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Sunday, Dec. 17, 2006
BARGAINS FOR 'BRAND' SHOPPERS
High-end fashion on the (fairly) cheap
By MARTIN WEBB
Japanese consumers are famous (or infamous) the world over for their obsession with luxury brands -- and as hard data demonstrates, this is definitely no globalized urban myth.
Astonishingly, the Tokyo-based Yano Research Institute found that, in 2005, the luxury goods market in Japan amounted to around 1 trillion yen; while analysts at HSBC in Paris estimate that when vacationers' shopping is included, Japanese consumers may scoop up as much as 45 percent of all the luxury goods sold worldwide.
Of course, a cursory "people watch" almost anywhere in Japan would also confirm the nation's addiction to branded merchandise. However, the results of a 2003 study by the Tokyo-based Saison Research Institute show just how astonishingly compulsive this addiction is among the nation's prime consumers: women in their 20s.
The research found that more than 94 percent of Tokyo women in their 20s own something made by Louis Vuitton; at least 92 percent have goods from Gucci; nearly 58 percent own a Prada item; and more than 51 percent have something with a Chanel label on it.
But like shoppers everywhere, they love a bargain (even an expensive one), and with a weak yen forcing luxury retailers to raise their prices in Japan, thrifty consumers are increasingly seeking to gratify their craving for conspicuous consumption without paying full price.
Two types of retailer have emerged to cater to this burgeoning demand. There are so-called recycle shops, which buy unwanted clothing and brand merchandise from consumers for resale at a healthy markup. Then there are brand discount stores, that often mix goods acquired in the manner of a pawnbroker with merchandise procured through "parallel import" -- meaning brand goods bought through authorized distribution channels, usually from countries where they are sold at lower prices. They then resell those goods in Japan at lower prices than the brands' official stores charge.
A 2003 study by the Yano Research Institute estimated that this "gray market" in parallel-import brand merchandise was then worth 480 billion yen a year. This is largely because, even after import duties are paid, there is still a healthy profit to be made since retail prices in Japan are frequently up to 40 percent higher than in other countries.
In February this year, Laurent Dubois, chairman of the Japanese branch of Union des Fabricants, an organization set up to combat counterfeiting, told the Financial Times of London that the legality of parallel imports was contributing to the huge number of fake brand products being sold over the Internet. He claimed that more than half the brand merchandise sold over the Internet in Japan was counterfeited, and said the trade was costing Louis Vuitton, Chanel, Gucci, Rolex, Cartier, Bulgari, Hermes et al as much as $4.3 billion a year.
Despite the huge volume of brand goods traded online, however, bricks-and-mortar outlets are still doing a roaring trade. Magazines like Brand Bargain and Brand Joy, which target shoppers in search of cut-price luxury merchandise, feature hundreds of stores specializing in these goods. But while the majority of these are small outlets in low-rent locations, in recent years several large retail chains have emerged in the sector.
As a result, those looking for branded goods at knock-down prices no longer have to sacrifice the luxury of being fawned over by smartly attired sales staff. Instead, they need only shop at this new wave of recycle and discount retailers, which aim to create a shopping experience not so far removed from that within the top-end brands' gilded portals.
The runaway market leader in this retailing field is Nagoya-based Komehyo, which bills itself as "Japan's largest recycle department store." Offering a mix of used and gray-market goods, it has two huge branches in Nagoya, two in Osaka and last year it opened stores in Tokyo's Shinjuku and Yurakucho districts. For the year ending March 2005, the firm reported sales of just under 28 billion yen ($241 million), over 16 billion yen of which was of watches and jewelry.
Komehyo's branches are laid out much like a department store, and suited sales staff greet customers with the clipped and respectful "Irasshaimase" (May I help you?)" that patrons of Japan's flagship stores are used to. The major differences are in the price of the merchandise, and its route into the shop's smart glass cases.
Komehyo's Business Development Manager Kazutoshi Torita attributes the company's success not only to the cheaper prices, but also to the increasing acceptability of secondhand goods among young people. "A lot of our customers treat Komehyo as a sort of leasing store," he said. "They will buy a brand product, wear it for a few months, then sell it back to us and buy something else. Also, if they are after watches or jewelry, they like it that we thoroughly clean everything before we sell it."
While other chains, like watch and jewelry specialist Sanoya, which has five stores in the Tokyo area, and Osaka's Daikokuya, mix gray-market brand items with unwanted goods bought like a pawnbroker, there are also plenty of stores that deal only in "recycled" merchandise. Many of them, including 2nd Street, which has over 140 outlets nationwide, are relatively downmarket, but some, like Komehyo, offer that plusher retail experience.
The pioneer in this field is Tin Pan Alley, the company behind the highly successful Ragtag stores, of which there are now six in Tokyo and another three in Chiba, Osaka and Sendai -- all facing competition from others in the field such as Space & Co. and Kind.
Ragtag, however, created a buzz in the industry in 2000, when it opened a seven-story flagship store called rt in the posh Tokyo district of Ginza, and followed up with another rt-branded outlet in Fukuoka in 2001 and yet another in Nagoya in September this year.
Press Officer Yumi Shimomura says that besides rigorous quality control, smart store interiors and impeccable service, the selling point of Ragtag's rt stores is their smart cafe area, where the people who come to offload their unwanted items are given coffee and chocolate and are made to feel like VIPs while they wait the store's assessment of how much it will offer them.
"We treat sellers not as though they have run out of cash and need to sell some clothes, but as if they are rich folks who have so many clothes that they need to get rid of some," Shimomura said.
During a visit to rt in Ginza last week, a mannequin on the third floor was sporting a jacket from Italian brand Marni that originally retailed for more than 180,000 yen, but was on sale at 62,790 yen. The same dummy's Giorgio Armani beret cost around 30,000 yen new, but at rt its price tag was 5,145 yen; the Gucci skirt was down from more than 80,000 yen new, to 20,790 yen. On the menswear floor, a mannequin's blouson was down from more than 60,000 yen new to 31,290 yen, and its Bottega Veneta bag was 144,900 yen, down from at least 250,000 yen new.
While foreigners' eternal problem regarding the scarcity of large sizes persists in recycle shops, the problem doesn't extend to street-fashion brands, which typically produce their designs in very large sizes.
Those in search of cut-price merchandise from cult Japanese labels like A Bathing Ape, Neighborhood, W) Taps and the like will find a huge number of recycle stores in the Harajuku area of Tokyo, most notably Heatwave, which is conveniently located on the crowded tourist drag of Takeshita Dori.
From outlets like these, buyers can expect to snap up streetwise-brand gear for as little as 25 percent of its original retail price.
While the rise of recycle stores says a lot about the Japanese obsession with brands, it also shows the extent to which Japan has become a nation of recyclers. For people with no qualms about wearing previously owned clothing, the rise of this kind of store is a something that should surely be taken advantage of.