Cross Company to launch chain targeting US and Europe

Feb 15

Cross Company still delivers rapid growth but it is reaching a scale that could well slow it down if it doesn’t expand beyond the current model and narrow market. It knows this, and for the last two years has been working on a plan to create a new kind of fashion chain, one that is designed for global markets and sales of ¥1 trillion, while also being ethically and ecological sourced. Can slow fashion scale that big?

Cross Company will launch a new chain of fashion stores this Autumn, specifically designed for the US and European markets as well as Japan. Details remain sparse but the new chain will have stores of around 700-1,500 sqm offering men’s and women’s fashion – most Cross Company stores today are only around 250 sqm and largely cater to young women.

The scale of the project is genuinely ambitious, aiming to a chain with ¥1 trillion in sales, along similar lines to the models developed by Inditex and H&M, rather than expansion through a portfolio of brands as Cross Company has until now. To date, the only apparel chain with sales of close to ¥1 trillion in Japan is Uniqlo – ¥934 billion last year. From 600 stores across brands like Earth, Music & Ecology, E Hyphen World Gallery, Green Parks and Sevendays=Sunday, Cross Company itself is expected to see sales of around ¥100 billion for the year ending January 2014 – more than double four years before but still a fraction of its ambitions.

A key selling point of the new chain will be a strong emphasis on ethical and ecological sourcing, hoping to appeal to the growing concern about both the environmental impact of fast fashions and working conditions for textile workers. It will aim to be a counter point to fast fashion, offering ecologically sourced, good quality and durable clothing at reasonable prices, and hopes to make 100% of production sustainable and ethical through 2016. To achieve this, Cross Company has reportedly spent the last two years building a new supply chain network, as well as reducing supplier numbers from 400 to 100 in order to make it easier to manage and monitor them. As always it is working closely with Mitsubishi Shoji Fashion and other trading partners for both fabric and apparel production.

A new team of designers, planners and logistics staff has been set up. Given the global ambitions, hiring of overseas staff is key. Cross Company is reportedly using its contacts through suppliers and subsidiary Thom Browne to recruit, as well as relying on Mitsubishi Shoji Fashion’s global intelligence on fashion markets.

Cross Company plans to make transparency of supply a key part of brand marketing, providing details at store on fabric sources, conditions of workers in manufacturing plants and the ecological footprint of shipments. Stores are also being designed to minimise energy consumption and use renewables where possible. It has already made relatively significant efforts in some of these areas, including LED lighting at its stores, solar panels at head office, and instigating community welfare schemes in its home town of Okayama. Since inception it has also made staff welfare a key value – in particular being one of the earliest Japanese companies to introduce genuinely flexible working conditions for working mothers, one of the reasons it was able to hire top level talent from other more conservative firms even when it was a minnow, and probably a key reason for its success.

The firm already operates stores in Asia, notably Earth, Music & Ecology. Cross first began wholesaling to Hong Kong in 2005, adding stores in Taiwan in 2008 and exports to China from 2009. In 2011 it signed a deal for the China market with I.T. Limited, a leading Hong Kong-based fashion distributor, but only for existing brands which were designed for Japan first and foremost.

Compared to its overseas operations so far, the newly planned chain is on a different scale altogether and potentially marries the skills of one of the better fashion retailers of the last decade with the very serious sourcing and apparel production skills of Japan’s Sogo Shosha.

Cross Company is nothing if not ambitious, ever since opening its first stores in 1994. It has long stated it has the potential to become a ¥1 trillion business, an ambition that is lent credence by its relentless expansion, with sales up more than 7,000% in the last decade, the fastest growth of any apparel retailer in Japan. It also has a good record on delivering on its promises too; four years ago Cross said it would hit sales of ¥100 billion in FY2013 and it looks to have achieved this target. It is forecasting a further jump to ¥140 billion in FY2014. The creation of a ¥1 trillion chain is still a long way off, but Cross Company’s record to date, and the quality of its management team, not to mention backing from Mitsubishi, suggests that its plans should not be written off.