Itochu signs Scotch & Soda, plans further expansion

Mar 15

Itochu Shoji may already be the biggest fashion distributor among the Sogo Shosha but it plans a renewed push in brand distribution both at home, where it sees a significant uplift from the tourist market, and across Asia. It is looking for brands across a broad range of segments.

Itochu Shoji signed Dutch fashion label Scotch & Soda last month. The exclusive deal gives Coronet, a major Itochu subsidiary, distribution rights for five years from this A/W season. Coronet expects sales to hit ¥5 billion within three years. The menswear brand was launched in 1980 and has been sold through a variety of Japanese agents and distributors over the years, but with little investment in stores. Since 2010 Scotch & Soda has added womenswear and childrenswear, and Coronet will open stand alone stores for the full collection in key cities over the next year in order to build brand awareness. Prices of ¥50,000 for coats, ¥30,000 for jackets and ¥15,000 for skirts are expected.

The deal is just one of many new brands Itochu Shoji’s brand marketing division plans to sign this year. It is optimistic about the domestic market, but is also planning to tie up with partners in other countries in Asia to cement its Asian-wide distribution network. It also sees great potential for the tourist market in Japan.

Coronet is a key part of these plans. Already last year, it widened its portfolio beyond its core upscale market to include mass market brands like Eastpak, but with the rapid expansion of its retail stores, it says it needs many more brands to fill capacity.

Another Itochu subsidiary, Joix Corporation, licensee of brands such as Paul Smith, is also optimistic about the tourist market, using it to adjust its collections for Chinese and other Asian tastes in preparation for expanding distribution to Greater China. It is also active in South Korea where its Penfield brand saw sales double to ¥1 billion last year and will double again this year.

Itochu sees more opportunity for synergy between the various divisions within Itochu Textile Company. For example it owns Le Sportsac but product planning is handled largely by Itochu Fashion System but with input on parts now from another subsidiary, Sanki. With sales in 35 countries, Itochu uses offices and subsidiaries of Itochu Shoji for Le Sportsac supply and distribution. Supply has also been expanded through the acquisition of foreign manufacturing such as the UK’s Bramhope, a major supplier to Marks & Spencer, and through joint ventures such as that signed last month with Vinatex, Vietnam’s largest textile firm. It now wants to use this group knowhow across many more of its brands, such as Anteprima, while also expanding sales of manufacturing to European and US brands and retailers.

Sales for Itochu’s luxury brands like Hunting World and Brunello Cucinelli bounced back from June 2014, in line with growth at department stores and other luxury retail, and last year Itochu signed more high end brands such as Hunter Boots from the UK, Cacherel and Forte Forte. It is seeing a significant increase in enquiries about distribution thanks to growing interest in the Japanese market again – it says US and European brands now seem less ‘obsessed’ with the Chinese market. Itochu believes the intense focus on Greater China will lessen as brands realise the stability and ease of doing business in Japan.

At the same time, Itochu sees a huge opportunity in tourism within Japan from Chinese and other Asian tourists – brands like Paul Smith may be foreign, but much of their manufacturing is handled under license with sizing and design details suited to Japanese and, so it thinks, Chinese consumers.

Last year net profit at Itochu Textile Company fell 14% to ¥12.2 billion, but this was partly because of the takeover of Edwin and US sock manufacturer, RC Holdings. In FY2014 it expects a dramatic increase to ¥32 billion thanks to strong sales of luxury, premium fashion and sport brands.

Itochu signs JV with Beenos

Last month Itochu Shoji signed a joint venture with Defacto Standard, a subsidiary of Beenos, and one of the leaders in the business of purchasing used branded goods from consumers. As a result of the deal Itochu will become Defacto’s second largest shareholder after Beenos.

Defacto runs an e-commerce business called Brandear ( which takes the hassle out of offloading unwanted used apparel, accessories, jewellery and watches. It claims to be number one in the used e-commerce market and the pioneer of the CtoBtoC model. For five years running it has been voted Best Store on Yahoo Auctions.

Consumers simply apply online, pack up their old stuff in supplied boxes, and Defacto arranges a pick up (for free) at a time convenient to the customer. It then inspects the contents, puts a price on each item and arranges for their sale through online auction and other market places, and then paying the customer after taking its margin. It buys in more than 6,000 types of product.

As well as its own site, Defacto also partners with leading firms such as Yamada Denki for its Yamada Kaitori service, Dinos-Cecile and the Coop.

Itochu plans to help Defacto expand both at home and overseas.