“Recession Represents Opportunity Because it Reduces Competition”
Following on from its main brands Moussy and Sly, Baroque Japan’s struggling fast-fashion sector label Azul by Moussy is now showing signs of recovery, following adjustments made since autumn 2015. Sales in China are strong as a result of its joint venture with major shareholder Belle International Holdings Limited, and profits are being reinvested in the business in Japan. The company has “entered a phase of stable growth”.
First year of the supply-chain adjustment
——What have been your hottest brands lately?
In 2015 we were catching up with the exchange-rate fluctuations that started in 2014, but both our domestic and international businesses prospered. Our key brands in Japan, starting with Moussy, developed into brands that are attracting customers outside of the existing “marukyu” fashion-customer category.
Our Avan Lily and Lilidia brands, which were struggling a little, have also caught fire. You might say this was a year in which brands created in the last five years really grew.
Making its debut in the spring of 2016, AEVES is a brand that targets mature women. It has also set its sights on selling to the overseas market.
——So you took the techniques employed for successful brands and applied them to others?
Since autumn 2015 even Azul by Moussy, a brand that is to a large extent planned by us, has shown year-on-year growth. Azul is very large, so it was missing some of the subtlety of other brands, but we began to share know-how between our divisions.
In the past the company as a whole was organised vertically with poor communication among divisions. However we have strengthened our headquarters, which provides support to the whole company, and we have increased cross-division teamwork.
As it was the first year of the supply-chain adjustment, much of our profit in 2015 flowed from that change – both in Japan and overseas. In Japan we cut waste by centralising purchasing and distribution – functions previously carried out by each brand. In China, we continue to build our supply chain jointly with Belle International.
After China, the United States
——What are the sales trends in China?
Moussy and Sly stores are now established in 25 cities across China, with 136 shops including outlet stores as of the end of December 2015. They have sales in excess of 10 billion yen. These sales are coming from stores with floor areas between 100 and 130sq m, which are not large stores. It certainly compares favourably with our domestic business.
In 2016, Moussy’s China sales are certain to overtake those in Japan. Other companies have invested in Shanghai and Beijing, but we are now expanding into Kunming and Gansu Province. We are aiming to grow our sales across China in future, from Chengdu and Chongqing in the southwest to Wuhan.
There is a lot of talk about the slowing Chinese economy, but there is a lag between macroeconomic events and what is happening in the real economy. Moreover, we are a company that started amid the recession in Japan and are not dealing in luxury-brand items.
The recession will reduce the number of companies investing in China, which means that the economic situation will, if anything, be an opportunity for us. The middle class is seeing huge growth in China. For brands like ours that target the young members of the middle class, this is a boon.
——As a company with a global perspective, what are you aiming for in the future?
We are thinking about putting our Japan and China planning teams together to come up with products to sell exclusively in China. For the future, Baroque Japan is quite happy for Japan to be a branch office. We hope to build a genuinely global brand by engaging designers all over the world with an excellent sensitivity toward their local markets.
The next target after China is the United States. We started test marketing of Moussy and Azul by Moussy in the American market in 2015. Currently, we are working through the issues for a full rollout there, but the biggest challenge for now is how to overcome pattern grading.
China and the US are the world’s two largest markets. The American apparel sector is very tough and no Japanese company has yet succeeded in it, but we want to be a winning player there. Rather than rushing in, we are conducting in-depth analyses before making our move.