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2007-05-14 11:01:00
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Private equity firm bucks fashion trend to bet on the revival of the Japanese kimono
Fewer women are wearing their traditional garment, but that could change
When prowling for a sector with mouth-watering profit potential, “dwindling prospects”, “outmoded products” and “l(fā)ong-term market contraction” are not the boxes generally ticked by aggressive private equity firms.
And yet the Japanese kimono industry, whose business model has been under attack since Western clothes arrived in Japan 140 years ago, has become the latest sector to spark the imagination of acquisition-hungry foreign capital.
The garments themselves are the traditional dress of Japanese women: they are woven from silk, require assistance to put on, demand a special hairdo, allow only a tottering form of movement and can cost around 400,000 yen (￡1,700). A good obi – the ornamental silk sash worn around the waist of a kimono – can easily run to Y2 million.
In a country where women are among the world’s most voracious consumers of Chanel suits, Gucci dresses and TODs shoes, the cumbersome kimono – although still widely worn on special occasions – is an exquisite anachronism.
Olympus Capital Holdings, a Hong Kong and United States-based private equity fund, said last week that it would take a 30 per cent stake and a leading management role in Kyoto Kimono Yuzen, a company selling Japan’s national costume to a population of young women in demographic decline.
The Y8 billion deal puts Olympus in effective control of one of the “big five” kimono-makers at a critical moment for the industry: at Y500 billion per year, the retailing kimono industry has shrunk 50 per cent over the past decade and is less than a quarter the size of its peak in 1981. Takeuchi, an old and noble name in kimono manufacturing, went bankrupt last year.
Kyoto Kimono is in poor shape, with its results for fiscal 2006 showing a 23 per cent slump in profits. The grand revival plan, Naoto Obama, an Olympus executive said, is for the company to revise its marketing strategy. Gone will be the expensive catalogues and “scattergun” technique of foisting between 30 and 40 direct mail campaigns on Japanese women every year. In their place will be “high-tech market research, accurate consumer targeting and income-specific campaigns”.
There are, Mr Obama said, even plans to introduce a “one-touch” kimono that could be donned by the owner without the assistance of a second helper – a necessity of traditional kimonos that, Olympus Capital believes, is behind their waning popularity in a Japan where young women routinely live alone.
That aside, the Olympus deal centres on the only segment of the kimono retail industry with any real chance of a turnaround. Kyoto Kimono’s chief speciality – deriving 90 per cent of its annual sales – is the furisode: the long-sleeved, often brightly coloured kimono given to 19-year-old Japanese women in readiness for the coming-of-age day seijinshiki ceremony in the January of the year of their twentieth birthdays. Kyoto Kimono has the largest market share (10 per cent) in furisode, which are often paid for by several family memebers.
The kimono industry has rolled through peaks and troughs in the past, but raw demographics are working strongly against growth prospects. Kyoto Kimono used to mail a catalogue to every single Japanese woman before her twentieth birthday. The number of addresses used to be more than a million; last year it was 600,000 and the national birthrate continues to decline.
Yet, crucially, 19-year-old Japanese women are also the most active users of online discussion groups and other networked communities. It is here, the industry experts say, that kimonos may be swept up into one last boom of popularity, with increased communication producing decisions by groups of friends to all wear their kimonos to a particular party or event.
There is already, leading kimono-makers say, a rich base of online discussion about patterns, fabrics and styles of new kimonos – discussions that could be coaxed towards becoming sales if properly exploited by the industry.
Masako Nakae, on the secretariat of the All Japan Kimono Promotion Association, said that the retail industry was also responding to the growth of online interest by displaying kimonos on hangers and mannequins rather than simply as thick rolls of silk in a drawer. Washable kimonos are a recent development aimed at making the garment more attractive for regular use.
Disappointing, though, is the fact that while the domestic food and furniture industries are enjoying a boom in traditional Japanese forms, the kimono has been left out of the trend, Ms Nakae said. Surveys conducted by retail research groups such as the Yano Institute, however, suggest that 90 per cent of Japanese women like the idea of owning a kimono.
The biggest problem, according to Kenichi Nakamura, president of one of Japan’s largest kimono rental chains, is that the surveys and the reality do not match. If that 90 per cent translated ambition into actual purchase, the kimono market would have 45 million customers. In fact, he said, the industry is supported by only about two million women.
It may be in Mr Nakamura’s business, which, like the rest of the kimono rental industry, has tripled in size over the past five years, that the future of kimonos lies. His network of 110 Tansuya stores rent kimonos to about half a million women each year.
His company, which has been in the kimono trade since 1924, fell into the red in 1998 after a grim decade of postbubble decline. The crisis forced him to come up with the kimono rental model, which was completely new to Japan.
Although the rental industry has grown at the expense of the kimono retail, he says, it may be the only route through which modern Japanese women will find an affordable way into their national costume.
National dress
— Decline of kimono industry began when Western clothes were introduced in late 1800s. There have been at least two postwar booms: one in mainstream kimonos 25 years ago and another ten years ago when there was a revival of the lighter yukata
— The All-Japan Kimono Promotion Association conducts an annual Kimono Queen contest and holds “kimonology” lectures for the general public and university students
— According to the Kyoto textile wholesale business union, industry sales increased 2 per cent last year. It was the first increase in almost in 30 years, but was a blip in a long-term decline that has seen the industry shrink from Y2 trillion in 1981 to just under Y500 billion in 2006
— Average cost is Y300,000 for a kimono and Y2 million for an obi. Other expenses, which can amount to Y150,000, include special shoes, underwear and a kimono-specific hairstyle
Source: Industry Website
Fewer women are wearing their traditional garment, but that could change
When prowling for a sector with mouth-watering profit potential, “dwindling prospects”, “outmoded products” and “l(fā)ong-term market contraction” are not the boxes generally ticked by aggressive private equity firms.
And yet the Japanese kimono industry, whose business model has been under attack since Western clothes arrived in Japan 140 years ago, has become the latest sector to spark the imagination of acquisition-hungry foreign capital.
The garments themselves are the traditional dress of Japanese women: they are woven from silk, require assistance to put on, demand a special hairdo, allow only a tottering form of movement and can cost around 400,000 yen (￡1,700). A good obi – the ornamental silk sash worn around the waist of a kimono – can easily run to Y2 million.
In a country where women are among the world’s most voracious consumers of Chanel suits, Gucci dresses and TODs shoes, the cumbersome kimono – although still widely worn on special occasions – is an exquisite anachronism.
Olympus Capital Holdings, a Hong Kong and United States-based private equity fund, said last week that it would take a 30 per cent stake and a leading management role in Kyoto Kimono Yuzen, a company selling Japan’s national costume to a population of young women in demographic decline.
The Y8 billion deal puts Olympus in effective control of one of the “big five” kimono-makers at a critical moment for the industry: at Y500 billion per year, the retailing kimono industry has shrunk 50 per cent over the past decade and is less than a quarter the size of its peak in 1981. Takeuchi, an old and noble name in kimono manufacturing, went bankrupt last year.
Kyoto Kimono is in poor shape, with its results for fiscal 2006 showing a 23 per cent slump in profits. The grand revival plan, Naoto Obama, an Olympus executive said, is for the company to revise its marketing strategy. Gone will be the expensive catalogues and “scattergun” technique of foisting between 30 and 40 direct mail campaigns on Japanese women every year. In their place will be “high-tech market research, accurate consumer targeting and income-specific campaigns”.
There are, Mr Obama said, even plans to introduce a “one-touch” kimono that could be donned by the owner without the assistance of a second helper – a necessity of traditional kimonos that, Olympus Capital believes, is behind their waning popularity in a Japan where young women routinely live alone.
That aside, the Olympus deal centres on the only segment of the kimono retail industry with any real chance of a turnaround. Kyoto Kimono’s chief speciality – deriving 90 per cent of its annual sales – is the furisode: the long-sleeved, often brightly coloured kimono given to 19-year-old Japanese women in readiness for the coming-of-age day seijinshiki ceremony in the January of the year of their twentieth birthdays. Kyoto Kimono has the largest market share (10 per cent) in furisode, which are often paid for by several family memebers.
The kimono industry has rolled through peaks and troughs in the past, but raw demographics are working strongly against growth prospects. Kyoto Kimono used to mail a catalogue to every single Japanese woman before her twentieth birthday. The number of addresses used to be more than a million; last year it was 600,000 and the national birthrate continues to decline.
Yet, crucially, 19-year-old Japanese women are also the most active users of online discussion groups and other networked communities. It is here, the industry experts say, that kimonos may be swept up into one last boom of popularity, with increased communication producing decisions by groups of friends to all wear their kimonos to a particular party or event.
There is already, leading kimono-makers say, a rich base of online discussion about patterns, fabrics and styles of new kimonos – discussions that could be coaxed towards becoming sales if properly exploited by the industry.
Masako Nakae, on the secretariat of the All Japan Kimono Promotion Association, said that the retail industry was also responding to the growth of online interest by displaying kimonos on hangers and mannequins rather than simply as thick rolls of silk in a drawer. Washable kimonos are a recent development aimed at making the garment more attractive for regular use.
Disappointing, though, is the fact that while the domestic food and furniture industries are enjoying a boom in traditional Japanese forms, the kimono has been left out of the trend, Ms Nakae said. Surveys conducted by retail research groups such as the Yano Institute, however, suggest that 90 per cent of Japanese women like the idea of owning a kimono.
The biggest problem, according to Kenichi Nakamura, president of one of Japan’s largest kimono rental chains, is that the surveys and the reality do not match. If that 90 per cent translated ambition into actual purchase, the kimono market would have 45 million customers. In fact, he said, the industry is supported by only about two million women.
It may be in Mr Nakamura’s business, which, like the rest of the kimono rental industry, has tripled in size over the past five years, that the future of kimonos lies. His network of 110 Tansuya stores rent kimonos to about half a million women each year.
His company, which has been in the kimono trade since 1924, fell into the red in 1998 after a grim decade of postbubble decline. The crisis forced him to come up with the kimono rental model, which was completely new to Japan.
Although the rental industry has grown at the expense of the kimono retail, he says, it may be the only route through which modern Japanese women will find an affordable way into their national costume.
National dress
— Decline of kimono industry began when Western clothes were introduced in late 1800s. There have been at least two postwar booms: one in mainstream kimonos 25 years ago and another ten years ago when there was a revival of the lighter yukata
— The All-Japan Kimono Promotion Association conducts an annual Kimono Queen contest and holds “kimonology” lectures for the general public and university students
— According to the Kyoto textile wholesale business union, industry sales increased 2 per cent last year. It was the first increase in almost in 30 years, but was a blip in a long-term decline that has seen the industry shrink from Y2 trillion in 1981 to just under Y500 billion in 2006
— Average cost is Y300,000 for a kimono and Y2 million for an obi. Other expenses, which can amount to Y150,000, include special shoes, underwear and a kimono-specific hairstyle
Source: Industry Website
