Onwards ties with Laox and Isetan-Mitsukoshi on export brands

Jul 14

Like all the big apparel groups, Onward is trying to escape dependence on department stores on the one hand, and weaker sales of its European division on the other. To fix this, it is teaming up with a department store to create a new brand aimed at Western markets, and with Chinese-owned Laox to target Asian consumers.

Onward Holdings is teaming up with Laox and Isetan-Mitsukoshi to launch new brands aimed at overseas markets. The deals with the two firms are entirely separate but both are based on the idea of creating fashion brands that communicate Japanese design values and lifestyle to foreign audiences.

With Laox, Onward Holdings will form a joint venture in September, 51% owned by Onward but with two representatives from Laox on the board. The partnership plans to create a lifestyle brand using Japanese craft skills and culture for sale first in Asia and then further afield. Onward will be in charge of planning and production and Laox, which is Chinese-owned, will handle sales and distribution both within Japan through duty free stores, and in China and other Asian countries.

It might seem surprising that what was once an electronics chain is now working in the fashion sector, but since Laox was taken over it has become a duty free retailer, selling everything from cosmetics to jewellery. Its Ginza and Shinjuku stores are quite upscale, selling a wide range of top end Japanese brands.

It is this repositioning that led to Onward and Laox starting a business relationship in 2009, when Laox began targeting inbound tourists with more fashion brands. In addition Laox also has its own apparel division; when it opened its newest store in Shinjuku last month, it unveiled Origami, its own Made in Japan womenswear brand targeting tourists. Laox also acquired the fashion footwear and accessories retailer Mode et Jacomo last month as part of its plans to develop more fashion lines to sell to tourists in Japan and across Asia.

Onward’s new project with Isetan-Mitsukoshi will also aim to use Japanese culture, art and aesthetics to develop a new upscale brand for foreign markets, but this time aimed at Western markets. Isetan-Mitsukoshi has already been working on promotion of Japanese art and design through in-store campaigns within Japan, and through a pop-up store in New York last year, and this Autumn will open an Isetan store promoting Japanese fashion and design in Paris.

Onward itself already has significant interests overseas, including ownership of brands like Joseph in the UK which will prove valuable for distribution contacts and expertise on marketing of upscale brands. It will be responsible for overseas distribution and marketing. The new brand will be launched in Spring 2016 and include both apparel and accessories.

Onward’s new collaborations are part of its efforts to increase exports and offset tough trading at home. Although sales rose 0.5% to ¥218 billion in FY2014, sales of all but its higher end brands suffered. The higher end brands sold well to affluent shoppers in department stores and could offset higher production costs, but its more mass market labels suffered from competition from better value specialty chains and from a higher cost of sales. As a result operating profit fell 44% to ¥5.7 billion.