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TOKYO — Japan was one of Kate Spade’s first foreign markets, and it’s clear that the country still plays an important role in the brand’s global strategy.
It is the brand’s second-largest market after the U.S.
The company currently has 53 Kate Spade points of sale and one Jack Spade store in Japan, and it plans to roll out more than 10 more doors this spring. One of the more high-profile openings will come in early March, when the company will unveil the first retail store for Kate Spade Saturday, its new, younger, more accessibly priced line. The store will make its home in the Harajuku neighborhood very close to a well-trafficked Marc by Marc Jacobs store.
“This global lifestyle brand is starting in Japan. We are going to be the first,” said Ayako Yanagisawa, president of Kate Spade Japan. The new store will feature a café selling Sigmund’s Pretzels — a move that targets young Japanese shoppers who love food and hanging out while shopping.
“We wanted to have something to show the brand’s American roots and lifestyle,” Yanagisawa said.
Kate Spade is registering significant growth here, in stark contrast with many other luxury goods and fashion players. Sales for the year ended Aug. 31, 2012, rose 20 percent to 7 billion yen, or $88.90 million at average exchange. Yanagisawa attributed the growth to a series of factors, including an aggressive retail expansion, the launch of new product categories like jewelry and watches and a shift in marketing resources to younger consumers.
The Saturday brand retail launch is just the latest example of how the company embraces local consumers’ tastes and uses them to shape its global approach. Unlike many other brands that strive for uniform product ranges around the world, Kate Spade Japan’s merchandising team frequently makes suggestions to the company’s head office in New York about styles or modifications that would work well in the Japanese market.
Often, these products designed with a Japanese consumer in mind go on to sell worldwide. Yanagisawa explained how this process resulted in a mini version of a metallic basket-weave tote for spring, in line with Japanese women’s preference for smaller handbags.
“The creative director [Deborah Lloyd] knows that we love ribbons, so she introduces ribbons and bows every season,” Yanagisawa said. “By doing that, the [individual] market needs start influencing each other.”
Similarly, the Japanese market has influenced the way Kate Spade approaches apparel. For spring 2012, the company started rolling out a size range of clothing called “Fashion Fit,” featuring smaller sizes, longer torsos and proportions suited to Japanese and smaller Asian body types. This more petite range of clothing, which originated as a request from Kate Spade Japan, sells both in Japan and in international stores targeting Asian customers.
Last year, Kate Spade took its Japanese business in-house by buying out the controlling stake held by its former partner, Sanei International, in their joint venture Kate Spade Japan. Sanei and Kate Spade formed the joint venture in 2009. Kate Spade has a long history with the Japanese company: Sanei, acting as a distributor and a licensee, brought the American brand to Japan in 1996.
Yanagisawa, who became chief executive officer of Kate Spade Japan in 2009, said the Sanei partnership was a fruitful one but ultimately it made sense for Kate Spade to fully own the brand as it plots further international expansion.
“We were mature enough to be owned,” she said.
In Japan, Kate Spade’s target consumer is a working woman, age 25 to 35, who lives in a big city. Yanagisawa has noted a significant change in the mentality of young Japanese women, who have lived much of their lives in a recessionary environment. They care less about logos and brand names than past generations, she said.
“People are becoming more mature and sophisticated and finding a reason to buy,” Yanagisawa explained. “I think they are looking to be inspired by the brand or [identify] with the lifestyle.”
Yanagisawa said the March 2011 tsunami that struck northern Japan brought that trend into sharper focus. In line with the experience of many other fashion and luxury goods players, Kate Spade saw a steep drop in sales immediately after the disaster, but business recovered relatively quickly in a few months, the executive noted. She added that shoppers were eager to lift their spirits with bright-colored and patterned merchandise.
“People were really looking for something additional, on top of just buying handbags or just buying clothing,” Yanagisawa said. “I think it’s going to be a permanent shift.”