Redefining Luxury in a Mature Market

This month's SPUR (fashion trend setting glossy monthly; circulation 113,000) has a whole section dedicated to redefining luxury. 

As I am now dealing with a brand who claims to own the "affordable luxury" space in fine jewelry (no, it is not an oxymoron according to the brand)
and we are mapping out the marketing and media plan for 2012, 
I have a very keen interest in this topic, 
not to mention that I believe it will become a core element defining consumer attitudes and the market in Japan in 2012.

Already two years ago, when WWD Japan ran a feature asking key trend making, influential people in the fashion industry 
"What would you buy if you won the lottery today?"
it was rather interesting to read that most of the people said, 
"I already own pretty much of what I wan that money can buy. What I really want today cannot be measured in monetary values."

For the longest time it feels like we have been saying that consumers today are cash rich and time poor. 

Especially in Japan, that has led to convenience being a key consumption driver. 

Leading underwear maker Gunze told me that their peak consumption time is around midnight in convenience stores - consumers realize just as they are going to bed that they have run out of clean underwear for the following day and rush to their neighborhood convenience stores to purchase a pair of underwear at full price. 

If you thought underwear sold best in discounted packs of seven - one for each day of the week - then think again. 

In SPUR, new luxury is defined as an attitude and a way of life.

Yes, being a fashion brand, it features brands like Loewe and trend makers like Tilda Swinton wearing Raf Simons in "Io sono l'amore," as well as Karl Lagerfeld's latest short film.

The headlines in the feature say,
"what we really want now is high quality daily clothing" or
"wearable art - fine jewelry" and
there is also a write up on Carine Roitfeld's book, irreverent and how she defines luxury as an attitude, which sums up the whole feature theme. 

When she speaks of luxury, she talks about time and travel. 
"to know what is valuable; knowing that some things like wine and crocodile skin are made of material that become better with time and to have that time to wait."
Personally, she says luxury for her is to be able to travel whenever she wants, so what she wants is a private jet!

Ordinary consumers will probably not go quite that far.

But with the scars from the 3.11 earthquake being still rather raw,
and the fear of radioactive contamination of food and water gripping many citizens,
luxury is about safety and knowing that the things one consume are safe. 

Where perhaps the affluent western consumer today buys organic food in hopes to enjoy a better quality of life as a result of eating better, 
the Japanese consumer will pay for safe food produced as far away from the nuclear reactor as possible. 

The shock of the massive disaster that came out of nowhere still has people valuing their loved ones and strengthening that bond with their loved ones. 

From spring through to autumn, bridal jewelry has been selling extremely well. 
And especially sales of engagement rings have picked up, where until the disaster, the market was dominated by couples going straight for the wedding rings and skipping the diamond (to save money as a reaction to the Lehman Shock).

Another luxury item seems to be time - and time spent with loved ones. 

I like asking my team point blank what motivates them, 
and more than a handful have said "spending time with family" or close friends. 

I believe that in 2012, any brand that is vulgar enough to push logos and icons will lose market share in Japan. 
Those who will rise are the brands that take the time to build a rapport with the customers and to offer them a sense of luxury not just in the quality of service (that is a given in Japan), the material, or the store, but also in the time they spend at the store be it online or off line. 

The Japanese consumer today is very sophisticated.

So brands won't be able to push products onto them just because they are branded. 
They can do that in neighboring China, where there are about 10 times more consumers who will be happy to devour such items. 

In this market, brands are going to have to work much harder to get a share of the wallet. 
And they must be mindful that the consumer here values intangible things as true luxury now - time, bonding with family and loved ones, and the experience. 


Leading is Living with Solitude

A short while ago, as I became COO, I was told,
"I am really curious to see who you decide to team up with."

Then, the very same person came back in two weeks to URGE me to pick my "side kick."

I figured this guy just doesn't get it.

To me, being a leader is about standing alone up front
or at the back;
wherever the buck stops. 
And that means ALONE.

Some wise man once asked:
"Have you ever seen statues of committees?"

It sure made me laugh.

Charismatic and powerful leaders make it very clear who the leader is.
And how decisions are made; and when decisions are made.

Decisions are not taken by faceless committees or behind closed doors through a vote.
(The Catholic church takes it to an extreme with the Conclave process... but then again, the cardinals are not allowed to come out until a decision is made, so I guess that is an exception.)

Ever since I was a child, my hero and ideal leader has been Napoleon Bonaparte I.

He was charismatic,
a workaholic,
and a man who was able to fight among the lowest ranking men
while taking ultimate responsibility for the strategic directions for his troops.

OK, one may say he had some raw luck with the woman he fell in love with,
but no one is perfect, right?

As a leader, I have a reputation for being tough but fair

As a young, aspiring manager, I was known for being rather ruthless with my "high standards" that I forced on everyone.
(At the time, it was hard for me to accept that my manager could give me a bad performance review for "having standards that are too high."This is a true story!)

Thanks to motherhood and age, I have become much more tolerant and less tenacious,
though I doubt anyone would call me a pushover or a softie.

In fact, I believe all managers should try to bring up a family - preferably with more than one child as children surely teach us a lot about about being better people, understanding how best to nurture and guide talent, and also to discipline both oneself and the children.

I know a leader who has the chutzpah, if that is the right word, to ask of his executive assistant,
"What do other CEOs do in a situation like this?"
"What should I do next?"

I am constantly making decisions - as that is what we all do - but I tend to believe that leaders need to do that alone.

The top guy has risen above his peers - that is why he is the top guy.

And living with solitude is part and parcel with - or rather, an integral part - of being a leader.

When I was working the diplomatic circuits, I was always blown away by how everyone seems to manage to keep track of who was sitting with whom at lunch or who was talking to who over coffee at every break and lunch!

That is because everyone knows that the real negotiations happen during coffee breaks and meals, not at the official negotiation tables.

In the same token, I am very conscious of how staff members keep track of who the leader takes out for lunch, coffee, or a smoke.

That is why I NEVER go out with the same people twice in a week.

Some days, I prefer just to go out on my own or with people from a different division or business to refresh my mind and reset my thinking.

Leading is a lonely business.
And often, the critics are louder than the supporters because as with many other jobs,
you are expected to keep things running smoothly, so there is no pat on the back for leading without a glitch for some time.
But the moment something goes wrong,
everyone has a field day pointing fingers at you.
And you have to bear that alone.

Perhaps that is why many entrepreneurial leaders like to run or compete in triathlons.
They are a great way to enjoy solitude and working with onself.

For me, once I slip into my dobok and tie that black belt around my waist,
everything else disappears.
It is a silent battle with myself in both the physical and mental sense.
Yes, in sparring, I have an opponent,
but during the two rounds of two minutes, I am fighting my fear, my fatigue, my doubts and
taking decisions in split seconds and getting feedback on the consequences of those decisions.

I appreciate and respect the fact that every man stands in the ring on his own,
his self doubt and any self restrictions being his worst enemies, not the opponent.

If there is any leader who can challenge me and prove me wrong about the need to live with solitude as a leader,
it would be a pleasant surprise and major eye-opener to be corrected.


Isetan Mitsukoshi to Open Stores in Lumine and Haneda Airport

The Isetan Mitsukoshi Group, who owns Japan's No.1 Department Store, the Shinjuku Isetan Store, announced today that come spring 2012, they will open a cosmetics store in Shinjuku's Lumine, a station building operated by JR East, the former Japan National Railway who is now Japan's 3rd largest retailer.

As early as 2004, when I returned to Japan from my seven-year stint overseas (I was in Australia, Singapore, Dubai, then Singapore again) I was seeing market research results that showed that year by year, a growing number of F1 women (It is marketing jargon common in Japan and refers to women aged 20 to 34) had "never shopped in a department store."

With the easing of our Large Scale Retailers Law, and with the rise of a barrage of uniquely Japanese commercial alternatives, the department stores have been and continue to flounder and shrink.

In addition to malls, Japan has in-station shopping that is not just small kiosks selling coffee and sandwiches, but book stores, family restaurants, cosmetics stores, boutiques, and the likes of UNIQLO.

JR Shinagawa Station is one such station, and when they opened their shopping complex inside the ticket gates, there was a 250% increase in the number of consumers paying 130 yen to buy a ticket that gave them the right to get inside the station! (The said ticket will not allow the user to travel on the trains)

- Imagine being able to charge every customer who wants to walk through your store's door.
How profitable can that be?

Another uniquely Japanese retail format is the "station buildings" - commercial multi-storey properties adjacent to terminal stations such as Shinjuku in Tokyo.

Shinjuku is not just another train station.
It is in the Guiness Book of World Records as the busiest station in the world - with a daily average of 3.64 million people passing through it, and with 200 exits.

At each of its exits, there are major department stores and shopping complexes -
South Exit leads to Odakyu Department Store and My City;
West Exit leads to Keio Department Store and the municipal building (that is rumoured to have a 200 million yen Mayor's Office);
East Exit leads to Isetan and Mitsukoshi Department Stores, Marui, LUMINE, and Kinokuniya as well as underground shopping mall, the Subnard;
New South Exit (Southern Terrace) leads to Takashimaya;
and so on...

But department stores have always looked down on the newer retail formats as being less classy and cheap.

I am currently overseeing the roll out of a "newbie brand" - to the Japanese market - and have been told repeatedly how we would be signing our death warrant if we opened up in malls and station buildings.

Some people tell me that the average basket size at station buildings is only 3,000 yen;
while the department stores sell an average of 15,000 yen.

But I would much rather have customers visit my store 3 times a month to purchase 3,000 yen each time, than for them to only come once a year and spend 15,000 yen as they do at the jewelry stores in department stores on the ground floor (luxury jewelry brands are usually on the fourth or higher floors).

Inditex blew the world away when it was made clear that the average Zara customer visits their stores 17 times a year on average vs the three for competing brands. 

At our business, we may not be getting customers to come back quite as often on average, but to date, our repeat customers come within 30.2 days of their first purchase, with some coming back as early as TWO DAYS after their initial purchase.

I like to tell my team that "if we sell well, we are the law."
To mean that if we can prove that it can work by having fabulous sell out, we can persuade the brand owners that jumping only on sinking ships - i.e. department stores - will not increase their brand equity.

For the last six months, rumours have been abound that the super brands will start opening up outside of department stores and in malls.

But now that a department store - or rather, THE department store - is moving out of its own comfortable kingdom and renting space in their once belittled competitors, retail in Japan has taken yet another turn down the road of no return.

Retail in Japan will never be the same again.