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Japan's "Textured" Fashion Market Rides Out Consumption Tax Hike

JFW-IFF 2014 took place just three months after Japan's new consumption tax rate was introduced. Tellingly, it was the middle generational market that was squeezed, with buoyancy still clearly apparent in the younger and older sectors.

Photo: Innovative presentation lures visitors at the JFW-IFF 2014.
Innovative presentation lures visitors at the JFW-IFF 2014.
Photo: Innovative presentation lures visitors at the JFW-IFF 2014.
Innovative presentation lures visitors at the JFW-IFF 2014.

This year's Japan Fashion Week-International Fashion Fair (JFW-IFF) had the misfortune to fall in the wake of Japan's recent consumption tax hike. This long mooted increase – from 5% to 8% – led many consumers to do their spending well before it came into effect in April, forcing a number of companies to take a step back and curtail their promotional spend.

This was clearly reflected in the number of exhibitors at this year's show, with large parts of the venue closed off, despite having been frequently utilised in previous years. Attendance numbers were also down. A number of visitors said their attendance had been a last minute decision, suggesting weaker demand for the event than of old. Another factor affecting the show was the launch of Fashion World Tokyo, a rival fashion fair and one held just ahead of the tax increase.

Every cloud, though, has a silver lining. This challenging situation actually benefitted some companies – with those with truly effective marketing strategies clearly standing out at the event. Overall, the show proved an object lesson as to just what works in the Japanese market, as well as revealing a few less obvious commercial insights.

In one key development, a number of exhibitors reported strong demand from department stores. Kozo Kayamura, Head of Corporate Business for Excel Human, an Osaka-based agent and distributor of foreign brands, was launching Gaastra, a range of nautically-themed clothing from the Netherlands. Commenting on the interest he was receiving, he said: "The department stores like to have something new. We think there is lots of opportunity for this kind of brand."

While many see the Japanese market as clearly separated into luxury, middle, and economy tiers – with the first and third of these divisions doing better than the second – Kayamura disagrees. He believes that the real market divide is generational, with Japanese boomers (known here as the "Dankai no Sedai," (literally the "nodular generation") having far more money – and time to spend it – than the younger generations, especially the Millennials.

A distinct division was also being seen in the commercial arena. One of the goals of Abenomics was to boost domestic production by making it more competitive through the devaluation of the yen. As far as the clothes sector is concerned, however, there is little sign of any major upswing. A typical comment often made by Japanese manufacturers is: "We're not Toyota" – an indication that the government's policy has mainly proved a boost to the mega-companies.

Keiko Sasaki, Head Office Manager at Yuka & Alpha, a pattern design software company, was in Tokyo looking to do business with Japanese clothing manufacturers, but for him demand had proved disappointingly sluggish. Despite this, a number of small craft producers, largely those specialising in traditional products from specific regions in Japan, reported an improved business environment.

A key theme to emerge from this JFW-IFF was that companies need to tailor their products to Japanese consumers in a number of precise and targetted ways. Perhaps more than in many other markets, Japan is "textured", in that it has various aspects, subgroups, and quirks that all have to be addressed by would-be entrepreneurs. While this undoubtedly creates complexities, if navigated successfully, it can prove rewarding.

The experience of Hong Kong-based clothing manufacturer, Impact International, seems to bear this out. Seiko Wada, the firm's Chief Operating Officer, said the show had proven to be very positive, even though the company had made a late decision to participate.

Photo: Nautical but nice: Gaastra’s new range.
Nautical but nice: Gaastra's new range.
Photo: Nautical but nice: Gaastra’s new range.
Nautical but nice: Gaastra's new range.
Photo: The ‘kawaii’ way: Cute accessories.
The 'kawaii' way: Cute accessories.
Photo: The ‘kawaii’ way: Cute accessories.
The 'kawaii' way: Cute accessories.

In search of OEM orders, Impact International set out to highlight its wide range of styles and materials, its versatility, and, most importantly, according to Wada, its readiness to deal in small quantities.

Explaining the company's approach, Wada said: "We want to get OEM orders. Although not that many companies came to our booth, some big companies came. I'm optimistic that we can get orders from them."

According to Wada, the company is seeing growing demand for what she termed "3D fabric". This is clothing with various forms of chunky knits and embroidery or adornments, such as tassels and sequins.

Another aspect of Japan's textured market relates to presentation and information. One emerging trend is growing consumer interest in well-known global brands that have yet to make inroads in Japan. The fact that these brands have little local profile, however, creates an information gap that sharp marketing practices can ably exploit. A prime example of this is Excel Human and its launch of the Gaastra brand.

Explaining Gaastra's appeal, Kayamura said: "It is very precise, very distinguished. It is all very functional. It is not just fashion with meaningless frills. This is a 'storytelling brand'. The Japanese like to have some sort of distinction or some interesting backstory to a product."

Excel Human has positioned itself well in its bid to establish Gaastra in the Japanese market. It has adopted network (or club selling), an approach that takes its cues from TV shopping channels and home selling.

Kayamura said: "We have our own way to do business. We have our existing network, with 50 shops nationwide, where we sell, explain, and demonstrate to groups of customers." This approach, utilising social networks and a sense of occasion, also embraces the generational aspect of the Japanese market.

The importance of a generational approach was also acknowledged by Masae Yamamura, a jewellery designer. On the lookout for distribution deals at this year's event, she believes that age-group specific marketing is done via women's fashion magazines.

Yamamura maintains that generations behave differently in Japan to anywhere else. This sees a lot of creative energy focussed on the older generation, who tend to play the role that teenagers fulfil elsewhere – setting trends and trying out new ideas. Explaining the reason for this phenomenon, she said: "I think an important part of it is that they just want to look younger."

Another key local difference is that, whereas in much of the world women dress to appeal to men, in Japan they dress to amuse or impress their female friends. This is one reason for the continuing popularity of anything regarded as "kawaii" (cute). Among other trends in the jewellery sector, Yamamura said there was also a current preference for simplicity and sparkly items.

Barusus, a Tokyo-based fashion company, also had a view on the generational question. The company was at the fair to promote its Suminopakia brand of simple, one-piece dresses, all made with various traditional fabrics sourced from local Japanese craft producers.

Introducing the range, Mami Asami, the company's Brand Manager, said: "This product is made from cloth that is woven in Izumiotsu, a place famous for producing Japanese blankets.

"Our dresses are aimed at the 30s and 40s age group. At that age, women want to hide themselves a little bit, hence the relatively low hemlines and high necklines. They also tend to be busy, so clothes have to be practical and functional. In Japan, people in their 30s tend to wear dresses with a simple design. Being unique is seen as bad at that age."

Photo: Attendance down, but optimism remains on show.
Attendance down, but optimism remains on show.
Photo: Attendance down, but optimism remains on show.
Attendance down, but optimism remains on show.

While the middle-aged market tends to be more conservative, the younger and older generations take a more playful and colourful approach to fashion. Even with attendance down and the market depressed by the consumption tax rise, a positive spirit remained clearly in evidence.

JFW-IFF 2014 was held from 23-25 July at the Tokyo Big Sight. This year's attendance was 20,081.

Marius Gombrich, Special Correspondent, Tokyo

Content provided by Picture: HKTDC Research
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