Business shirts are a commodity product usually sold either within Japan’s Big 4 suits retailers or at department stores. In the last decade a few specialty chains have begun to wrest control of distribution from manufacturer wholesalers. Recognising this, one of Japan’s biggest materials businesses, Nisshinbo, sold its own shirt brand last year and has just replaced it with leading shirts retailer Tokyo Shirts, which is itself beginning to target the higher end of the market.
Nisshinbo, the materials manufacturing giant, has acquired shirts retailer, Tokyo Shirts. The operator of the Brick House SPA shirts chain, Tokyo Shirts, has 200 stores producing sales of ¥17.5 billion in FY2013.
While the acquisition is nothing unusual, Nisshinbo recently sold its own shirts business, the nationally renowned Choya brand, to another manufacturer. It chose to sell off its own shirt supply business and buy a retailer because of the increasing necessity to get close to the end consumer. The rapid restructuring of the shirts market, and the emergence of price leading competitors, meant it also had to seek efficiencies through a vertically integrated business in order to survive.
Tokyo Shirts was itself just a manufacturer until a decade ago. In 2004, seeing the way the market was moving, it overhauled its business and began opening stores, creating the first national SPA shirts chain. Lucky timing meant it was able to exploit the boom in SC development, and its narrow niche and reasonable prices meant it fitted well in suburban malls and station buildings alike, helping it grow into a 200 store chain today.
Unlike many manufacturers that have ventured into retail, Tokyo Shirts operates almost all its stores directly, building a retail expertise that is the envy of many of its former manufacturing peers. Given that the merchandise in business shirt retailing does not differ widely, supply chain management becomes key, and in particular the ability to manage the plethora of neck and sleeve sizes needed to deliver optimal customer service while keeping inventory low. Tokyo Shirts is one of the few companies to crack this, and it is this skill, along with its direct relationship with its customers, that Nisshinbo is buying above all.
Today Tokyo Shirts stores average sales of around ¥87 million a year, although the wide variety of store sizes, from 10 sqm to 60 sqm, means that densities vary significantly. Tokyo Shirts has, for the most part, avoided the higher rentals of the better city locations, determined to stick to a low cost operation while still delivering on size variation and reasonable quality.
Going forward, the deeper pockets (sic) of Nisshinbo, and its vast manufacturing resources, should allow Tokyo Shirts to exploit the opportunities in city centres. Given Nisshinbo’s expertise in the higher end market as well, there will also be an opportunity to build a competitively priced premium chain for station SCs and upmarket city shopping locations, exploiting the affluent business market of both men and women. Currently one of the few dedicated competitors in that market is Maker’s Shirts Kamakura, but with sales of just ¥3.8 billion, there is clearly an opportunity to set up a rival chain, and take share from the likes of Aoki’s Orihica.
Indeed, tentative signs of experimentation in this area are already there; Tokyo Shirts just opened the first store of a new higher spec chain called Camicia Sartoria near Tokyo Station, offering order made shirts at just ¥6,300.
Potential avenues for expansion aside, what is significant about Nisshinbo’s takeover of Tokyo Shirts is the rationalisation of yet another part of the apparel sector into an SPA model of retail-led businesses. A minor sector perhaps, but then Zara’s founder Amanita Ortega also started his career working in a shirt store, so who knows where Tokyo Shirts may end up.
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