The interview highlights the uniqueness and strengths of the Japanese fashion industry, emphasizing the meticulous and passionate "otaku" culture. The President notes the distinctiveness of brands like Uniqlo while differentiating his own brand, #FR2, which focuses on creating unique souvenir experiences for tourists. #FR2 avoids oversupply and discounts by offering exclusive regional products only available in physical stores, enhancing their value through scarcity.
Japan has historically had a deep clothing culture that has gone through different eras of improvement over the years, however, in recent years we have seen the rise of regional competitors with cheap fast fashion that have overrun the market, but in this specific field, we can see Japanese companies such as Uniqlo that have spun themselves as quite a unique brand internationally. How would you define the uniqueness of the Japanese clothing industry and what would be the main strengths from your point of view?
The strength or uniqueness of the Japanese industry can be characterized by the spirit of Japanese otakus (individuals who have an intense and passionate interest in specific subcultures, such as anime, manga, video games, or other niche hobbies), or what I consider an investigative mindset on a specific item. Looking back at the fashion of the 20th century the growing global trends of the time were influenced by Japanese otaku culture, for instance, in 1995 AirMax 95 was released, and the Japanese people appreciated the small and minor details. Thus, the global trend followed along with trends such as vintage denim. This vintage denim in particular was considered old rags, but Japanese otakus have looked and categorized different fabrics and different types of stitching. They made a differentiation by era and therefore converted something that was considered worthless into value. This is characteristic of Japanese people.
The traditional European way is to wear luxury items from top to bottom whereas Japan has added a new element to it. By combining luxurious heirlooms with worn-out jeans they have created entirely new looks.
You mentioned Uniqlo, but they are in a different fashion zone to us, more of a commodity-based presence. As a pioneering Japanese company that opened to a global presence, we have a deep respect for Uniqlo, although we aren’t really in the same field as them.
The revenue of the global apparel industry reached USD 1.7 trillion in 2023 and is expected to reach over USD 2 trillion by 2027, with countries like the US and China leading the way in terms of consumption. The demand for sustainable and environmentally friendly solutions is predicted to drive growth in both the secondhand industry as well as the luxury market. How do you foresee the next 12 months in your industry playing out and what do you believe will be the key drivers for future growth?
To be very honest, we have a unique business model and our style is to create innovative souvenir experiences, therefore, targeting inbound tourists. Together with the good memories they have we want them to purchase products to trigger said memories at home. I think this puts us in a very different position from other apparel companies, thus, it is very hard for me to comment on the trends of the global apparel industry.
You mentioned creating innovative souvenir shops that are targeting inbound tourists. Could you explain to us what is unique about your souvenir shops?
#FR2 is our flagship brand with a souvenir shop concept, and while the brand was established 10 years ago now we’ve never once discounted our products. Where many companies have attempted to enter e-commerce and online sales, with #FR2 we have stayed strictly physical since our business model is to stay as a souvenir shop in tourist spots. Any spot of interest has a shop that will provide unique products of the area, meaning that tourists have a one-time opportunity to purchase products. Additionally, since the products are so unique, some customers will take the products back to their home country to sell them using their homeland infrastructure.
Customers cannot buy our products if they do not visit our offline stores, which leads to the scarcity of our products, and the resellers themselves increase the prices of our products, and this phenomenon makes our products more valuable. As a result of this secondary distribution of the products, the brand value increases. Our marketing and sales are done by individuals who purchase our products.
You base your souvenir shops on the regionality of the area in which they are located. Can you elaborate on the process of selecting and designing exclusive merchandise for a specific region? What factors are considered in creating products that resonate with local culture and history?
#FR2’s basic color is yellow, but we change this color based on the area. Okinawa for example is close to the ocean and therefore the color used there is blue. Additionally, regional stores all have their logos. Products are almost like collector's items, since exclusive products vary between regional stores, they are only purchasable at their respective locations, so Japanese people can travel across the country and collect our products.
Ceno Company has stores in Hong Kong, Thailand, and soon London. How are you able to apply the same type of philosophy to attract people overseas?
We essentially are applying the same strategy since we want to locate ourselves in each tourist spot across the globe. The idea is to create regional-only products and turn those into collector items that can only be acquired at a designated store. We had a plan to open a store in Singapore in front of the Merlion, but that was halted due to the COVID-19 pandemic. Post-COVID however, we are trying to enlarge our presence overseas so that we can create World Heritage Sites ourselves. This approach will encourage people to come visit us and purchase our regional goods. Following this, marketing will be carried out automatically for us by tourists who have purchased our products and brought them back to their home countries.
Sustainability has now become a big talking point in the fashion industry, but I would say that issues occur more in mass production, particularly with companies that allow large inventories to be wasted. Our policy is to not oversupply products and this is reflected in our policy to never discount products. Increasing our product portfolio with regional variations allows us to avoid this oversupply issue.
2024 will see an approximately 40% operating profit, possibly the largest globally in our sector, so it means that our business is highly lucrative. We want to continue this by being present across the globe but finding the right location is very important.
Your brand is quite edgy, with many giving a double look when they see your products. What inspired you to incorporate some of the rabbit motifs in #FR2 designs? Can you elaborate more on some of the unapologetic messaging you have labeled your products with?
In 2010 our company decided to implement our global strategy and until then we had a brand called Vanquish that targeted a very niche segment of Shibuya boys. At that time I was living abroad, and 2011 saw the launch of Instagram. I soon realized how effective pictures are at sending out messages since they don’t require a language to understand. I was trying to figure out the best way to stop people from swiping away and this is where I came up with the concept of aggressive messages with edgy rabbits. I was born in the year of the rabbit and therefore rabbits represent me. The #FR2 stands for Fxxking Rabbits with the hashtag used commonly on Instagram.
Although your company has a strong presence on social media, there are many Japanese who still prefer to acquire information through more traditional means such as TV. How are you adapting to the ever-evolving needs of consumers? How are you able to blend classic elements with innovation across different generations?
We don’t have any specific marketing strategy or allocated marketing budget. It is thanks to non-active marketing that we can have such high profitability. The company has always tried to align itself with the excitement of people. For example, in 2004 we established our Vanquish brand many people were still using Galapagos phones ( Classic flip phones ) and the thought was that online sales were very difficult. I saw teenagers purchasing items through their small phone screens so I thought that I should give online sales a try. Fortunately, it worked out perfectly. Now, since online shopping is so common we have reversed and focused only on physical stores, and I think this is why #FR2 is doing so well.
Speaking of #FR2, it was established in 2014 around the time when Instagram gained popularity. There was a lot of excitement at that time around Instagram-promoted products, so we were able to leverage this trend and grow our brand. Ten years have now passed, however, and there isn’t any excitement about Instagram it has become the standard. This is why we have shifted to a souvenir shop business model where there is a lot of excitement.
When interviewing other companies in your field we’ve often heard the need to collaborate or partner to co-develop new products or penetrate new markets. Could you tell us the role that partnerships play in your business model and are you currently looking for any new partnerships in either domestic or overseas markets?
We are very passive when it comes to promoting ourselves. I believe that by having really exciting products, the products will sell themselves by word of mouth. In terms of collaboration, we are not very active either, and when I got the contact from Frank Mueller I initially thought it was fake. Fortunately, it wasn’t and we ended up working together. For exhibitions, we no longer show up in showrooms of Spring/Summer or Fall/Winter collections since we are not looking for any type of conventional promotion. Everything we do is out of the box, which keeps us updated in terms of customers' wants and trends.
You have gained a lot of popularity across various regions in the world including Bangkok, Hong Kong, and soon London. You’ve mentioned wanting to open new stores in tourist locations, where is next?
Constant surprise is an emotion we are trying to achieve with our customers. Although it is not overseas, I’m thinking about opening a store at the foot of Mount Fuji. The idea is to have foreigners come and be amazed by Mount Fuji, then come to our store and see the limited edition Mount Fuji logo on our products and realize that these items cannot be purchased online. I think through this model we can provide unique memories for tourists.
Chinatown in Yokohama is now getting a lot of attention, so we are thinking about setting up a “fake,” #FR2 store there with counterfeit rabbit products, that is yet official. I think that would surprise our customers.
Another idea we had was to put a small store underneath the Eiffel Tower where there are many stalls, but that idea was postponed due to COVID-19.
Imagine that we came back to have this interview again in two years. What goals or dreams would you like to achieve by the time we come back for that new interview?
I don’t have a specific goal, but one thing that Japanese people have always been taught is that fashion is usually led by Westerners. We want to change that and become a fashion company from Asia that surprises people all around the globe. We want to be recognized as one of the most unique brands not only in Japan but around the world.
For more details, explore their website at https://ceno.jp/
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