Building a Healthy and Long-lasting Legacy through Environmentally Sustainable Products

Mr. Shou Watanabe, we saw throughout our research that you have had quite an illustrious career. You started as a marketing researcher and soon enough you were working in the American startup culture with the launch of an IT hardware startup where you were in charge of global sales and marketing for the company.  You then joined an online travel agency and managed to climb the hierarchy all the way to the position of manager for Asia Pacific before coming back to your family business, Kindware. Here is a very different working culture from what you experienced in the West. What are the main lessons you managed to learn from working in such diverse and dynamic work environments and how do you plan to implement these lessons to make a better working environment here at Kindware?

Just to clarify, that online travel agency became part of TripAdvisor when it was bought out. I first went there when I was 15. I was a high school student and a college student there before I started working for American companies. My first job was in New York City where I worked as a market researcher. After that, I moved back to Japan and worked at Kindware for a year. I wanted to understand more about the family business, and to that end, I spent time in every department. I felt it wasn’t for me and I wanted to go back to the United States. I then acquired a job with a university research firm and ended up spending seven years in San Francisco which was a great time for me. I think this experience built the foundation of my professional career. I learned how to approach projects and how to approach tasks. I think it helped me to strive for what I have right now, and as you know, Kindware has been around for 130 years now. It is really old, and while sometimes old means good, it can also mean bad. This is because bad stuff builds up and that bad stuff could harm a business.

What I’m doing is simple, speedy, and logical and we refer to this as SSL. All three must be in a fine balance to execute a project successfully and also move forward. If you are too fast you are going to lack logic, if it is too simple it is going to be meaningless, and if it is too logical it is going to take too much time. There has to be a balance there. I’ve implemented a lot of stuff since joining eight years ago. I changed the reviewing system, payment system, hardware, software, the company mission, basic value rules, and many other things. What I am trying to achieve is the building of basic foundations because the company has been here for a long time and a lot of things have been unspoken. Since things are unspoken rules a lot of nuance gets lost and people have different interpretations. A business should have things written down.

We think that what you are talking about is very important when we consider the big changes that have occurred over the past four years due to the COVID-19 pandemic, especially in the fashion and apparel world. We saw as a consequence, the rise of e-commerce platforms, which is forcing brands to redesign their consumer experience to give new functionality to brick-and-mortar stores. We also saw that you recently moved your flagship store, so with that in mind, how do you foresee the evolution of physical retail playing out in the near future? What strategies are you employing to provide your customers with a unique, in-store experience?

We have two main brands under our umbrella, Kindware and Kindcare. Kindware is a luxury brand, so with this in mind, we wanted to have a super luxury flagship store, a separate store that is hidden and embodies the area. This luxury store is exclusively reservation-only, with no walk-ins. When you enter the store people outside can see you, and the in-store experience is extremely intimate and luxurious, including champagne, finger food, personal shoppers, and music. We are focused in that store solely on customer relations and treating the customers like they are royalty. This is why we built this flagship store.   

Kindcare is a different approach than Kindware. Kindcare has a more warm approach and that is because we have two main types of customers with this brand. One is the user, and the second is their daughter, son, nephew, or cousin. We have made it more open, but still very high-end. Products such as walking sticks and push-carts already exist in the market, but they are pretty plain and on the cheap side too. Our customers are looking for something more personalized, more functional, and something more fashionable. It is a niche thing but we are trying to focus on the demand so we have collaborated with Sophie Hallette or SLT among many others. We are also focusing on good materials like wood and we don’t use plastics.

In-store, the focus is on the customer relationship, basically building trust with a valued customer. We train a lot of in-store salespeople and we call the position an SC, which stands for a Style Coordinator. We also train various TCs, which stands for Tailor Coordinator. SCs are trained specifically to build relationships with customers and that is because a lot of times the customer will come in with a specific problem and they are looking for a very tailored solution. In many cases, they might not even buy anything at first, but if we are intimate and don’t rush the customer, they will come back and make a purchase. We are looking to build customers for life rather than one-time purchasers. 

You talked about training human resources to have a special relationship with clients, and this is going to become much more difficult as Japan’s demographic continues to change. With the shrinking demographic, there are going to be issues with recruitment and passing on skills. How are you overcoming these challenges? What are some of the strategies you are implementing to navigate Japan’s changing demographic and perhaps take advantage of the opportunities presented?

Labor shortages are a challenge. Our approach right now is branding, and I think you have to consider that a lot of Japanese companies are not very good at marketing or talking about themselves. We are cutting against the grain and trying to take this approach where we tell everyone who we are and what value we can provide. We are pushing brand value as our core message to consumers. During interview sessions with potential employees, the number one thing we push is the brand.

I would estimate that our work environment is considered challenging, but there are many rewards for employees who thrive here as well. The company is structured to reward those who are hard-working and dedicated to the brand, similar to many American and European companies. Kindware is a meritocracy-based company. I think at the core of this particular message is that we want employees to understand that we respect their skills and pay them accordingly. Slowly this approach is working in my estimation. Although it may temporarily fill a spot, it is oftentimes more damaging to a company to hire a bunch of people who are not a good cultural match for the company. Inevitably if they don’t fit the company culture they will leave, which means you have to hire again, costing more money for the company. We value our culture since we face our customers. Our culture is solid, so we only hire people who understand our culture and our brand.

One of the true critiques that you can throw at Japanese companies is their lack of marketing and branding ability. This is particularly true with SMEs who are competing in high-end markets against legacy brands, thus creativity becomes key. How do you set your brand apart in comparison to these historical Western companies in the same market segment?

Firstly we make everything in Japan because we are a Japan-based company. Next, we have a history that dates back over a century. We have a track record of serving such illustrious customers as the Emperor of Japan. There are people of influence inside and outside of Japan who respect Japanese craftsmanship. We can’t target everyone, but we can target those in the upper escalon.

I like to think of our brand as a baby, so we don’t just protect it, we raise it to achieve amazing things. We aren’t looking to expand rapidly to hundreds of locations, instead, the brand is everything and we need to be selective in how we grow the brand.

Historically your brand has related more to Western styles of clothes, not Japanese ones, and, shortly after its establishment, you began as a second-hand specialist in Western clothes. This allowed you to approach tailors from the West and from there you developed your branding using the finest textiles to make made-to-measure formal clothing. Can you talk a little about the influences your company felt from foreign brands? How were you able to establish yourself as a reference point for Western-style formal clothes in Japan whilst also incorporating the Japanese touch in your products?

Honestly, I don’t see the fanaticism of made-in-Japan lasting forever, so the approach we are taking is to first create customers who appreciate made-in-Japan products. From there we transition those customers to loyal fans of our brand in particular. I want to take our customers to the level where they are devoted fans of Kindware. It's almost as if we are running the made-in-Japan brand until the wheels fall off.

Kindware has four main types of businesses; tailoring, healthcare, logistics, and textiles. Among all of the different divisions you have, which would you say has the most growth potential for years to come?

Our focus is to grow customer-facing brands, so I’m talking about Kindware and Kindcare. I think that Kindware will grow slowly but steadily, whereas Kindcare will grow fast. When you talk about Kindcare and the kinds of products under the brand, there is no other brand that achieves a one-stop shop like we do. There is a chance we could become a pioneer in this market, so we are making a push in English, Japanese, and Chinese to see what kinds of customers we can acquire in the global market. Outside of Japan, we are still just testing the waters.

Our fabrics and logistics businesses are B2B, so they are very solid in terms of revenue and business partners. Frankly speaking, I think they are going to be solid for a while now too because a lot of companies that do what we do are closing their businesses.

The history of Kindware has been to incorporate Western fashion senses and yet today you mentioned that one of your branding strategies is to leverage the Japanese craftsmanship involved in the creation of your products. What kinds of elements of Japanese craftsmanship are you looking to highlight within your products?

My ancestors did a fantastic job recognizing that formal wear would become a huge thing in Japan. They went to the UK, Italy, and the US to learn craftsmanship and to learn what the upper echelon of those societies were wearing. They took those good parts and then combined them with both modern manufacturing techniques and Japanese dedication.

Japanese craftsmen are the best in the world when it comes to focusing on small and precise details. This is an approach that no other nation has. I think in particular a crucial aspect of Japanese craftsmanship is doing the same thing over and over again but retaining the same quality. It is why, for example, sushi chefs have to dedicate decades to mastering their techniques. When we started our partnership with Huntsman, they were taken aback by how well we were able to make the suits. Details, stitching, lining, everything was on a level they had never seen before. Honestly, we had no idea that we were that good at the time.

We got the message and very quickly we became quite confident that we were doing something special. I think additionally, if you look back at Japanese history there are countless instances where we’ve excelled at incorporating Western culture into Japanese culture and then evolving it further into something completely new and exciting. I think that at its core, Japan respects other cultures and products, but at the same time, we can incorporate them into our own while infusing the Japanese essence.

Making canes and trolleys is very different from making very high-end suits and formal clothes in general, but you’ve managed to tackle this challenge successfully. What kinds of synergies have you been able to leverage between your two different style brands?

When I joined this company I felt like there was no synergy between Kindware and Kindcare because they cater to a different customer segment. Products, customers, and brand names are all completely different. It almost felt like Kindcare was damaging the name of Kindware because nobody wanted to buy suits from a healthcare seller. We decided therefore that we should separate the two brands in terms of brand image.

In some ways, however, Kindcare compliments Kindware because if customers do their research they will find out that the two brands are related. That 130 years of history is very prestigious. Also, Kindware customers are a little bit older too, with an average age of about 60, meaning they might be in the market to purchase a walking stick or a trolley. Although this is the case, we are looking to shout this from the rooftops, rather we would like to quietly leave it there for customers to think about.

Quality matters to us, so when we make products and when we buy products from Europe the quality is high. This is helping to drive the Kindcare brand to become a high-end brand. Selling cheap products is not going to make anyone happy. Uniqlo is a great brand, but people will buy hundreds of t-shirts from them because after you wear one you toss it away. At most people will wear it a few times but they aren’t going to have an attachment to it. We go beyond just attachment. We want our customers to purchase a product, use it for 30 years, and then pass it on to the next generation.

We found in our research that your Tochigi factory also produces OEM for both domestic and international companies. We can’t ask for client names, but could you give us a little more information about your B2B business and the potential that you see in providing your services to international brands?

We are very lucky that all of these international brands are approaching us, and honestly, we are honored they see Nasu Yume Koubou’s craftsmanship as valuable to them. Right now, we aren’t looking to increase our B2B ratio more than it is. The idea is to keep it very exclusive.

You’ve mentioned a few collaborations with foreign brands today. You started in 1971 with a technical partnership with Huntsman, the tailor that is appointed to the British Royal Family. This history continues with some of the biggest and most prestigious brands worldwide working together with Kindware. What role do partnerships play in your business model and are you currently looking for any new partnerships in overseas markets?

Currently, we are looking for partners for Kindcare, especially in Scandinavia. As you probably are aware, Scandinavian design is known for its highest quality, and in particular they make outstanding healthcare products. We are looking to partner up to sell their products or do OEMs in Japan.

In regards to Kindware, we are pretty happy with the partners we have, particularly Huntsman. Kindcare is the focus and we are actively looking for partners to help make great functional products. In addition, we have a few partners in Taiwan already. In summary, we are looking for more partners in Taiwan, Europe, and Scandinavia.

Not only have you sold your products in Japan, but also overseas in the US, the UK, and other countries. Where is next? What country do you believe shows growth potential for your company in the future?

We are looking to expand in Asia but we aren’t going to open shops. What we are doing is a very slow approach and steadily building an exclusive customer base of loyal fans. Realistically we are still testing the waters overseas and trying to figure out what is good for business.

Right now is quite an exciting time for Japanese brands because of some big macroeconomic factors. Japanese craftsmanship used to come at a certain price premium, but with the depreciation of the JPY, we believe it is a big chance for brands to actively push exports. Do you concur with this sentiment?

I agree wholeheartedly with ready-to-wear items, but unfortunately, we don’t make mass-produced clothing. With that in mind, we don’t see this as a chance for our particular brand.

Japan is growing into a leading tourism destination, and because of the JPY depreciation, many inbound tourists see Japan as a great shopping destination. Are you targeting foreign tourists that come here?

That is a great question and it is a good opportunity. We’ve sold hundreds of walking sticks to foreign tourists over the past five years. It's not thousands because our foreign customers found spring-lock technology walking sticks that use Liberty London fabric unique and interesting, so they would buy those in bulk and give them to family members. We don’t see this as sustainable so we aren’t going to target these foreign customers. If we follow this trend there are risks involved since we are so focused on being exclusive and prestigious.

In recent years the apparel industry as a whole has been the target of heavy criticism for its environmental impact. Companies in this industry have the longest supply chains in the world. What is your company’s strategy in terms of environmental friendliness and sustainability?

One thing I can say for sure is that we aren’t going into fast fashion. Simply put, fast fashion is a cheaper product which means cheap labor, and cheap labor is not in Japan. Is there value in this cheapness, Maybe, but is it sustainable, no. Companies like mine are responsible for setting the pace and putting our employees on the right course. If you go cheap, inevitably someone is going to pay for that. We are going to continue on our course, producing personalized, high-end, and prestigious products for our loyal customers. As I mentioned earlier, we want to produce products that last beyond a lifetime, and these products have to have the quality and emotional factor that moves people and pushes them to pass these products down as heirlooms. Kindware isn’t producing products that last a few years, rather we are producing products that last 30,40, or even 50 years. We produce luxury suits that are made durable enough to be worn for three generations; they would not cause waste problems inherent in the apparel industry. 

Our company is also using recycled materials and we feel these materials are nice and high-quality. Also, we mainly use wool materials for suits. 

Wool purifies the air, so it is much more environmentally friendly than cotton or polyester.

This is one way to help the environment. We all live on this planet so we have to each do our part to preserve it for the next generation. 

You became the CEO in 2022 of this 130-year-old company and you’re the fifth generation of your family to hold this position. What objectives would you like to achieve as this generation's CEO of Kindware? What legacy would you like to be remembered by once you are ready to hand the baton to the next generation?

This is something I’ve thought about so many times and I constantly get asked this question. What do you want to be remembered as? What is your legacy? There are so many answers to this question. Perhaps it might be increasing revenue to a certain level or maybe the globalization of our brands. What makes me truly happy however is having happy people around me. Happy employees, happy customers, and a happy family. I want to build this company just like a family. We call ourselves managers and employees, but everyone here is like a family member to me. I want to build a healthy company just like a family, but one that is also aggressive about achieving goals. It is all in pursuit of striving for another 100 years.

For more details, explore their website at https://thekindware.com/