Business / Corporate

Blue-collar clothier Workman shakes up Japan's stagnant apparel market

by Alex Martin

Staff Writer

It’s a weekday morning and a steady stream of customers is entering a Workman store in Tokyo’s industrial Ota Ward, mostly blue-collar workers looking for ¥99 rubber gloves, ¥3,500 safety shoes and other gear they need before heading to construction sites.

The clientele markedly shifts as the clock approaches 10 a.m., with casual shoppers coming in to check out the ¥1,900 stretchable cargo pants popular for their light weight and breathability, and the ¥4,900 rain suits displayed near the entrance — a handy item for the rainy season.

“We see regular customers during the day and manual laborers in the morning and at night, before they head to work and after they’re done for the day,” said Hiroki Nagasawa, the 27-year-old franchise owner of a store he runs with his wife and a few part-timers.

“On really busy days we rake in sales of around ¥1 million,” he said.

Meet Workman Co., the company running a chain of stores selling work wear that’s rapidly expanding beyond its traditional consumer base — a rare success story in Japan’s saturated apparel market.

Since its first outlet opened in 1980, Workman has grown into a chain of nearly 840 mostly franchised stores across the nation, fueled by its unique business model and cheap but durable product line.

Take the best-selling Fine Grip Shoes that sell for ¥1,900 a pair. A variation of a slip-resistant chef’s shoes for those who work in kitchens with greasy floors, the product became a surprise hit among pregnant women prioritizing safety over show. Then there are the ¥1,954 flame-resistant hooded overalls designed for welders but sought out by campers and barbecue aficionados.

Tetsuo Tsuchiya | ALEX MARTIN
Tetsuo Tsuchiya | ALEX MARTIN

“Surprisingly, we don’t have any competitors in the market for cheap, functional apparel,” Workman’s Executive Managing Director Tetsuo Tsuchiya said at the company’s Tokyo headquarters. “We estimate the market for such products to be around ¥400 billion and intend to take a fourth of that share in the next several years.”

Since joining the company six years ago, Tsuchiya — whose uncle launched the first shop nearly four decades ago in Isesaki, Gunma Prefecture — has been reworking Workman’s marketing strategy, introducing a new store concept last year called Workman Plus that targets general consumers.

This proved to be an immediate success, with long lines of customers waiting to shop at the first store, which opened in a shopping mall last September in Tachikawa, a suburb in western Tokyo.

“For that new Workman Plus outlet we chose around 320 products out of our catalog of 1,700 that we thought would appeal to casual consumers looking for outdoor clothing,” he said. “For the first time in our history, we’re bringing in mannequins and mirrors into our stores — we didn’t need them before since we primarily cater to manual laborers who know what they are looking for.”

While a typical Workman store sees annual revenue of around ¥100 million, Tsuchiya said that Workman Plus stores can expect to rack up around twice, or even three times that figure, simply by playing up certain products that appeal to the masses by reorganizing the shop layout. Looking ahead, he plans to have all new outlets operate under the Workman Plus banner while gradually overhauling the interior of existing shops as well.

“We are selling the same products for the same price in Workman Plus stores, we just tweaked the user experience,” he said.

Typical Workman stores sell both work wear and more general products side by side. By displaying these in separate areas, cushioned by everyday clothing such as socks and T-shirts, 70 percent of casual shoppers “feel that the shop is made for them, while 90 percent of manual laborers feel the same,” he said.

“It’s like magic.”

Prior to the 2008 global financial crisis, work wear was generally distributed by construction companies, Tsuchiya said, but that practice ended when the economy wilted, prompting workers to purchase their own goods. This also allowed them to be more adventurous about color and design.

“Workman took the opportunity to extend its product line to include outdoor and sports apparel — a bet that’s paying off,” Tsuchiya said.

Rubber gloves of various kinds hang from a display at a Workman outlet. | YOSHIAKI MIURA
Rubber gloves of various kinds hang from a display at a Workman outlet. | YOSHIAKI MIURA

In the year ended March 31, Workman, which is part of the Beisia Group of retail chains, logged an operating profit of ¥13.53 billion, up 27.6 percent from the previous year, and saw a 25.1 percent jump in net income to ¥9.81 billion. Meanwhile, revenue from Workman’s three outdoor brands — FieldCore, Aegis and Find-Out — is forecast to reach ¥31 billion by the end of next March, compared with ¥13.2 billion for the year just ended.

Workman’s rapid growth is defying the stagnant apparel market. According to a report in March by Yano Research Institute, the domestic apparel market stood at ¥9.22 trillion in 2017, roughly unchanged from the year before and down from ¥9.38 trillion in 2014.

“We forecast the market to remain flat or face a slight decrease looking ahead due to factors such as the low birthrate and aging population,” it said.

In a note, Kazuko Nagata, senior analyst at market data provider Quick Corp., said the introduction of Workman Plus indicated Workman had entered a new phase of profitability.

“Demand for functional, cheap private-brand wear, not only for professional customers but also for the general consumer’s outdoor needs, has been growing,” she said. “The publicity surrounding the launch of the first Workman Plus store last fall has enabled existing shops to lure in general consumers as well.”

Masayuki Sakurai, whose family operates a fishing rod company in Tokyo, is a regular at Workman stores where he buys socks and underwear for fishing expeditions.

“I love the breathable, water-resistant jackets — they’re cheap but practical,” he said, referring to Workman’s rain suits, which sell for ¥3,900 to ¥5,900.

One of Workman’s strengths is regular customers like Sakurai, who make frequent visits to shop for necessities, giving the stores’ owners steady streams of revenue.

The company is also known for its long-term stocking practices. In a fast-moving industry known to discount or even throw away out-of-season clothing to maintain a brand’s image, Workman will keep selling a product for 10 years before permanent removal.

“For example, if a product doesn’t sell well among workers one year, we can bring it back the next year for general consumers,” Tsuchiya said. “This allows us to avoid discounts.”

Tsuchiya also said the company’s profitability has attracted many job applications from those interested in running a Workman franchise.

Hiroki Nagasawa, manager of a Workman outlet in Tokyo's Ota Ward, poses with one of the company's rain coats. | YOSHIAKI MIURA
Hiroki Nagasawa, manager of a Workman outlet in Tokyo’s Ota Ward, poses with one of the company’s rain coats. | YOSHIAKI MIURA

Nagasawa, owner of the Workman store in Ota Ward, said his mother, who runs her own Workman store, recommended that he apply. Workman stipulates on its website that, in principle, it only accepts married couples between the ages of 25 and 55 as owners, a prerequisite he met. The website also says owners can expect to earn an annual salary of around ¥10 million, compared with Japan’s average household income of about ¥5.6 million. To reduce the burden on owners, Workman also employs an automated ordering system based on demand projections.

“So far business has been good, especially after the television broadcasts,” Nagasawa said, referring to the numerous programs that have been covering the Workman phenomenon in recent months.

But while Workman boasts more domestic outlets than Uniqlo, the ubiquitous apparel brand run by Fast Retailing Co., the company is still virtually unknown outside Japan. Tsuchiya said that, at least for the time being, the company intends to keep it that way.

“We have no plans for expanding in the United States or Europe,” he said. “We succeeded by carving out a niche in Japan but believe it will be difficult to cultivate a similar customer base in countries with different climatic conditions and demands involving work wear.”

Tsuchiya said, however, that the company is looking to e-commerce to reach overseas customers in countries including China, where Workman has warehouses. Another idea is to open duty-free Workman stores in tourist destinations such as Fukuoka and Sapporo to appeal to foreign visitors, he said.

“We’ve reached that point where we need to think about whether we want to hire more people and expand or stick to our current style where we prioritize efficiency,” he said.