Targeting the over 50s

There are few large, dedicated fashion chains for seniors despite being the fastest growing market in terms of population. Leilian is one, but the firm has struggled to innovate, focusing instead on managing the transition in ownership from Renown to Itochu. Under the trading firm’s new lead it has spent the last two years revamping supply chains and is now beginning to launch more appealing brands to suit the modern mindset of today’s late 40s and 50s women. These stores include a large number of international brands, presenting new opportunities for fashion labels selling into this segment.

Womenswear retailer Leilian unveiled a new chain last month, part of plans to revive its fortunes following more than a decade of genteel decline. Sales have fallen from more than ¥60 billion in 2005 to ¥45 billion and store numbers from 371 to 353. It has always had a loyal following among the over 50s, who regard the Leilian chain as a reliable source of quality, comfortable apparel. Those over 50s have now become the over 60s, however, a market that buys a good deal less apparel than the generation below.

While not much has changed within Leilian stores, its ownership has. In 2010, Itochu Shoji acquired Renown’s 53% stake in the business giving the trading firm 80%. Itochu’s stake was further evidence of its intention to invest in the retail end of the apparel market to complement its already wide network of apparel interests at the manufacturing and wholesale level. At the time of the purchase, Itochu said it would use its vast OEM network to increase Leilian’s range of brands and raise gross margins.

Progress has been slow due to the scale of the restructuring task, with net profit declining sharply in 2011 but then rising equally sharply again last year to ¥1.5 billion.

At last Leilian is showing signs of life, with plans to focus on its core strength in the growing 50s and 60s market with a variety of chains. The new chain, Nemika, launched with a standalone store in Hiroo last month and a second store in Futako Tamagawa this month, both markets suited to its premium positioning. The stores replace Leilian stores in the same locations and it is expected that Leilian will use Nemika to take over other Leilian stores where Nemika’s higher and more modern positioning warrants it.

The Hiroo store reflects the radical shift in thinking at Leilian,with a very modernist interior design aiming to appeal to the new generation of 50s women who look for serious fashion and are prepared to pay for it. Future stores planned for Shinjuku and Ginza will also stock a selection of overseas designers largely sourced through Itochu’s many imported brand interests such as Lanvin, Nina Ricci and Jason Wu, but other labels outside the Itochu stable too. About 50% of merchandise in these stores will be overseas brands, making Nemika into a new kind of select shop chain for the older market, an idea with significant potential, and one that Isetan-Mitsukoshi is believed to be considering, but this time using the Mitsukoshi brand.

Leilian is also in talks with department stores – where 290 of its 353 stores are located – to convert some Leilian stores to the new brand. While city department stores will be a good match for Nemika, a major concern is the image of regional department stores. Although a few are being spruced up, most remain drab and unpopular. Leilian is particularly concerned with the impact on these stores of the closure of the many Burberry concessions following the cancellation of Sanyo’s license next year – many of its stores are next to or near Burberry London concessions. To combat this, Itochu has worked with Leilian to create a new chain for SCs instead. Called En Recre, it also targets 50s women but with more casual fashions and accessories.