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Kanebo Works to Regain Consumer Trust

Kanebo works to repair damage to its reputation with consumers.

TOKYO — After issuing a voluntary recall of more than 50 brightening products in July 2013 due to customer complaints of vitiligo-like symptoms, Kanebo is working hard to regain the trust of Japanese consumers.

“We lost [customers] because of quality, so we have to prove our quality [to regain customers],” said Masumi Natsusaka, president and chief executive officer of Japan’s second-largest cosmetics company.

In addition to thorough quality checks of all of its existing products, Kanebo is emphasizing on one-on-one counseling with customers through its own beauty consultants at department stores and cosmetics specialty stores. The company is also maintaining close contact with those customers who were affected by the recalled products. Around 8,500 people report having symptoms that continue to persist, even two years after the initial recall.

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“We understand that customers from self-selection or mass [retailers] aren’t coming back because [those stores] rely only on advertisements,” Natsusaka said. “So we have shifted our focus from advertisements to one-on-one customer care.”

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Before issuing the recall, Natsusaka and his team had vastly underestimated the number of customers who might have been experiencing symptoms, due to what he calls a problem with the structure of the company.

“Before the recall, we know that 39 people had been to see a doctor about the problem. And according to our experience, if 39 people say something, there are actually 13 times as many people [experiencing the same problems],” Natsusaka said. “So we thought there were probably about 500 people [affected], or at the most 1,000.”

In actuality, that number rose to 19,517, as it turned out that some people had experienced symptoms, but they and their doctors did not make the connection that these symptoms were related to the Kanebo products. Information sharing within the company was also poorly executed, exacerbating the issue.

“Simply put, the company was one that had people meeting by division, but there wasn’t much communication between those divisions. I think that was the biggest problem in the company,” Natsusaka said. “This is very embarrassing, but even some of our employees had vitiligo symptoms [related to the recalled products]. And even though employees were affected by it, no one realized [the problem].”

Since the recall, Kanebo has undergone various restructuring measures, while at the same time strengthening its quality control and customer care activities. It has also temporarily shifted its focus away from skin care, instead investing in its makeup lines. Natsusaka said this has been an effective strategy, and that while the company started again to invest in skin-care products late last year, it has not seen high returns from this business.

In Japan, Kanebo’s makeup priorities are on the Kate Tokyo and Lunasol brands. The former is also seeing success in other Asian cities, such as Hong Kong, Shanghai and Taipei, where sales are growing at around 30 percent per year. Moving forward, Natsusaka says he wants to grow its presence in southeast Asian cities, such as Bangkok and Singapore. Kate Tokyo is developed and marketed as a makeup brand by Asians for Asians, with products designed for Asian women’s faces. Its fall collection, for example, includes a series of eye-makeup products that create the illusion of an expanded vertical length of the eyelid, made with double-lidded women in mind. The products were released this week.

In European markets, the company’s focus will continue to be on the Sensai brand, which Natsusaka said he hopes to introduce to Asian markets within a “few years.” He says the reason this will take so long is that in Asia, skin-care lines are expected to include a brightening range, which Sensai does not currently have. After Kanebo’s recent problems with brightening products, development could take even longer than usual. Still, Natsusaka seems determined to take on the challenge of proving itself to its former and potential customers. His company’s best year in terms of sales was 2007, when it reached 220 billion yen, or about $1.78 billion at current exchange rates. Since then, sales have fallen about 20 percent, with 2014’s figure coming in at just under 180 billion yen, or $1.45 billion. Natsusaka’s aim is to return to the 220 billion yen figure during his tenure at the company.

“Because we had that problem [the recall], we are now operating with the absolute highest levels of quality in the world,” the executive said. “Our only option is to make customers understand that. But, of course, even if I say things are safe, that won’t translate to customers; they need to try them for themselves and have the products convince them.”