Major domestic underwear firms are aggressively expanding their direct retail operations, opening lingerie boutiques with French names, as well as bra kiosks at train stations.
Wacoal Corp., the largest domestic company in the sector with annual lingerie sales of 110 billion yen, has been opening outlets in major urban areas since September and currently has 30 shops.
The Kyoto-based firm said it plans to establish 40 new stores during the 2003 business year, with an eye to operating around 150 outlets by the end of March 2006.
“Many major retailers and lingerie chains have gone under in recent years, and we have to secure retail outlets with our own capital,” said Masayuki Yamamoto, director in charge of Wacoal’s direct retailing operations.
Battered by a decline in consumer spending and mounting debts amassed during the asset-inflated bubble years, department store and supermarket chains, including Sogo and Nagasakiya, have failed, leaving fewer shelves for manufacturers to showcase their wares.
By establishing its own retail outlets, Wacoal has taken the offensive, targeting young consumers who have typically been scared off by the steep price tags that dominate upscale retailers.
Direct sales may also increase the company’s profit margin, part of which would otherwise go to distributors.
“A typical bra at the firm’s conventional retail channels is sold for around 5,000 yen, which is expensive for young girls. We had to offer prices acceptable to them,” Yamamoto said.
Wacoal has thus developed four new brands and four separate retail chains to sell each brand.
The new brands and stores are designed to offer casual and more reasonably priced products, targeting various age groups.
At each of the new retail chains, the average price of a bra is around 3,000 yen.
One of the new brands is called une nana cool, French for cool girl.
Une nana cool stores, which are spacious and feature wood furniture, target young female shoppers from junior high school age to their late 20s.
All items at the stores, including bras, are displayed on shelves rather than on hangers.
Meanwhile, at its amphi retail chain, Wacoal tries to project an atmosphere akin to an underwear convenience store. Located mainly at railway stations, amphi hopes to lure walk-in shoppers.
The nation’s second-largest lingerie maker, Triumph International (Japan) Ltd., is adopting an even more aggressive bid to attract customers.
The firm had opened 173 outlets by the end of December, with another 70 planned for this year.
The maker runs six direct retail chains, targeting young customers in major cities with a relatively low price range compared to that of regular retail channels.
The fully owned subsidiary of the German underwear giant chalked up domestic sales of 44.2 billion yen last year. It said the directly owned stores alone logged 9 billion yen in revenue during the period.
“We would be in a very difficult position without these shops,” said Takao Umezawa, director in charge of Triumph International (Japan) marketing. “They’ve helped us maintain sales and profit growth for the 16th straight year by making up for the fall in the conventional retail channel.”
The firm that captured the hearts of young Japanese women with the blockbuster Angel’s bra, which it claims accentuates cleavage, found that conventional retail channels had little room for its items due to the strong presence of its rival.
“It’s been taboo for wholesalers to run outlets by themselves, but we had to, because the main retail channels were pretty much locked up by Wacoal,” Umezawa said.
The need for direct retailing has recently become more acute, with ailing independent lingerie chains unable to afford to open outlets in new shopping complexes.
But for Triumph, these complexes provide opportunities that it cannot afford to miss, including a new high-rise in Tokyo’s Roppongi district, where the firm will open a store in late April.
In addition to the absence of rival products on the same floor, Umezawa said that one of the merits of direct retailing is that firms have freedom to present their own products in the most advantageous ways, some of which would likely be frowned upon by conservative department store chains.
One initiative that has proven popular with shoppers, for example, is the introduction of “pair fitting rooms,” where boyfriends can accompany their sweethearts while they try on new lingerie.
“It is not necessarily for dating couples. It could be among friends or for mothers with small children,” Umezawa said.
But retailing ventures also carry risks.
Wacoal’s Yamamoto said his biggest concern is inventory control.
Since the firm produces original lingerie items for each brand that cannot be sold at different brand stores, they run higher inventory risks than wholesale items, according to Yamamoto.
Creating a precision production plan is also a tricky business, since it is difficult to estimate demand for products that have a great variety in terms of size.
For instance, a manufacturer must prepare at least 54 different variations on one kind of bra; six cup sizes for three under-bust sizes that come in three colors.
Despite these risks, apparel industry analyst Masako Tamemoto of Shinko Securities Co. said it is imperative for underwear makers to expand their direct sales operations if they want to maintain growth.
She also cautioned that finding good store locations is vital.
“Opening an outlet in a good shopping center doesn’t guarantee success,” she said. “They should also make sure that they get the best place within the building.”
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