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Friday, July 6, 2001

CHINA-MADE SPECTACLES AT SPECTACULAR PRICES

Cut-rate eyeglass retailer an eye-opener for rivals

SETSUKO KAMIYA Staff writer The nation's eyewear industry is starting a fresh price war that could prove spectacular for the bespectacled.

The latest competition began with the opening in February of a small eyeglass retailer in Tokyo that was inspired by the success of Uniqlo, the retailer known for its affordable casual clothing.

Zoff, which opened in the fashionable Shimokitazawa district, sells stylish eyeglasses at 5,000 yen, 7,000 yen and 9,000 yen, including frame and lenses. Most other shops charge more than 10,000 yen for a pair.

The retailer said it cuts costs by bypassing wholesalers, designing glasses in-house and keeping a production base in China, where labor costs are much lower. This is almost the strategy Fast Retailing Co. uses to run Uniqlo.

"We want our customers to buy eyeglasses as if they were buying T-shirts," said Susumu Taguchi, vice president of Intermestic Co., Zoff's operator. "The eyeglass industry's profits were too big, and consumers also took the high prices for granted. But we thought eyeglasses could be much cheaper."

While Zoff's products are designed in Japan, its 200 different types of frames, which come in six colors, are manufactured in China. Zoff's plastic lenses, meanwhile, are made in South Korea. By farming out production to the two countries, Zoff keeps costs down while maintaining satisfactory quality, Taguchi said.

There are only two Zoff stores in Tokyo (the second is near JR Ikebukuro Station), but the new entrant's growing popularity, especially with young people, has forced some major eyeglass retailers to adopt similar tactics.

Traditionally, glasses made in Japan are expensive because frames and lenses made in Japan are considered higher in quality, said Yukio Izumi, president of Succeed Co., a management consultancy specializing in the eyeglass industry.

But an increasing number of Japanese frame makers have been shifting production to China or establishing joint ventures with Chinese frame makers that use Japanese technology, said Izumi, whose firm has been issuing the annual Optical White Paper for 10 years.

Another key to Zoff's low prices, Taguchi said, is that it does not sell any name brands or pay royalties.

"People these days do not necessarily rely on brand names when buying things."

With the success of Zoff, which intends to increase its branch in Tokyo's Shibuya Ward and other business districts, major eyeglass store chains have began making similar attempts.

For example, the major chain Megane Top Co. will open an A-Look store today in Osaka that will offer original glasses priced from 5,000 yen to 8,000 yen.

Megane Top, based in Shizuoka Prefecture, has more than 250 stores nationwide. It plans to design original A-Look products and make frames in China and use lenses made in Japan, the firm said.

Also today, Meganesuper Inc., another major chain, will open a similar low-price shop in Shibuya under the name Hatch and another branch in Shinjuku Ward by the end of this month. The firm, which operates 340 outlets across the country, has recently began producing frames in China and lenses in another country that the firm declined to reveal.

Consultant Izumi said given the increasing trend of production and tieups in China, competitors are likely to increase.

"But it's true that Zoff is the pioneer and is very successful in providing eyeglasses as part of fashion rather than simply a tool to correct eyesight," he said.

Nozomi Miura, 22, an office worker who bought a 7,000 yen pair of glasses at Zoff in Shimokitazawa, said she came to the shop after hearing about the low prices and the product lineup.

"I never thought buying eyeglasses could be so easy, because they are expensive," said Miura, who usually wears contact lenses. "But these are really cheap and cute."

Another customer, Kazuya Kuboki, 27, a sales clerk who owns five pairs of glasses and was about to buy his sixth at Zoff, said, "The low price is attractive."

While young people may consider price and quality the most important aspects in selecting glasses shops, Izumi said his firm's surveys have showed that the older generation consider service -- including professional eye examinations and close consultations with sales clerks -- more important.

Eyeglasses stores near Zoff in Shimokitazawa point out the difference of the new store and themselves, claiming Zoff's popularity has yet to affect their business.

"Zoff seems like a variety store. . . . And if that's what customers want, I think that's fine," said a clerk at Meganesuper's Shimokitazawa branch a few weeks before his firm announced plans to open similar low-price shops. "But we're providing brand-name products and services that Zoff doesn't offer its customers, and some customers will continue to prefer our style."

Izumi predicted that the intensified competition in the industry will trigger an overall price decline.

"From the consumers' point of view, being able to buy better products at lower prices is good news," he said. "But for the industry, this could affect their business."

Conventional eyeglasses retailers need to come up with new marketing strategies that target different segments of consumers while trying to maintain their profits at the same time, he figured.



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