Thursday, Dec 14, 2017
Conglomerate | Asia-Pacific | Japan

Onward Holdings

The brand behind the brands


1 year ago

Takeshi Hirouchi, Representative Director and Chairman of Onward Holdings Co., Ltd.
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Takeshi Hirouchi

Representative Director and Chairman of Onward Holdings Co., Ltd.

You might not have heard about Onward Holdings, but you will surely recognize names such as Jean-Paul Gaultier, Michael Kors or Jil Sander – all of them related to Onward Holdings. Today, as Chairman Takeshi Hirouchi explains, after years producing leading luxury brands all over the world, Onward Holdings aims for fashion conglomeratization and pushing the image and quality of Japanese products in overseas markets.

 

Could you begin by giving us a brief history of the company? How have its origins shaped the company’s business operations and what have been your key milestones?

Next year will mark the 90th anniversary since Onward Holdings’ was founded by Junzo Kashiyama in1927. Now Onward Holdings Co., Ltd. has 104 affiliate companies in Japan and overseas, as Onward Kashiyama Co., Ltd. as central.

I myself represent the third generation of leaders of this company and became the president of Onward Holdings in 1997, following Mr Baba, our second-generation ruler who was at the head of the company for 23 years, during the period of rapid growth in Japan from the 1970s to 1990s.

One critical year in our company’s history was in 1945, which marked the end of World War Two. Back then, there was nothing in Japan. In such a situation, we started a suit company focusing on ready-made suits. Before then, made-to-order was mainstream, and there were not many ready-made suit companies or any distribution systems either. Department stores rapidly became the main retail point for selling suits, and became a huge market for us.

From suits, Onward expanded to sports and casual wear for men, then opened up to women’s wear including suits, dresses and casual wear, then lastly children’s wear as well. We are the first ready-made-to-wear company in Japan. We sold our products in department stores where we displayed, presented and introduced them, then sent our sales people to sell them. As department stores grew in Japan, so did Onward. We were growing together and business developed remarkably in the time of the “all-Japanese-are-middle-class” mentality.

 

With a shrinking domestic market, what strategies do you have for positioning yourself internationally?

Our founder Mr Kashiyama always had globalization as part of his vision and objective for the company. His creed was, “The world will be one.” Making Onward a global business was always his focus.

In the early 1970s, Onward expanded to Paris, New York, and Milan. We established local companies in those cities famous for fashion. In New York for example we opened a store on Fifth Avenue, right next to Tiffany, which is a prime location.

In 1986, we bought J. Press in the United States, which is an American apparel company established in 1902, and quickly it became one of the pillars of our global business, generating ¥20 billion in revenue from home and abroad.

In Paris, we worked with the couturier Jean-Paul Gaultier – he was only 24 years old back then – and we assigned him as chief designer of one of our boutiques in Paris. At the same time ‘Made in Italy’ products were also growing in popularity in France, so we licensed an Italian factory, to cover the manufacturing of products for the sales in Japan.

In 1995, we started a brand called ICB, International Concept Brand, which started at a national brand, and then started to sell globally, in seven countries and one district area. ICB is the independent development brand as the capital letter for the brand indicates and this year was a memorable year for our global marketing strategy.

At that time we even made a contract with Mr Michael Kors as a designer for the brand. Back then we were doing very good business in the United States with about ¥10 billion in sales, but then 9/11 happened and the business went down.

Currently, our international division is focusing on the Italian market. We have established Onward Luxury Group S.p.A. in 2013, a former prestigious company called Gibo Co. S.p.A., which we have bought out in 1990.

In 2014, we unified the luxury brand Jil Sander, and Joseph Ltd. We also have a factory in Venice, Italy, which is called Erika s.r.l. Freeland of London Ltd is our sports shoes company, and Frassinetti s.r.l. is for luxury bags.

We also have a factory network in France, where we implemented a satellite system, to work on outerwear made in Italy. We had a ballet shoes maker, called Freed of London, which must be the number one ballet shoe maker. Recently, we bought a company called Moreau, a brand company in France, and it joined Onward Group.

Our focus is moving from apparel to shoes, sneakers, and bags, and as part of our strategy we are trying to buy these types of companies globally. As LVMH group and Richemont group, we are aiming for fashion conglomeratization.

 

What communication strategies do you have in place to ensure that when people all around the world think of Onward, they have a uniform image of high fashion and quality?

In Japan there are famous production areas where products such as wool, cotton, chemical fibers and knitwear are produced. From one generation to other, the expert craftsmanship, the techniques of sewing and knitting and dyeing procedures have been inherited.

However, in Japan, under long deflation and appreciation of yen, the production shifted from our factories to outside Japan and domestic products’ rate downsized to just 3%.

This is a serious issue and we have to revitalize the middle-placed industrial area to not terminate Japanese craftsmanship. The middle-placed industrial area has supported Japanese high-end and high-sensed expenditure.

“Made in Japan” products enjoy a very strong label of quality (‘J quality’), and that’s very important; however, we can produce in China and Asean countries maintaining our quality. This is a strong business practice, and will be a good business strategy to maintain in the future.

As the TPP talks progress, we want to try to sell Japanese products overseas, not only Onward’s products, but all Japanese products. We are pushing the image and quality of Japanese products in overseas markets.

On the other hand ‘Made in Italy’ is also significant for the Onward Group. Establishing Onward Luxury Group S.p.A. as the central core to sell the Italian products, the best in high fashion, would be connected to the best communication strategy of our company.

 

As a relatively fashion conscious society, Japanese consumers like not only the newest trends, but also high quality construction and materials.

One of the things that I observe is that people are losing focus on buying high-quality products. The shopping activity by Chinese people has been a rare case in the global society; the reality is that the fashion market loses steam. People prefer lower prices, and Japan is no exception. As the result, department stores’ sales used to peak at ¥12 trillion in sales in the past, but is currently standing at ¥6 trillion, it downsized to half of its peak.

The fashion business is a tense risky industry. People need enough time to relax, or else the industry cannot grow. When 9/11 happened, our business became really slow, so we needed peace for our business to be successful. We really appreciate Obama visiting Japan for the summit as well as Hiroshima City; it was historically remarkable. Fashion can make people feel rich and energetic. As the fashion industry grows, the country becomes more relaxed.

 

What role will the US market play for Onward?

The United States is one of the largest markets in the world and will always continue to be the leader, but that does not mean it’s an easy market to enter. It’s very competitive, and sustaining business is very difficult. People in the United States are energetic. When we try to sell our large variety of products, it takes a lot of energy.

Although fashion is our main business domain, Onward is also looking at diversifying its activities. We are trying to fulfill people’s lives in other areas than fashion. In Guam for example, we have a hotel and two golf courses. In Paris, we have a soba restaurant. We actively try to sell ballet shoes and leotards, so we have ballet-focused business as well. We also cover pet food and clothing for pets. In the United States we have a store that sells both ballet goods and dog goods in the Manhattan area, in New York.

 

Do you see room for more M&A type deals as a path to expansion?

Absolutely, but as far as foreign markets are concerned, we as a Japanese company are always facing cultural differences, which is a challenge because it takes time to understand each other. A Japanese company introducing into a foreign market with a distinct Japanese style will always struggle.

 

As chairman, what are the things in Onward that you take particular pride in?

I am very proud of Onward’s contribution to society and environmental edge. For example, we collect used clothing and we recycle them to make blankets and other cotton work gloves to give to refugees all over the world and others who need help. Up to this day, we have collected 2.1 million clothes and given the recycled items to 380,000 people.

In addition, we also have launched a green campaign in Japan, in a rural city of Tokyo in 2014, where we have put in place a recycling system and sell used clothes at charity prices. We strive to pursue this type of activities to understand the recycling system and ecology for consumers.

We also have a training center, which we called Onward R&D center in 1991, where to try to improve our sewing machines and test cleaning materials. We collaborate with 16 companies in this R&D center and we take the role as the substantial role in the apparel industry.

 

What would be your message to readers?

We are working for a peaceful industry that brings our lives brightness and happiness. Our mission is to suggest “something new” through the fashion business and to realize people’s hopes and dreams. We would like to proceed as the company of which our activities will be connected somewhere, somehow to as many people and share our values.



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