How-To

The Scoop: Understanding the Fashion Market in Japan

Summary

Japan is a cutting edge fashion market that had sales valued at approximately ¥16.4 trillion or US$ 143 billion. Of this total, women’s wear accounted for approximately 60 percent. Working women, who are fashion-conscious and have large disposable incomes, are some of the most important customers for American fashion companies. Contemporary fashion, which contains the essence of the latest world’s fashion trends, has good potential in the market.

Japan is open to imported apparel and doesn’t have significant tariff or non-tariff barriers to imported clothing. Clothing distribution channels in Japan have simplified in recent years but to succeed here a company needs good business practices such as timely, dependable communication and on-time shipping, etc. The focus of this report is to examine the contemporary fashion market for women in Japan, to discuss the unique characteristics of this market, recent fashion trends and labeling and sizing information.

H.S. Codes covered in this report include: H.S. No. 6101.10 - 6114.90: Knitted or crocheted apparel and clothing 6201.10 - 6211.49 Woven apparel and clothing Market Demand

1. Overall Market

Japan is a huge fashion market that offers great potential for U.S. apparel manufacturers and designers. Contemporary women’s wear, especially products made from high quality fabrics, one-of-a-kind items and clothing with great details have good potential in Japan.

Given the size of the market, it is highly competitive. To succeed, a company’s product must be perceived as unique, high quality and fashionable. The Japan Textiles Importer’s Association (JTIA) discussed some unique characteristics of the Japanese market in their report entitled “The Japanese Imported Apparel Market in 2007.” Some of the points covered in that report are as follows:

The Japanese women’s wear market is a highly sophisticated consumer’s market and to succeed, suppliers must be prepared to supply small lots with short delivery cycles;

Consumption patterns are very diverse;

The market is very well supplied and extremely competitive;

Consumers demand extremely high quality fashion products.

The number of SPA (Specialty store retailer of Private label Apparel) stores has been increasing.

The referenced report describes the unique characteristics of the Japanese women’s wear market very well. The competitiveness of the Japanese market may make it sound extremely difficult for foreign suppliers to enter. However, there are many U.S., and other foreign fashion firms achieving record success in this market. Success in the Japanese women’s wear market requires a strong commitment in terms of time, effort and promotional resources. Given the size of the market, however the potential returns are very large indeed.

The Japanese women’s wear market is a highly sophisticated consumer’s market and to succeed, suppliers must be prepared to supply small lots with short delivery cycles;

Consumption patterns are very diverse;

The market is very well supplied and extremely competitive;

Consumers demand extremely high quality fashion products.

The number of SPA (Specialty store retailer of Private label Apparel) stores has been increasing.

The referenced report describes the unique characteristics of the Japanese women’s wear market very well. The competitiveness of the Japanese market may make it sound extremely difficult for foreign suppliers to enter. However, there are many U.S., and other foreign fashion firms achieving record success in this market. Success in the Japanese women’s wear market requires a strong commitment in terms of time, effort and promotional resources. Given the size of the market, however the potential returns are very large indeed.

The Japanese women’s fashion market is made up primarily of two extremes, the low-end portion made up of reasonable apparel and fashion accessories and the high–end portion made up of expensive items. Imported fashion products from the U.S. and Europe are usually positioned in the higher price zone. Japanese consumers appreciate value and can afford it. However, items should be able to demonstrate their value and uniqueness at first glance. As such, the use of very high quality materials, delicate designs, great details, and outstanding decorations is very important.

Because of the recent strong euro against Japanese yen, Japanese buyers are paying more attention to U.S. designers and the U.S. fashion industry than ever before. While the yen/dollar exchange rate has remained relatively constant over the past several years averaging ¥115/$1, the euro has appreciated significantly against the yen over the past 2 years rising from ¥ 145 to € 1 in 2006, to over ¥160 to € 1 today. This situation has made U..S. designs and fashion products more cost competitive versus European brands and bodes well for small to medium sized U.S. designers and contemporary fashion companies interested in entering the Japanese market.

So-called “select shop” boutiques have also been doing well in Japan. At “select shops,” various brands that meet a boutique’s unique selling concept are offered to the store’s clients. Examples of leading “select shops” in Japan are Beams, United Arrows, Ships, Journal Standards and Barney’s New York.

One “SPA” chain that has done exceeding well in recent years is that of UNIQLO. This SPA retailer boomed in the late 1990’s offering inexpensive basic casual fashion but later lost favor among Japanese consumers. Recently, however, the chain has reinvented itself with the establishment of a design studio in New York to develop the most up-to-date fashions. The company, with its large size and targeting marketing campaigns, has the ability to influence fashion trends in Japan. The company is a very strong competitor, especially for U.S. mass-merchandise apparel companies.

Fashion in Japan basically follows worldwide fashion trends, which are influenced by collections in New York, London, Paris, and Milan. Therefore, overall fashion trends in Japan are usually the same as those in the U.S. The recent trend toward premium jeans has begun to diminish and in its place, there has been an increasing demand for leggings. One of the most popular styles is a combination of dress/tunic and legging.

The Senken Shinbun, a leading fashion industry newspaper, conducted a survey on what sold well at leading department stores and boutiques this summer. Based upon their research, the following colors, materials/fabric, accessories and items sold well. The best selling item was dresses. Above-the knee-dresses, leggings and clutch bags also sold well.

Please compare these trends below with the fashion trends in the U.S. to get an idea of similarities and differences between the U.S. and Japanese women’s wear markets.

Market Data Japan remains the world’s second largest apparel market after the United States. Although there are no official statistics showing the Japanese apparel market size, commercial sales surveys done by Ministry of Economy, Trade and Industry (METI), give a good indication on the size of the Japanese apparel market. The surveys detail the retail sales of clothing and accessories. The most recent data released was for the Japanese Fiscal Year 2004 (April 1, 2004 – March 31, 2005) and totaled ¥16.4 trillion or $143 billion.

China is a dominant supplier to the Japanese apparel market, especially for knitted garments. However, the products produced in China typically carry Japanese or other foreign brand names. As such, U.S. and European competitors have refocused their efforts on Japan on premium, high end, high quality designs and fabrics. Despite dropping import numbers, the per-unit price has actually risen in recent years for products from the West. This is an important distinction for any U.S. firm wishing to enter the Japanese market. That is to say, Japanese women are willing to pay a premium for items they perceive to be unique, high in quality, and fashionable. The tables below clearly detail these trends.

Best Prospects To be competitive in the Japanese market, high value added products, such as one-of-a kind items and made-in the U.S. A. products are the best options for U.S. companies. These unique and high quality fashion items hold much more promise for U.S. companies rather than contracted out, non-U.S. made mass-produced products. Please see the list of Trends for 2007-2008 fall/winter in the Market Demand section for specific items, styles and colors for this season. Key Suppliers As said at the beginning of this report, the Japanese market is very competitive. Japanese manufacturers are major competitors for U.S. suppliers although Chinese made apparel is dominant in the market. Japanese brands many times have their products produced in China.

Japanese companies have several advantages over American suppliers in the market. For example, domestic companies can respond more quickly to fashion trends and produce according to Japanese size standards. As a result, their products are likely to fit Japanese consumers better than foreign products.

Japanese manufacturers and distributors both purchase foreign products. Since “select shop” style boutiques are popular among consumers, Japanese manufacturers have established “select shops.” At manufacturer’s select shops, they sell their original products as well as imported items. Therefore, Japanese manufacturers are sometimes customers of U.S. suppliers. Also, they sometimes produce American brand clothing and accessories under licensing agreements.

Italian and French manufacturers are also competitors in this market as they are regarded as very fashionable and high in quality. However, because of the recent strength of the euro, Japanese buyers are looking more and more to U.S. fashion for their procurement needs.

Prospective Buyers

Working Women - Powerful Customers

Japanese women in their upper teens to late 40’s are generally very fashion-conscious and interested in making themselves look as beautiful and fashionable as possible. In addition, the average age at which Japanese marry keeps rising. As a result, there are more single workingwomen who have a lot of flexibility on how to spend their incomes. According to “the Single Workers’ Household Receipts and Disbursements Survey” by the Ministry of Public Management, Home Affairs, Post and Telecommunications, the average monthly expenditure on clothing and footwear in 2006 by single working females younger than 35 was ¥13,768 (approximately $120). This accounted for nearly 8% of their total living expenditure and is nearly double the average monthly rate ¥7,901($68) spent by households on this market segment category. This can be attributed in some part to the fact that many single women often live with their parents and as a result don’t have to pay for rent or food expenses.

Strong Influence by Celebrities, Magazines and Blogs

Japanese women actively read fashion magazines and watch TV programs to learn about upcoming fashion trends and to plan their buying for the coming season. Celebrities appearing in magazines and TV programs also exert a strong influence on what consumers buy. As a result, Japanese female consumers usually have clear ideas on what kind of items they want to buy before they go shopping. This is supported by their active participation in blogs, which in recent years has grown considerably. “Word of mouth” about products is spread far and wide through Japanese blogs and as a result, savvy retailers work aggressively to market their products to the Japanese blogosphere.

Where Clothing is purchased

According to the survey by the Japan Apparel Industry Council in 2004, Japanese Department Stores have a 31.5 percent share of Japan’s total apparel retail sales, Boutiques and Specialty Stores have a 31.7 percent share and mass-merchandise stores have 25.9 percent share. The table below shows the results of the surveys by Ministry in 2004. Boutiques and clothing specialty stores expanded their market significantly.

Market Entry 1: Distribution Systems

Product from U.S. suppliers usually goes direct to retail consumers or via an importer/distributor. Though consignment sales still exist at some Japanese department stores and other mass merchandisers, this option is not available to foreign suppliers. A Japanese importer, however, may be able to arrange consignment sales with their customer base. Finally, it is still common practice in Japan for small mom-and-pop stores to buy on a cash & carry basis from wholesalers but not directly from manufacturers.

2: Easiest Way to Meet Japanese Buyers:

It is still important to show actual samples to buyers in the apparel industry. As a result, exhibiting at trade shows is a necessary first step to entering the market. U.S. companies can also target Japanese buyers at major U.S. domestic trade shows as many of the fashion buyers from Japan travel to leading industry trade shows in the United States. Please see a list of trade shows at the end of this report for more information.

3: Suggestions by CS Japan

Based on interviews with industry experts, the following are several suggestions to serious U.S. apparel suppliers. Japanese companies are looking for new suppliers, domestic or overseas, who respect long-lasting and beneficial business relationships.

Timely Communication

U.S. companies should respond to any requests or inquiries in a timely manner. If it takes time to answer, U.S. firms are encouraged to acknowledge receipt of the email and advise the Japanese customer when they can expect a full response.

On-time and Correct Shipment

Suppliers are expected to respond quickly with timely shipments and deliver products of not only high-quality but also with accuracy regarding sizes and styles. Mistakes made by foreign suppliers are often related to shipping. Finally, on-time delivery is very important because Japanese retailers start selling spring items in early February and start bargain sales in early July for the summer season. They sell fall/winter items from late July and start bargain sales in early January. Therefore, late delivery means that importers lose sales and cannot sell the products at regular retail prices.

Quality

Japanese end-users are some of the toughest customers in the world. They may find tiny tears, sewing mistakes, etc, which customers from other markets may not notice nor even care about. If a Japanese consumer discovers defects after their purchase, they typically ask for exchange or a refund and will likely never buy the brand again.

Actual Presence in the Market

Actual face-to-face contact with Japanese customers is important and is very helpful toward maintaining a good working relationship with customers. In addition, if a designer of the brand visits Japan, it can help increase media coverage.

Market Issues & Obstacles 1. Custom Duties and Consumption Tax

Apparel tariff rates have been reduced to conform to the World Trade Organization’s tariff guidelines. General duty rates are applied to product imported from the U.S. However, a WTO approved duty rate will be applied to U.S. product whenever that rate is lower than the general rate. In 2007, WTO duty rates of approximately 7.4-10.9% for knitted garments and approximately 7.4-12.8% for woven garments will be applied to CIF costs. A 5% consumption tax will also be added to the to the entered value after customs duties. For exact custom duties applicable to specific products, please contact the Japanese Customs office. The Japanese Customs Agency website is: http://www.customs.go.jp/english/index.htm

2. Labeling is required in Japan

Apparel imports into Japan require labeling in Japanese with symbols that are also recognized in Japan. Importers/sellers in Japan are responsible to show certain information on apparel labels as required by the Labeling of Household Articles’ Quality Law. The Ministry of Economy and International Trade and Industry (METI) specifies requirements and those requirements vary depending upon the imported product. Types of information required for apparel include the following:

  • Type of fabric and textile yarn content, with percentage figures for lining, thread, materials, etc.;

  • Care and washing instructions;

  • Size in metric measurements;

  • Name of manufacturer/supplier or officially registered number with the Ministry of International Trade and Industry (METI); and other items.