Europe’s clothing retailers
head the race
It is a “democratisation of fashion” says Christine Edman, country manager in Japan for Swedish clothing retailer H & M Hennes & Mauritz. Despite the recent recession, sales of affordably priced but stylish clothes (often known as fast fashion) are booming. And at the head of the race in Japan are European companies.
In 2008 H&M launched its first Japan store in Ginza, followed by six other stores in Tokyo, Yokohama, Saitama and Osaka. Edman describes the opening of the Ginza store as “one of the most successful openings in H&M history.”
“We were able to illustrate that design is not a question of price, and that fashion should be attainable by all,” says Edman, although she also points out that, with a history of 60 years in the industry, the company is reluctant to be pegged as fast fashion. “Our business simply focuses on delivering fashion and quality at the best price,” she says.
In the wake of Japan’s worst recession in over half a century, the time couldn’t be better for fast fashion. Mid-priced clothing retailers are vying to move into the market space left by luxury brands hit hard by the economic downturn. That is literally the case, according to Kyodo News, for US retailer Forever 21 which may move into a space in Ginza vacated by Gucci. Meanwhile, Gap, also from the US, has its eye on Louis Vuitton’s spot.
Nor are foreign retailers the only ones in the running. Fast Retailing, owner of Japan’s Uniqlo, has its flagship store in Ginza. The company reports that operating income at their Japan stores rose 28.2% to ¥110.7 billion in the year to August 2009. According to Forbes magazine, CEO Tadashi Yanai is Japan’s richest person.
A long-term design consulting agreement signed with Jil Sander in 2009 has involved the German luxury clothing designer in all aspects of the design and manufacture of men’s and women’s apparel, as well as the development of a special collection, for Uniqlo. The company has also built strategic alliances with other popular brands, such as a character-license agreement with Walt Disney.
According to Brian Salsberg of consultancy firm McKinsey & Company’s Japan consumer and retail practice, the high-profile store locations and sophisticated presentations of fast fashion leaders have stolen luxury’s thunder. “Luxury retailers no longer have a monopoly on exciting and innovative shopping experiences,” he says.
H&M’s high-impact outdoor advertising is closely tied to location, says Edman. “Interiors and graphics are specially designed for each location, and each store is very different. We also tailor our product selection to the market in each particular location.” H&M uses huge eye-catching storefront advertisements from fashion label Comme des Garçons, and fashion designers Jimmy Choo and Sonia Rykiel, who also collaborate on their own fashion ranges.
Meanwhile, Spain’s Inditex Group opened a Zara flagship store in Shibuya late last year, its fiftieth outlet in Japan. As secretive as it is innovative in its business model – rarely talking to the press – Inditex is second in size worldwide only to H&M. Other fast fashion retailers dipping their toe in the Japanese market include Forever 21 and Topshop/Topman from the UK which both have shops in Tokyo’s fashionable Harajuku district.
Love of luxury
But the rise of affordable fashion doesn’t necessarily mean Japan’s love affair with luxury is over. According to marketing research company Yano Research Institute, Japan is still the second-largest luxury goods market in the world with 10-20% of global sales. It comes behind the US and before China, although Japan’s Asian neighbour is rapidly catching up.
“Shoppers haven’t fallen completely out of love with quality,” stresses leading Japan fashion stylist, and owner of a Tokyo luxury-goods store, Sonya Park. “They may be less likely to wear a luxury brand from top-to-toe, but Japanese are still investing in one good piece while mixing it with cheaper items.”
McKinsey’s Salsberg notes that a few luxury retailers are meeting the challenge of fast fashion by frequently offering new colours and designs. But he suspects that the majority are wisely “doing the opposite … going back to basics, timeless designs and not trying to compete on ‘fashion’ but on the brand story, craftsmanship and heritage.”
But if the Japanese economy picks up again, as it seems to be doing, could one-time luxury brand aficionados ditch chic and cheap clothing, and cheerfully return to paying more? Salsberg has a one-word answer.
“Unlikely.”
He suspects the recent recession has brought Japanese consumer patterns into line with other Western economies – something that should be good news for European retailers. It looks like fast fashion is here to stay.
An ecosystem of style
W. David Marx, fashion market analyst and contributing writer for The Business of Fashion
Interview Tony McNicol
What is fast fashion?
I assume the name is a joke on fast food in that it’s disposable, cheap and not meant to be high fashion. The name also reflects the speed at which the fast fashion brands are able to take ideas and elements from high-end designer collections to the mass market. But I don’t think it’s a label that most fast fashion companies particularly enjoy.
Why has Uniqlo been so successful?
First, Uniqlo has brought US and European standard mass retailing prices to a Japanese customer who had previously been asked to pay much, much more. Second, the quality and design are relatively good, and Japanese consumers have been extremely appreciative of these reasonably priced, very basic clothes. Japanese fashion these days is very non-logo oriented, and so Uniqlo provides the neutral building blocks for lots of different groups to put together an outfit. And the company smartly produces on-trend items that consumers want.
Also, the company has branded itself well as modern and fashion-conscious, yet still neutral enough to not alienate anyone. Everyone thinks Uniqlo is for them without worrying that people not in their segment are also buying the goods.
Do you think this “new frugality” is here to stay?
The Japanese always paid too much for apparel and lived up to luxury consumption expectations that would be seen as impossible in any other country. Wages have dropped every year since the late 1990s. Without an economic miracle, it’s hard to believe that this narrative of malaise will cease.
Does the move away from luxury brands signal a cultural change from homogeneity to individual expression?
Absolutely not. Young female consumers still want to wear clothing in the same genre as everyone else, although the number of acceptable options has increased. What has happened is just that luxury bags and brands are no longer the “recipe” for the proper outfit. And as fewer and fewer girls wear their luxury bags, the girls around them take that as a signal not to wear their own. But when you see less Louis Vuitton and Gucci out on the streets these days, that’s not because less people own them. Women are just choosing not to wear them.
What are the opportunities for European fashion retailers?
Japanese fashion culture is the most complex in the entire world. There are more brands here than anywhere else. There are at least 60 regularly publishing fashion magazines for women alone, compared to a dozen in either the US or UK. This is a massively complex ecosystem. Japanese consumers just know what they like and have attached meanings to every brand.
European fashion retailers do have opportunity in Japan, but they cannot waltz in believing that their product is more sophisticated or has an “aura” just because it’s European. The most successful brands of late succeeded because they placed their brand within the Japanese fashion ecosystem — and didn’t try to play outside it.