Japan’s Denim & Jeans Scene: Jeans Sales Turn Sluggish

Japan’s Denim & Jeans Scene: Jeans Sales Turn Sluggish

The jeans market in Japan has shown a drastic change from the boom in 2004 to sluggish sales starting from around the spring of last year. One of the reasons for slow sales is said to be that consumers have purchased more than enough jeans. For this reason, apparel manufacturers are hastily searching for the next standard items, and are vigorously undertaking the development of new consumer-persuasive products.

Jeans sales usually decline during July-September, and because Japan had another hot summer for the second straight year last year, everyone from the store back up to denim suppliers had to suffer more from the dull business situation. In such a situation, which also can be said be to oversupply, jeans manufacturers have held down their production of new products as a means of adjusting stocks.

The moderate production situation has resulted in a decrease in denim production, which is said to be down to about 80% for Kaihara Corporation, a major denim maker.

In order to overcome this business situation, jeans manufacturers are attaching importance to the development of new products, and the industry itself has been endeavoring to promote consumption. Denim suppliers have also set out to create new products befitting the next generation, and at the recent Japan Creation in Tokyo, they showed original products and made aggressive presentations to apparel and jeans manufacturers.

Leading the market are “Bikyaku” (beautiful leg) jeans, but the material, silhouette and the attachment of one-point marks are more advanced.

The trend appears to be shifting from basic-based stylish jeans to design jeans, and men’s jeans collections have also been reinforced.

Jeans costing less than 10,000 yen apiece are showing a comeback, and luxury import brands and premium jeans are heading unlimitedly toward the higher end. The high-end jeans market has come to establish itself, and in the coming season, overseas markets will probably show an expansion from the U.S. to Europe.


New Factory Capable of Competing Well Worldwide

Major denim producer Kaihara Corporation positions its new Sanwa Mill as a factory that can well compete on the world’s markets. The Sanwa Mill was completed in October last year, and commenced operations as Kaihara’s fourth denim factory.

The Japanese jeans market slightly slowed down last year with a lull in consumption, but high-end premium jeans moved favorably in the U.S. and Europe. Although exports to U.S. and European firms are said to have decreased slightly, Kaihara CEO Yoshiharu Kaihara expects demand to continue this year with the export volume being about the same as last year’s.

Sanwa Mill Targets 1.3-Million-Meter Production

Located about an hour by car from JR Fukuyama Station, the Sanwa Mill took one year to complete on elevated ground surrounded by abundant nature. It is about 20 km in a straight line north of the Kaihara Head Office in Fukuyama.

The factory is about 300 meters square, and built on elevated ground created by cutting out a mountain slope. It is fully equipped including sizing equipment, and employs about 70 persons. After the installation of 60 of the latest 153-inch projectile looms, Kaihara will add another 60 looms in February for a total of 120 looms.

Kaihara intends to bring production at the Sanwa Mill to 1.3 million meters early in March. The Sanwa Mill will account for more than one-third of its monthly output of approximately 3 million meters. Since December last year, the mill has been operating 24 hours endlessly at full capacity.

The Sanwa Mill is currently producing about 600,000 meters of denim monthly. As a result of decreases in domestic demand and exports in comparison with a year ago, denim weavers are said to be operating at 80% capacity, but Kaihara considers that production is unlikely to be reduced any further.

Besides the Sanwa Mill, Kaihara has three denim mills: Head Office Mill (Shin-Ichi Mill), Kisa Mill and Joge Mill. The addition of the Sanwa Mill will enable Kaihara to enhance timely production and increase its cost competitiveness.

With an integrated denim production system including spinning, dyeing, weaving and finishing, Kaihara enjoyed buoyant business and registered sales of 21.5 billion yen for the fiscal year ending in February 2005, which is a double-digit gain from the preceding year.

As for the coming season, Kaihara expects changes in silhouette and color, and premium jeans are to remain popular, as it will be difficult for another material to replace denim.

Sales for fiscal year ending in February 2006 are expected to decrease by about 10% from the previous fiscal year. Kaihara gives sluggish consumption and slow sales of stretch jeans as factors decreasing sales, and anticipates that stretch denim is likely to decrease by half compared with the time when stretch denim first accounted for more than 50% of total production.

When domestic demand and exports of denim for women’s Bikyaku (beautiful leg) jeans and premium jeans were favorable in the previous fiscal year, Kaihara registered double-digit growths in both sales and profits. However, sales have been inactive since last spring, and apparel firms have been holding down their production. For these reasons, orders for denim have declined, and Kaihara is reportedly operating at about 80% capacity.

Nevertheless, there are also some bright prospects. Pure cotton denim has increased to offset the reduced portion of stretch denim, and the movements of men’s jeans have also accelerated, according to Kaihara.

As far as exports are concerned, Kaihara expects that premium jeans will remain in demand and maintain the same favorableness as the preceding year.


Attaching Importance to Core Products

Compared to 2004, the denim business was reportedly not in the best of conditions last year. In Japan, the U.S. and Europe, the jeans trends remained the same, and nothing new appeared on the world’s markets.

As a result of such a dull situation, exports have slowed down centering on shipments to the U.S.

Under such circumstances, Nisshinbo Industries, Inc. is attaching importance to its core denim products. Manager Masaharu Tanaka of Nisshinbo’s Jeans section, says, “Like a king who always goes on the royal road, Nisshinbo values core products in our denim business, giving greater care to major items in offerings to customers. We have a strong, firm vision toward basic portions with an unwavering stance, and pursue the good qualities or merits of products that are selling well on the market.”

According to Manager Tanaka, customers have been showing a favorable response toward this policy to appreciate main products.

In its manufacturing of denim, emphasis is placed on “Waza”, or the outstanding craftsmanship and original techniques of Japan. Importance is attached to Japan’s original production and processing techniques, quality and taste in all stages of production, such as spinning, dyeing, weaving and finishing. The results of Nisshinbo’s never-ending endeavors have been highly appreciated among jeans manufacturers inside and outside Japan.

Nisshinbo produces approximately 1 million meters of denim a month, 200,000-250,000 meters of which are exported abroad. The denim fabrics Nisshinbo exports are mainly used for premium jeans with a retail price of over US$100 apiece.

The U.S. is the largest overseas market for Nisshinbo denim, and the company is looking forward to expanding its business in Europe. Korea and Taiwan are also markets, to which prompt delivery is an important point.


Introducing Its Next Generation of Original Denim Fabrics

Kurabo Industries Ltd. is introducing its next generation of denim fabrics consisting of three new original materials.

The first product is “Air Spinner”, a denim fabric made from a very low twist yarn. The number of twists is about half of that of ordinary yarn, giving the fabric an extremely soft feel.

The second novelty is “Wave” made from a yarn of multiple yarn count construction. A special device is used to produce abrupt changes in the yarn count.

The third new product is the color Ocean Blue offered under the brand “Splash”. This denim fabric has a distinctive appearance that is recognizable at first sight.

Kenshi Kawano, Manager of the Jeans & Casual Fabrics Sales section at Kurabo, says, “These denim fabrics are novelties that are completely Kurabo’s originals obtainable nowhere else.” The company began introduction of its next generation of denims from January, such as presenting them at an exhibition in New York toward the end of the month.

Kurabo has been focusing on marketing in its denim business with an emphasis placed on specialization in the development of products. Its marketing strategy has been to offer a collection consisting of three major products; in 2000, the three main denim products were “Natural Leaf” greenish blue denim color, “Multi Indigo” rich expression denim and “Nature Blue” cured denim.

In 2003, Kurabo began offering the second generation consisting of “Clear Sky” denim made from compact slub yarn, denims made with core spun yarn (T-400 PTT fiber core), and denims that have been dip-dyed 32 times.

The latest generation of Kurabo denim is also available in combination with earlier generations.

Kurabo is currently increasing its denim production capacity in China to 1.8 million meters a month under a scrap and build program. This capacity increase is scheduled to be completed in February, and upon completion, its total denim production capacity in Japan and China together is to reach 2.8 million meters.

According to Manager Kawano, denim business was slow in the second half of 2005, and is likely to remain slow in the first half of 2006. If an improvement of business can be seen from around the middle of the year, the company might be able to maintain the same scale of business as last year. In the U.S., premium jeans have toned down from its bubble, while men’s jeans are said to be enjoying comparatively favorable sales. In Europe, there is a possibility that a relatively early recovery is might occur.

Copyright Osaka Senken Ltd. Feb 2006

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