Part 2: Where Japanese Fashion and Apparel Industry Go? Looking back at the 10 years since the collapse of Lehman Brothers in 2008
As for the future, it is noteworthy that a significant change is appearing in 2018. First of all, regarding SPA brands, reports in the global market say that H&M has gone into a decline, even in the Japanese market. Moreover, it appears that ZARA (Inditex) is showing signs of declining sales in Japan. For these two big SPA brands, it is difficult to determine whether they can continue to increase their sales, and it seems that they may have reached a peak. Among the four major SPAs, only UNIQLO is at least proceeding smoothly in the global market including Japan. TOPSHOP is an example of withdrawing from the Japanese market long ago, and it seems that FOREVER21 may be in a similar situation at the moment. How will it respond to the Japanese market in the future?
Regarding luxury brands, the stock market is in a state of flux, and it feels like the Nikkei average is very volatile. I think that the situation will be clear by March; however, at one time I estimated ¥25,000 at the beginning or even ¥27,000 if things are bullish, but that now seems unlikely, and it could be that the Nikkei average will go lower, even to the ¥20,000 range. Although, the optimistic mood leading up to the Tokyo Olympics in 2020 was great, there are signs that the whole Japanese market including stocks is now coming to a critical point. At least for low-priced SPAs, they are at a turning point. So where are the fashion and apparel items going to be? The failure to respond to local trends and tastes because of their scale has begun to be seen as a disadvantage of the SPA brands. Over the last 10 years, it seems that opportunities have started to appear for domestic manufacturers in the medium price range that previously were controlled by SPAs and luxury brands.
One more thing not to forget when looking back on over the past decade is the penetration of e-commerce. At the e-commerce industry, Start Today has become the dominant player, and other apparel companies have certainly failed to efficiently manage their own sites. Because of fear of misunderstanding, sales do not increase significantly with e-commerce. E-commerce is originally a matter of matching. E-commerce is the most effective tool to match consumers and producers. However, there are many executives who mistakenly believe that sales will increase with e-commerce. In fact, the phenomenon where the sales of the brick-and-mortar shops is affected when the e-commerce ratio of the brand actually becomes 15% or more is beginning to be seen recently. The companies have to get along with the so-called omni-channel strategy to manage both real shops and virtual shops successfully. They should also bear in mind that the era of doing e-commerce uncritically is over. Localization and omni-channel seem to be the keywords going forward.