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10.30.2009

First the McDonald's Burgers, Now Jeans - Never Ending(?) Price Reductions

It has now become a staple to be able to buy something at McDonald's in Japan for 100 yen - be it a burger or an ice cream, small shake, small drink, hot apple pie or whatever the latest promotion. And as an economist, I remember how an attempt was once made to use the price of the McDonald's hamburger as a global measurement criteria for the relative value of things. Then "Makudo" as they are called here, went on this donward spiral of price reductions that just made their burgers cost less than a bag of chips in a convenient store.

Now, it seems to be happening with jeans here.
Fast Retailing launched g.u. jeans at 990 yen to cannibalize UNIQLO's 2,990 yen jeans.
Honey's responded with their 990yen jeans and Aeon joined in with 880 yen jeans. Seiyu, of course, had to have an 850 yen jean, and Don Quijote reportely sold all 30,000 pairs of their 690 yen jeans since its launch on the 14th in 5 days.

The domestic jeans market is said to be around 80 million units per annum, and 70% to 80% of that is imported. However, in the medium to upper market segment, Japanese denim still plays a significant role. Even UNIQLO retails their Made in Japan jeans at 7,900 yen-more than double their entry price range.

Denim is in fact, one of the few fabrics that Japan continues to export and enjoys an edge over other production centres for its quality. Last year, exports of Japanese denim averaged 4.5 million sqm per month, but thanks to the global recession and competition from other countries, that is now said to be down to around 3 million sqm.

Kurabo closed its Okayama plant in June and has migrated production to China. Nisshinbo has commenced technology transfer for their dyeing techniques to Indonesia. Such strategic directions taken by Japan's No.2 and No.3 denim producers show a stark contrast to No.1 Kaihara, who continues to enhance efforts in Japan. And Kaihara seems to be walking a lonely road. Levi's Japan has also announced that they will move everything offshore except for some key products that can only be made in Japan.

Will Kaihara's efforts pay off or are they missing the boat?

As a retailer, one has to wonder who in the world buys all those low priced jeans - basic jeans! And why?
Does buying cheaper jeans free up some cash for the same consumer to buy a T shirt or another garment that he/she had not intended to buy, making the promotion worthwhile? Or do the consumers just come in for the jeans and not buy anything else?
When the latter happens, where does that leave the retailer?

Even before the crisis, the government's household spending survey indicated that household spending on clothing and shoes came down to 12,339 yen in 2008 from 15,891 yen in 2000.
This does not give one much confidence that lower priced staples like the 5,000yen suit is going to boost overall spending by encouraging consumers to buy more items.

And are 680 yen jeans something that consumers _really_ want?

No doubt someone will soon come out with a "one coin" jean or a 500 yen jean. But to what end?

A Senken columnist commented that visiting these retailers selling items at "incredibly low prices" meant that one is shown a very loud and busy retail scene, but there was none of the flair and fantasy that shopping for fashion should be offering.

It is not hard to imagine. What is there to be excited about purchasing such garments with no soul? I would much rather spend 1,000 yen on a good book or a decent cup of coffee!
And yes, I am still on the waiting list of the SAMURAI SP003JP Yamato jeans at 29,800 yen a pair. SAMURAI Jeans grew the cotton themselves here in Japan and the new Yamato is a tight fitting, straight leg jean with a new hip stitch - one of a pair of seagulls - a child and a parent; symbolizing the brand's wishes for a better future for our children. I am happy to buy into that story despite my 200+ pair collection of jeans (mostly basic jeans). But a 680 yen pair of jeans? What would I do with that?

10.26.2009

Buying Product or Buying into Their Confidence? +J and UNIQLO

Last Thursday, taking advantage of a small window of spare time, I did some retail - walked Ginza and spent a bit of time in H&M, Zara, and UNIQLO.
Of course I walked past the other boutiques while there and noted the 13-storey Abercrombie & Fitch building, quietly preparing for its opening and Lanvin readying to open as well.
But passersby with shopping bags were either carrying H&M or UNIQLO bags for the most part on that particular day.

In terms of visual merchandising, UNIQLO was by far the most colorful and was obviously enjoying the most robust trade.
H&M and Zara looked very monochrome - lots of black & white, grays, and graphic prints in black & white on the ground floors near the entrance.
UNIQLO on the other hand is full of color.
+J was tucked away at the very back of the store in both the men's store and the women's store.

I'm always impressed with their straight forward POS signage - you walk in and you immediately know what they are pushing. The time limited discounted price tags are a very powerful call for action that creates a sense of urgency.
It is tacky, less elegant, and so very in your face, but while H&M managed to get their RRP listed on their ads in glossies like VOGUE, blowing people away with their straight forwardness about being affordable, when it comes to pushing the hero product of the week on the shop floor, UNIQLO seems to have the upper hand.

Discussions among shoppers overheard during my short stay in the store made it obvious that they were visiting H&M and Zara, too.
"The quality of this (jacket) is much better than the floppy one you tried on in H&M" said one man to a woman who looked like his wife. Maybe he is from the trade, but the observation was noted.

"Oh, they are selling their cashmere again," said one older woman to her friend, "I bought some nice colors last year and it is so inexpensive, you can wear cashmere everyday! Can I see what colors they have this year?"

The announcement over the PA system was referring to the "now familiar UNIQLO cashmere line" as well as how another batch of heat tech products just arriving on the higher floor.

After reading headline after headline of how UNIQLO and Fast Retailing are outdoing the rest, I admit to being a bit sick and tired of it, but after visiting the store and seeing the energy among the shoppers and the staff, I can see how such energy creates a positive spiral and brings in more shoppers who get excited.

And the location being Ginza, there was an interesting mix of customers, too - very elegant, stylish types to more modest, simple, dressed in basics head to toe types. But they shared one thing in common - they were checking out the merchandise with an obvious intension to actually shop and spend money.

At the end of the day, when enough people do that, the hype has substance and enough energy to create the next hero product campaign, it seems.

In a way it was most refreshing to see a store pushing hero product so boldly.
So many other shops have so much of everything, wanting to be everything to everyone, that you end up feeling like they all look the same and nothing jumps out.
Walking in and seeing without doubt that UNIQLO wants you to buy their cashmere sweaters was a sign of their confidence and in these times of uncertainty, that confidence almost makes you want to buy their product to get a piece of that confidence more than anything else.

10.24.2009

Cosmetics for Men, Porn for Women - Herbivorous Men and Carnivorous Women Update



The "soshoku-kei danshi" (herbivore men) and "nikushoku-kei joshi" (carnivore women) has become a staple in modern day Japan.

And thus, perhaps it is no surprise that men are becoming more avid consumers of cosmetics while women are showing some serious appetite for pornographic content in cyber space.

Ever since I saw the Men's Beauty Book as an independent booklet inside the November 2008 issue of Men's Non-no (image left), it has really hit home for me that men's cosmetics have gone main stream here.

I wrote on the 24 February 2009 entry of the CarpediemJapan Word on the Street Blog about this, too, but seeing first the Shanghai Daily article in September, and then this week's Indepent article really drove this point home again.

Just to quicly summarize some of the definite facts:
- men are twice as more likely than women to make purchases after receiving samples
- Shiseido Men continues to enjoy 5% month on month growth since its launch in 2004
- Sales of men's skin care cosmetics increased 16.9% from 2007, to Y17.6 billion (€130 million) in 2008
- more than 59% of Japanese men now use facial wash, up from 48.8% in 2005. For university students, the 2009 figure soared to over 85%
- Last year alone, 3,600 new personal care products for men were launched globally, according to market research house Mintel Beauty Innovation

So, finally, the human male is becoming more like other creatures in nature that need to be beautiful to attract eligible females, it seems.
And the cosmetics industry can now aggressively market to the other half of the world's population, at least in this part of the world, anyway.

And to me, another indicator that women are becoming stronger still is that the number of women joining membership based pornographic content sites is on the rise in Japan, according to some insiders of the industry.

Bloomberg ran an interesting article on the estimated 100 billion yen market where some sites enjoy as many as 1,000 new members a day paying 10,000 yen to join. And then Biglobe ran a follow up article highlighting some speculation that one of the key drivers of membership and traffic to mobile porn sites is the rising number of female subscribers.

"If a man wants porn, he can go to a theater or rent a DVD and not worry much about it, whereas women find it too embarrassing to be seen doing those things. But on the mobile, she can have more privacy and therefore, it is easier for women to access such content through mobile phones."

Department store sales of fashion items in Japan just recorded its 26th consecutive month of decline in September. Maybe some women as spending less money on fashion and pooling that not to save for even harsher times than today, but into porn on mobile phones?

This feels like yet another gender barrier being broken by aggressive and confident female consumers.

Several years ago, I went to an Economist conference in Hong Kong and had the good fortune of sitting in between the Regional Marketing Director for DeBeers and the CEO of LVMH Asia. Even then, I learned some very interesting facts about how Asian women consumers were more confident and more aggressive than perhaps their western counterparts when it came to shopping for themselves.

"We ran a campaign to urge successful women to buy diamonds for themselves globally. The campaign was most successful in Asia. It seems western women still want men to buy diamonds for them. But Asian women are happy to buy diamonds for themselves," I was told. I am sure the campaign had a slogan like: Women of the world, raise your right hand (and wear a diamond on that hand). And I guess a lot of Asian women did.

"We have this limited number of Swarovsky crystals covered champagne bottles that are very expensive - and they sell like hot cakes! Women buy them for hen's night parties and other special girls' night out events. And Asia is outselling the rest of the world!"
Sparkling wine that sparkles on the outside as well - hmm... why not?

But now one is challenged to think: what markets/products/services that have traditionally been male or female targeted are left?

10.21.2009

TV shops x Department Stores

Today's Senken ran a story on the collaboration between department stores and TV shopping channels.

Jupiter Shop Channel is opening a store inside Hankyu Department Store Yurakucho Hankyu in Tokyo and QVC Japan is opening one in Odakyu Department Store Shinjuku . Both launched on 14 October for a limited time only.

The Yurakucho Hankyu store features Osaka bag brand, ThinkBee on the ground floor and will be open through to the 27th. On 21 October (today), Jupiter Shop Channel will feature the autumn/winter merchandise by ThinkBee on their TV broadcast as well.

The 3-way collaboration (shop channel, department store, and brand) has resulted also in limited merchandise available only at the store and during this limited period.

The store is equipped with a TV monitor playing the spot feature on an endless loop as well.

On the 4th floor of Shinjuku Odakyu features Celebista, QVC's original brand that offers merchandise developed in collaboration with celebrities based on their unique sense of style and lifestyle needs including pregnancy and being a mother.

The 25 sqm store is stocked with dresses, coats, and jackets hitting affordable price points.

This kind of collaboration between TV shop channels and department stores was attempted for the first time in November 2008 when Daimaru and Shop Channel collaborated on bag brand Accessoires Des Mademoiselles Limited (ADMJ).

The manager at Hankyu Department Store is quoted (but unnamed) as saying that this type of collaboration has become more accessible thanks to the credibility of TV shopping improving in the eyes of consumers.

The TV shopping channels are hoping to further enhance their brands' image by being in department stores, while department stores will only go out on a limb if the brands already have positive brand recognition among consumers. This could create some challenges for future collaborations, though they will certainly be on the rise, says Senken.

Furthermore, expanding into brick and mortar retail for nonstore retail brands pose visual merchandising and packaging challenges as well.

Yet this is another form of conversion of distribution channels that retailers and consumers alike will no doubt be watching closely.

Will TV shopping become so credible to the point where traditional retail brands would offer their products more readily as well?

When I closed a deal 15 years ago to sell Olympus cameras to pachinko parlours for them to be available as prizes, my seniors were very worried about the brand image being compromised. After the third order of 2,000+ units came through by the beginning of week 3, I was no longer labelled a rogue or a maverick that tarnished the brand image, but was suddenly a hero among the ranks for creating a completely new channel. Large volume orders do that for sales people.

Will that magic work for fashion brands through TV shopping? Would it work for TV shopping brands in department stores? With 19 consecutive months of sales decline (26months of consecutive decline in fashion items), can department stores ever again deliver that kind of magic for any product category other than food?

10.19.2009

TV x Internet: Double and Triple Screen Users

Radio hasn't killed the newspaper.
TV hasn't killed the radio.
The Internet has not killed the TV.
Rather, the Net generation is growing up as consumers of information through multiple screens and all forms of media.

At the CEATEC conference in Tokyo, Masahiro Inoue, President of Yahoo Japan, spoke and said that the future is in developing services that can be delivered through a range of channels as Internet connectivity is realized through not just PCs, but the mobile phone, TV, car navigation systems, and game consols as well.

He shared research results that almost 70% of all generations simultaneously access the Internet (either via PC or mobile phone) while watching TV.
For tween women, that figure is close to 90%.

Many say that if they see something of interest on TV, they will connect to the Internet to learn more about the product or company and often make purchases afterwards online.

He also said that the number of Internet users and their page views have pretty much hit their peak with no significant growth anticipated. However, the amount of time spent online continues to rise, and said, "By utilizing the strength of the terminals, through double screen and triple screen connectivity, consumers may even be connected for 24 hours a day."

I can relate to this.
I, too, have purchased goods advertised on TV through their mobile commerce site rather than to sit and be put on hold on their toll free number or take note of it, look it up later and make a decision.
Nowadays it is not unusual for me to be reading my emails on my mobile phone while creating a presentation online with my PC and doing most of the required research online as well.
So using double screens through two terminals is a definite daily routine.

Yahoo launching a TV service and NTT docomo (a mobile phone service provider) purchasing TV shopping company Oak Lawn Marketing are all signs that traditional boundaries are rapidly disappearing. Content must now transcend media - and terminals are multi-functional.

At the ITU Telecom 2009 conference in Geneva, NTT docomo's CEO participated in a panel discussion and shared that BeeTV, a subscription based service (monthly subscription is 300 yen or US$3.00) has secured over 700,000 subscribers in the five months since its launch. BeeTV has a range of oringinal video content developed to be viewed on mobile phones that are of 5 to 10 minutes in length. Subscribers can view as many of the clips as they like for their monthly subscription.

In the presentation, he said that mobile phones are (1) carried with the user almost 24 hours a day; (2) enables individual recognition to determine the user; and (3) offers pinpoint information on the geographical location of the user, making it a unique device that is in optimal position to be the gateway for a range of personalized services and information in addition to telephony and emailing.

In Japan, already it is not impossible for one to leave home with nothing but the mobile phone and not be inconvenienced. The phone gets you on the train, it is a transaction device to make purchases (including lunch), it offers entertainment and you can read the latest news on it, it tells the time (in more than one country) and your calendar, address book, and to do list as well as notes are all on it. You can take photos with it and upload images and entries to your blog. You can create and update Tweets.

As a fashion person, I worry for the future of the It Bag.
As a sales and marketing professional, I find the possibilities infinitely exciting.

10.17.2009

The Tokyo Girls Collection and a Big Time Racketeer

According to the 22 October issue of the Shukan Shincho (weekly Shincho), out in stores now, Fashion Walker, organizer of the fashion phenomenon Tokyo Girls Collection, is in dispute with a big time racketeer who has been arrested 8 times.

Takenouchi, the racketeer, is said to have commented,
"I didn't think this company was this dumb. I have an arrest record and more than once, too. You'd think they would have done something quickly."

He visited the head office of Fashion Walker without an appointment on 22 April, and is said to have demanded that the company recognize his standing as a shareholder. He had with him a document certifying the transfer of shares to him from an existing shareholder.

According to Corporate Law or Kaishaho, if the company does not take action to deny recognition of the shareholder, then it is automatically recognized that this new shareholder is entitled as he declares.

Sokaiya racketeers like Takenouchi are called "sokaiya" because they attend general shareholders meetings (kabunushi sokai) and challenge the management in a deadlock debate over issues, holding up the meetings. Their racket is to get the companies to buy back their shares from them.

Takenouchi is quoted in the article as saying that he initially wanted 6 million yen per share or a total of 600 million yen (approx. $6 million), but now, he will accept 5.25 million yen per share.

Fashion Walker and Takenouchi are in dispute as the company is challenging the original transfer of shares to Takenouchi and is arguing that the delay in taking action was caused by their needing time to confirm the legitimacy of the transfer.

The latest Tokyo Girls Collection, held in Yoyogi on 5 September, attracted more than 23,000 attendants.

What sets TGC apart from other fashion shows is that it is a real clothes fashion event. Whatever the audience (consumers) see on the runway can be purchased then and there from the mobile commerce site. It is _the_ real clothes, fast fashion event of Japan.

The 9th TGC this past September was a major turning point for the event in that such market leading select shops BEAMS, United Arrows and BAYCREW'S group company JOINT WORKS joined regulars CECILE McBEE, FREE's MART and UNIQLO.

Fashion Walker looked to have everything going for them, and that nothing would stop them from an IPO - but the down side of extensive media coverage attracted a very unwelcome guest, it seems.

10.16.2009

Manga and Beauty/Fashion Marketing: "Love Make" and "Real Clothes"

It was very "refreshing" to be asked the significance of manga in Japan recently. So I decided to think a bit more about this genre.

I grew up with it as a child, and while I was recruited into the translation team to create an English version of the Economic White Paper in the late 80s, I knew that more people would buy the manga version than the English version we were so intensely working on. Yes, the Japanese government actually issued a manga version of its Economic White Paper.

Manga in Japan became "mainstream" or legit thanks to great artists like Osamu Tezuka and international hits like his "Atom Boy." I used to think as a student that while we are taught about literary greats like Ryunosuke Akutagawa or Soseki Natsume, Yukio Mishima, and the only Japnese writer to win the Nobel Prize, Yasunari Kawabata, as the writers that shaped modern Japanese literature, in future, we would have Osamu Tezuka and manga meisters in our textbooks, too.

In November 2008, I was surprised to see a new form of marketing occur with manga. Dr. Ci: Labo, a cosmetics brand, teamed up with Shueisha's "Chorus" manga monthly magazine read by working women and young home makers to create a manga series that takes place in the offices of Dr. Ci: Labo. Through the struggle of the newly appointed PR assistant, readers learn about their products and development processes as well as how PR works (in part) for this cosmetics company.

The series ran for 6 months (6 episodes) and has since been made into a book that can be purchased. (Great way to recover some marketing investment dollars - imagine selling your marketing collateral in this way!)

Dr. Ci: Labo created a special campaign site for the manga series as well, and on the site, the actual products that are introduced in the story are featured with a web site only short comic strip posted to explain their benefits.

I have yet to see any other businesses jump on this bandwagon, but Dr. Ci: Labo has certainly taken the application of manga one step further than just using manga characters instead of real models and celebrities.

Another interesting topic, which came to my attention in a timely manner, is the launch of the TV Drama Series "Real Clothes, " which is based on Satoru Makimura's manga of the same title.

Kansai Television's official web site for the drama series is a great platform for those who paid top dollar or whatever was required to do product placement. "This Week's Fashion Check" page shows which item worm by the lead characters is of which brand. Louis Vuitton, Lanvin, JAYRO, DEARER & Gabrielle seem to dominate for now.

We have yet to see any promotions for these brands linked to the drama, but since the original manga series started in 2007, and is still ongoing, there defenitely is a longer life span to being involved for sponsors than a full feature film like "The Devil Wears Prada."

In the past, Hermes has published a manga book on its history with Moto Hagio as its author (they wanted someone who was good at drawing horses), and manga charisma-come-opera singer Riyoko Ikeda had a seried titled "Mijyo Monogatari" (The Tale of an Attractive Woman) that educated readers about haute couture and luxury brands as well as diet and taking better care of oneself. (Balenciaga and Louis Vuitton were featured) But manga seems to remain a very experimental marketing medium.

It is a very unique format to Japan and something that has a long history and a strong following. I am sure there will be other, more creative applications to come.

10.15.2009

Poupee Girl - Fashion SNS Site

I've gotten quite a number of positive responses from people both in and outside of Japan by sharing the Japan Times article on Poupee Girl.

Let's look at what makes them so different:
- it is a SNS site for members to talk about and showcase fashion (no family photos of pets and kids!)
- 500,000 registered users (since 2007)
- 98% of them women
- 80% of them in their teens or 20s
- 35% of them living outside Japan (U.S., central America, and China)
- 5,000 virtual items to be purchased with "ribbons" by members for their avatars
- virtual boutiques by Louis Vuitton and Coach; campaings by Kose; supported by Sanei International
- 15 million+ photos of real fashion merchandise uploaded by its members that can be searched by brand (from what I last read, that is a 5 million images increase in one year!)

An article by Nikkei MJ in April 2008 said that some users access the site more than 200 times a day.

They are also collaborating with Twitter and FaceBook, and are slated to launch a Nintendo DS hand-held game that enables users to play dress up.

I've actually talked about them a lot in my trend seminars and thus, I actively use the site. It can get quite addictive when you start having fans giving you really positive comments about the items you upload.

A quick look at the voting results give one a very good idea of what items are popular and which brands, too.

I think Sanei is really clever to use this platform to "test market" designs and items that can be made into real clothes for their retail business.

10.14.2009

The Saturday Senken

Magazines and newspapers in Japan are suffering as advertising budgets continue to shrink.

In the past 12 months, quite a number of long-standing titles disappeared in the world of glossies and rumours were abound that the former Editor in Chief of Marie Claire Japan resigned because she was unable to hit the advertising budget after some estimates put a 40% cut in advertising dollars by luxury brands in Japan not due to the downturn of the economy, but because they were redistributing that money to mainland China.

So it came as no surprise for the Senken Shimbun to announce that they will stop issuing their Saturday edition in physical, paper format. Instead, they asked the subscribers register to receive the Saturday Senken as an email, and by the way, the monthly subscription price is the same. "We thank you in advance for your kind understanding" the letter from the management said.

But what is really cool is that one can now opt in to receive the following day's headlines via mobile email in the evening. They also send breaking news - like the announcement that Yohji Yamamoto is filing for protection from creditors with a 6.0 billion yen debt, or that Fast Retailing announced a new record profit for the quarter - as they are filing it.

They have managed to turn their very antiquated format into something that takes advantage of the Japanese way of using mobile/pc emails as well as paper. Their site still looks very static and is in need of work, but I love this email and mobile email service. It is nothing fancy, but who needs bells and whistles to receive the breaking news and the next day's headlines?

I really hope that leading trend sites that charge several hundred times the Senken for an annual subscription who send the translated version of the day's headlines at 15:00 take note of this and work harder!