Large supermarkets that handle general merchandise are beefing up their marketing strategies, including developing own-brand goods, in response to the popularity of Uniqlo, GAP and other clothing specialty stores.
“We want to create the image that our (products) are reasonably priced and have a sense of beauty,” said Yukio Fujimaki, director of apparel business at the large-scale supermarket chain Ito-Yokado Co. Such retailers in Japan often sell clothing as well as groceries.
To revive sluggish clothing sales, Ito-Yokado brought in Fujimaki, well known in the apparel industry as an expert on sales floor design, from department store chain Isetan Co. last April.
By handling the entire process from product development through manufacturing and sales, Fujimaki’s business model, which mirrors that of Uniqlo, has helped cut Ito-Yokado’s costs.
One example of the strategy is the pbi brand that hit Ito-Yokado’s shelves in February.
By moving the company away from an exclusive focus on low-priced clothing, Fujimaki is trying to balance reasonable prices and better quality with a more fashion-conscious image for Ito-Yokado.
It isn’t alone in trying to move upmarket. Aeon Co., another supermarket chain, is getting help from from a well-known designer in an effort to spruce up its Topvalu line. Midsize supermarket chain Uny Co. has tied up with trading house Itohchu Corp. to develop marketing strategies.
Ito-Yokado’s clothing sales for the business year that ended in February 2005 totaled 314.6 billion yen, down about 40 percent a decade earlier.
Despite the decline, clothing is still Ito-Yokado’s second-biggest seller after food, accounting for about a quarter of total sales. Hence the need to turn the ailing division around.
A stronger clothing division is the “key to recovery,” said Noritoshi Murata, president of Seven & I Holdings Co., Ito-Yokado’s holding company.
Meanwhile, Fast Retailing Co., which runs the Uniqlo discount clothing chain and serves as a benchmark for supermarkets’ apparel operations, is suffering from slower growth.
Uniqlo’s fleece jackets were a big hit in 2000, helping push its sales above the 400 billion yen mark in the business year that ended in February 2001. In subsequent years, however, the company’s growth has been less spectacular, partly because its products are already so popular.
To maintain growth, the company has moved into intimate apparel, children’s clothing and uniforms. Fast Retailing has also been pushing ahead with mergers and acquisitions.