Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Equity Bottom-Up

2020 was an annus horribilis for the apparel sector, and particularly for wholesale-centred firms. The good news is that most have come out of the crisis energised, with new ideas about how to save their businesses and some even think they can expand again through e-commerce and diversification beyond apparel.The bad news is that the new wave of cuts being announced will likely still not be enough and the leaders in the apparel sector will end this sorry period significantly diminished in size although a bit more profitable.In World's case, it has said repeatedly in the past few years that the work of restructuring is done but soon enough as announced yet another round of cuts to brands and stores. We expect a repeat next year too.

2020 was an annus horribilis for the apparel sector, and particularly for wholesale-centred firms. The good news is that most have come out of the crisis energised, with new ideas about how to save their businesses and some even think they can expand again through e-commerce and diversification beyond apparel.The bad news is that the new wave of cuts being announced will likely still not be enough and the leaders in the apparel sector will end this sorry period significantly diminished in size although a bit more profitable.In World's case, it has said repeatedly in the past few years that the work of restructuring is done but soon enough as announced yet another round of cuts to brands and stores. We expect a repeat next year too.

Big Apparel in Trouble: World Announces yet More Cuts but It Still Won't Be Enough

Thematic (Sector/Industry)

The growth in subscription services is a global phenomenon that has been growing just as fast in Japan as anywhere else. While most attention is given to music and media subscriptions, many brands and retailers of consumer goods are finding that the subscription model can be a key part of their online strategy, delivering multiple benefits across sales growth, customer data, marketing, inventory management and margin improvement.

The growth in subscription services is a global phenomenon that has been growing just as fast in Japan as anywhere else. While most attention is given to music and media subscriptions, many brands and retailers of consumer goods are finding that the subscription model can be a key part of their online strategy, delivering multiple benefits across sales growth, customer data, marketing, inventory management and margin improvement.

The Subscription Economy: Keeping Customers Keen While Earning Recurring Revenues

Like other big apparel firms, <a href="https://www.smartkarma.com/entities/world-co-ltd" target="_blank" data-smartkarma-citation="entities:27437:1" rel="noopener">World Co Ltd (3612 JP)</a> is reeling from the impact of Covid-19 restrictions on middle market apparel. After one round of restructuring and layoffs that led to the closure of 360 stores and five brands last year, World will have another go, cutting 450 stores. This may still not be enough.

Like other big apparel firms, World Co Ltd (3612 JP) is reeling from the impact of Covid-19 restrictions on middle market apparel. After one round of restructuring and layoffs that led to the closure of 360 stores and five brands last year, World will have another go, cutting 450 stores. This may still not be enough. 

<a href="https://www.smartkarma.com/entities/world-co-ltd" target="_blank" data-smartkarma-citation="entities:27437:1" rel="noopener">World Co Ltd (3612 JP)</a> is working hard to diversify from its dependence on the mid-level fashion market as both its department store and shopping centre brands retreat in the face of competition and lower apparel consumption.But it needs to fill the empty concessions in department stores and one solution is the UK brand, Laura Ashley, which it is now launching in Japan with plans for 30 stores soon.This is not enough however. While World cancelled five brands and several hundred shops last August, we argued it would need to do more and it has just confirmed it will close another 450 stores and ask for another 100 voluntary redundancies.Meanwhile sales continue to plummet, down nearly 40% in January.

World Co Ltd (3612 JP) is working hard to diversify from its dependence on the mid-level fashion market as both its department store and shopping centre brands retreat in the face of competition and lower apparel consumption.But it needs to fill the empty concessions in department stores and one solution is the UK brand, Laura Ashley, which it is now launching in Japan with plans for 30 stores soon.This is not enough however. While World cancelled five brands and several hundred shops last August, we argued it would need to do more and it has just confirmed it will close another 450 stores and ask for another 100 voluntary redundancies.Meanwhile sales continue to plummet, down nearly 40% in January. 

World Launches Laura Ashley Chain but It Is Not Enough

By 2019, many retailers and brands were already introducing new technology solutions to make up for labour shortages. Despite the crisis, shortages continue to be a major headache in the service sector and the downturn in trading since March has only accelerated efforts to replace staff with tech.This could create new problems as older employees lose their jobs although will also reduce pressure on the labour market and lessen labour shortages in retailing.

By 2019, many retailers and brands were already introducing new technology solutions to make up for labour shortages. Despite the crisis, shortages continue to be a major headache in the service sector and the downturn in trading since March has only accelerated efforts to replace staff with tech.This could create new problems as older employees lose their jobs although will also reduce pressure on the labour market and lessen labour shortages in retailing.

Surge in Calls for Retail Voluntary Redundancies Likely to Continue

Japan

World Co., Ltd. designs, manufactures, and distributes apparels. The Company produces women's garments, men's garments, children's garments, and other products. World also operates investment businesses.

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World Co Ltd (3612 JP)

Big Apparel in Trouble: World Announces yet More Cuts but It Still Won't Be Enough

Japan's apparel firms had an unquestionably bad year last year but trading isn't getting much easier. World is showing promise through...

Michael Causton

The Subscription Economy: Keeping Customers Keen While Earning Recurring Revenues

Subscriptions to physical goods are rapidly becoming a popular model. In Japan, many major retailers and brands are creating subscriptions, gaining...

Michael Causton

World to Close 450 More Stores

Japan's apparel groups are struggling and will continue to struggle. We remain bearish on all the big firms and that includes World which claims to...

Michael Causton

World Launches Laura Ashley Chain but It Is Not Enough

World is one of Japan's largest apparel firms and is fighting for survival, cutting brands while diversifying. Its purchase of a franchise for...

Michael Causton

Surge in Calls for Retail Voluntary Redundancies Likely to Continue

Japan's retail industry has been hit by labour shortages in the last 5 years but layoffs in the industry in the last year could end that, at least...

Michael Causton

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