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Tuesday, Jan. 6, 2009
Glasses retailer has price-cutting edge
Zoff chain founder focuses on expanding offshore
Teruhiro Ueno has seen both his business and reputation grow by upholding a key retail strategy: undercutting the competition.
The 67-year-old founder of the Zoff eyeglasses chain has thus taken on the handle of "price-breaker" in the process of revolutionizing the cost of retail glasses.
Starting with just one outlet in Tokyo, Ueno now has 81 nationwide and sells about 1 million pairs of glasses annually. And he's looking to go global.
In past years, glasses would average about ¥33,000 at retailers, which pursued high markups after acquiring their products from manufacturers on the cheap, Ueno said.
Ueno has beat these prices by buying lenses from South Korea and frames from China that come in many colors and designs and range in price from ¥5,000 to ¥9,000.
After he opened his first Zoff outlet in 2001, other retailers tried to learn where he sourced his products that could be sold at such low prices.
Ueno said that if he had been buying lenses and frames made in Japan, he would have faced the same pressure as his rivals: either hike prices or lose the source of supply. Because he could offer reasonably priced glasses, "customers gave us overwhelming support."
As a side note, Ueno in an earlier time was a classmate of Prime Minister Taro Aso at Tokyo's prestigious Gakushuin elementary, junior high, high school and university.
"Since (Aso) has now been attacked intensively (by opposition parties and the media), I feel sorry for him," Ueno said, adding that like politics, business is never easy either.
After graduating from the university, Ueno entered the apparel industry.
Around 20 years ago, he was engaged in licensing brand name products. He dealt with some 20 firms, giving them trademarks for their products.
Among the companies was a glasses maker, which told him the business is a moneymaker.
Casting his fate to the whims of consumers, Ueno embarked in eyeglass retailing in 1993, eventually expanding until he had around 20 shops nationwide.
But the business was unable to turn a profit.
"We genuinely made mistakes (in locating) shops," Ueno recalled, vowing to change his strategy and try again.
At the time, eyeglasses were regarded as luxuries.
"Since everyone had the notion that eyeglasses were expensive, it was hard to draw customers to our shops," Ueno said, adding that many people were probably leery of getting a hard sales pitch.
Glasses shops were also a bit imposing, like clinics, where staff wore white outfits like doctors and products commanded high prices, Ueno said.
But besides helping people see better, glasses are an integral part of their appearance and yet were not getting proper consideration, according to Ueno.
"(Glasses) are the same as clothes," he said. "I wish customers came to our shops once a week."
To make eyeglasses more affordable and customer-friendly, prices needed to come down. Ueno looked abroad, where production costs were lower. He also decided to design, plan and market his own products.
"I am the price breaker," he said during a recent interview with The Japan Times.
Ueno opened the first Zoff in the Shimokitazawa district of Setagaya Ward.
It was a major hit from the start. Customers crowded the shop even on weekdays.
Ueno at one point had to limit the number of customers on the weekends. Once inside, they snapped up all the glasses, Ueno recalled.
The affordable prices were revolutionary. The popularity of Zoff's glasses prompted all major print and television media to interview him.
The increased notoriety fueled even further success.
It wasn't long, however, before his rivals copied his business model and the competition heated up.
Despite the challenges, Ueno saw major changes taking place. The average interval between glasses purchases shrank from five years to around one, he said.
And glasses became more affordable, averaging in price between ¥22,000 and ¥23,000.
Not resting on his laurels, Ueno is looking farther afield.
"Up until now, we only thought about ways to open more shops and expand our domestic sales," he said.
Ueno now hopes to carry his success story abroad.
China, which boasts almost 200 million people classified as rich, is clearly in Ueno's focus.
"If we do not win in China, we will not eventually become the world's No. 1," he said.
"If we intend to be Japan's No. 1, we will have to be No. 1 abroad, especially in the Chinese market."
Zoff hopes to open its first outlet in China or South Korea around 2010.
In this occasional series, we interview entrepreneurs whose spirit may hold the key to a more competitive Japan.