Overview of the Retail Apparel Market

The retail apparel market

The scale of the Japanese retail apparel market is just under ¥10 trillion. Structural issues including Japan’s aging demographic profile and low wage growth are leading directly to lower consumer spending on apparel. As a result, the market scale is showing steady signs of contraction.

The economic downturn triggered by the global financial crisis since September 2008 is making consumers more cautious in their spending patterns, more reluctant to purchase clothing, and more inclined to choose lower-priced items. In addition to the drop in customer numbers, the “fast fashion” boom together with the rise in specialty stores that place considerable emphasis on pricing are prompting a decline in average customer spending and by association contraction in the market’s overall scale.

Operating within a retail apparel market that continues to confront increasingly harsh business conditions, the UNITED ARROWS Group is working diligently to open new stores while lifting annual sales. Buoyed by a wide variety of initiatives, the Group is endeavoring to generate ongoing and stable sales growth.

Trends in the scale of Japan’s retail apparel market and UNITED ARROWS Group sales

Trends in the scale of Japan’s retail apparel market and UNITED ARROWS Group sales

Channel diversification

Over the past decade, sales channels have undergone significant change. Department and general merchandise store sales growth has stalled. Specialty store and others channel* sales, on the other hand, have remained firm by comparison.

The mail-order route, included in other channel, and particularly online sales have enjoyed remarkable growth. Despite expectations that the market scale will continue to shrink, the online sales market is projected to experience ongoing growth.
* Includes mail order (Internet, catalogue, television, others) as well as discount stores.

Trends in rates of sales growth by sales channel

Trends in rates of sales growth by sales channel

Select shops

Select shops are stores that provide customers with products procured from all over the world, based on unique brand concepts and the discerning judgment of their buyers.

There are also companies that adopt an SPA (specialty store retailer of private label apparel) strategy under which they offer a mix of purchased and private label products. In handling products that offer the appeal of high-value-added attributes and a distinctive uniqueness, select shops are positioned between department and specialty stores at the mid- to high-end price range. As such, they are relatively unaffected by trends in economic conditions.

UNITED ARROWS LTD. maintains a balance between attracting customers by carefully handpicking selected designer brands from Japan and overseas and ensuring high profitability by offering private label brands. The Company has the largest sales of any company adopting a select shop business model and is the only such company to have publicly listed its stock.

Trends in total sales of five major select shop companies and UNITED ARROWS LTD.’s market share

Trends in total sales of five major select shop companies and UNITED ARROWS LTD.’s market share