Shoichi Aims to Become Leading Global Firm in Garment Industry

Today, Japan's demographics are changing dramatically: in 15 years, one in three Japanese will be over 60 years old. This poses a challenge for Japanese firms when it comes to hiring new staff. But it is also an opportunity for companies to tailor their offerings to this new demographic. To what extent do you think Japanese companies need to look overseas to ensure business success? And what business opportunities do you see for catering to this new demographic?

We are in a unique inventory business. Unlike other businesses that focus on sales, we are in the business of selling other companies' inventory, so we cannot produce our products in order to increase our sales the following year. It is all about taking market share. That is our only strategy. The market share we take comes from the business sector. That is our focus and we have increased our market share in the Japanese market. Looking to the future, our next step is to focus on the global market. We want to repeat the same process in Japan and take share in the global market. I don't expect to capture the entire global market share in my lifetime, but that is what the company is striving for.

The inventory business is not very popular. Not many new players are entering this market, and many existing players are exiting the market. For example, a company that has been in this business for 30 years recently decided not to pass the business on to their son because he chose a different career. However, we are different in terms of planning for business succession. We intend to pass this business on to the next generation. We are trying to take as much market share as possible in the domestic market before expanding into the global market. I think we are the only company that has this vision. To run an inventory business, you need a warehouse. However, many other players in this industry do not see the future in this business and therefore do not want to invest in these assets. We are completely different from our competitors. 

High-brand manufacturers do not want to waste inventory. Therefore, they are looking for ways to reuse their products or rebrand them and sell them again. To handle large amounts of inventory, a certain amount of warehousing and human resources are needed. However, other players in the sector have not invested in such assets. We are the only company with such infrastructure and human resources. That is why we have been able to gain so much market share in Japan.

You mentioned that the next step for your company will be to go global. Are there any particular countries or markets that you have identified that you would like to target next for expansion?

We are targeting two regions: Asia and Europe. 

We saw on your website that you were recently in Milan showcasing your recycled wool garments. The amount of clothing waste in Japan stands at over 1 million tons per year. As a response, you have launched your Martha brand, which uses the traditional techniques of Hanmou to use recycled fabric. What are some of the challenges that you faced in launching this new brand using recycled fabric, and do you have any plans to use other fabrics or technologies in the future?

When recycling clothing, it is very time-consuming to sort it by material and remove small buttons. Therefore, we employ people with disabilities. They are engaged in sorting materials and removing buttons. The government subsidizes the employment of these handicapped people. This not only creates jobs for the handicapped, but also reduces the cost of the recycling process. As a result, we are more cost competitive than other companies in this process. By working with people with disabilities, we have grown our business; we have employed 500 people with disabilities, and we are now able to provide them with the opportunity to work in the recycling process. It is a very labor-intensive process. 

Usually handicapped people cannot do two things. But when we ask them to do only one thing, they can do it very well. From our company's point of view, we want them to do more than one job. But we have aligned our process with these handicappers and divided the steps so that they can do more. I went onsite and went through the same process with them. And I found out that they couldn't do the whole process. So we decided to separate the steps of the process. By separating the process, those people became very easy to work with and we were able to increase our efficiency.

[GALLERY]

You also use AI to scan labels and extract metadata as a way to reduce costs. What role do you see AI technology playing in your business in the future?

AI will play a role in our business in the future. In reality, however, it is more effective to look at materials and sort them manually. 

When it comes to companies looking to use your services, many luxury brands are reluctant to take action to get rid of B-grade or unsold items. This is something that is being addressed through your services. Can you tell us how you work with these companies to turn B-grade products into revenue without harming the brand?

Many of the requests we receive from luxury brands are for recycling. Sorting and scrapping clothes is very costly. Many recycling companies do not have the type of processes needed. When luxury brands try to find a recycling company, they usually find one that will take all of their clothing at a very high cost. Recycling companies may also require brands to sort their garments by material before giving them to recycling companies. Either way, it is very costly for the clothing manufacturer. However, as I mentioned earlier, we have an advantage in terms of labor costs and can handle the recycling end of the process at a very low cost. That is our advantage in this field. When we negotiate with luxury brands, we are successful about 90% of the time. We also have the technology to recycle fibers such as wool and felt. These processes are highly regarded in the industry. We recycle wool and produce original products. The company is also highly regarded for its employment of people with disabilities.

We are interested in how this business model can be scaled up not only in Asia, but also in Europe, where it is a step further. If a European fashion house or retailer contacts your company, how can you meet their demand for your services given that they are in Europe? Or are you looking to partner with a European recycler?

Our strength is that we work with people with disabilities in Japan in the scrapping and sorting process. We have already found a way to deliver materials and clothes from overseas to Japan using eco-friendly transportation that does not emit CO2. This does not only apply to luxury brands. It also applies to fast fashion manufacturers who provide us with large lots. It is common for them to produce in Bangladesh. Recently, we received an offer from such a manufacturer to select and scrap their remaining textiles in Japan. 

Your company serves customers from an OEM perspective as well, and can provide consistent services from sample creation to mass production. We can also help you overcome minimum order quantities, which is especially important for smaller companies. Are you also looking to expand your network of suppliers and producers throughout Asia to help more companies with their OEM business?

Our business model is to buy inventory from manufacturers. That way we can better understand the challenges that manufacturers face. That is one of the main reasons we started our OEM business. Also, because we were buying inventory from manufacturers and selling it, there were no trendy items in our inventory. We want to make and sell trendy clothes. That is one of the reasons we created the OEM business model. Over the past 10 years, we have reduced the amount of waste from the products we produce to zero. 

If we were to return in 2030, to interview you again for the 25th anniversary of Shoichi, what goal or ambition would you like to have achieved by that date?

My goal is for Shoichi to become the world's number one new garment recycling company in the apparel industry. I want to be number one in terms of the number of items processed. Our industry is minor, so we don't have a benchmark; I want to reach 100 million garments by 2030. I believe we can do it.