparel and ¥1,000 for accessories, with a strong focus on cross-merchandising. Like Baroque, Pal will operate Colony 2139 as an entirely separate entity, called The General Inc., given the very different operational requirements of a low-price high-volume chain.

Within Japan, Pal Group sees a significant opportunity to compete against the prosaic and weakly presented apparel of general merchandise chains and supermarkets and the higher priced lifestyle chains of Point and others. While there has been a greater emphasis on value in recent years, Pal says there is little to delight the shopper – the gap which it hopes Colony 2139 will fill.

Pal Group has also designed Colony 2139 with overseas expansion in mind, particularly to the US and European markets; it plans to open a showroom in the US this Autumn to test the market through wholesaling before opening stores there. It will also create a design office in California and has linked up with US firm Townes to help with design direction and store roll out.

Pal Group is not the only retailer going after what is being dubbed as the 'new basics' market (fashionable contemporary basic apparel at reasonable prices). Mash Style Lab, owner of Snidel and Cosme Kitchen, also sees a gap in the market left by the waning enthusiasm for fast fashion, but continued demand for reasonable prices and good design. It just launched the first store for this market called Mila Owen in Lumine Shinjuku, with plans to open 25 stores in Japan in the next three years and around 100 in China. Average price points have been set at a reasonable ¥7,000.

Cross Company also plans to build a mass market chain called Koe, focused on what it calls 'fair supply chain' principles – fair trade and ecologically sound sourcing, production and distribution. The company has serious ambitions for Koe, targeting sales of ¥1 trillion ($9.7 billion) in the long-term.

While all its current brands are designed in Japan, Koe will have a new team mixing Japanese talent with designers, planners and managers in London, New York and other key international cities. These teams will have diverse experience, spanning luxury brands to mass market chains. Koe will offer menswear, womenswear and childrenswear, with prices of around ¥7,000 for knitwear, ¥5,000 for shirts, and ¥17,000 for outerwear. In keeping with its fair supply chain branding, information on factories and suppliers will be prominently displayed in stores and in marketing, and 1 percent of net profit will go to charity.

Cross Company will open three Koe stores within Japan this year starting this Autumn and initiate its plans for rollout to Europe and the US in the near future, with a target of 25 stores through 2016 and growing rapidly thereafter. It expects Koe to generate sales of ¥100 billion by 2020.

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

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