Lands' End to Target Japan's Huge Small Company Market
"The idea," Gary Steuck, CEO of Lands' End Japan said, "is to make logos and uniforms for companies. We're not after the big market of companies with 10,000 employees but after the large universe of small companies."
These, he continued, "are hotels, restaurants and shops who never thought they could afford small batches of specialized clothing." Steuck is even thinking of targeting large families who might need special clothes for special occasions.
Lands' End, Steuck pointed out, had opened a similar business in the US in the early nineties where companies and other organizations who make large purchases are targeted in a separate, specialized way.
"We started thinking about doing something similar in Japan in May of 1996 and did some testing to test our own internal procedures. We didn't want to launch this and get buried."
The first test mailings were dropped in May of last year and a second batch went out in September, but the real test came on January 23rd when Steuck dropped a significant number of books. "We'll do a larger test if this one is successful."
One reason Steuck would not reveal the size of the drop is because "we don't know what this universe is. We do know that this is a tremendous market. We know that people buy a lot of products with logos on them."
Launching such a btb service is not easy, he noted.
Relationships between catalogers and consumers are far simpler than all the transactions required in the btb area. "How many logos are you going to use, for example, and how are they going to be developed?"
Often, he added, a section manager looking to buy 100 items with specialized logos or other personalization will need approval from his boss.
Events in Japan that might require personalization abound. "Opening a new warehouse this year could merit development of a logo, for example."
Lands' End is publicizing the new service in its consumer catalogs and is putting together an advertising and publicity campaign that includes use of the Internet.
"We have a home page in Japanese that tells consumers just what our services and products are. Consumers can make requests for catalogs and for other information on the web. Reading our message in Kanji makes it much easier."
Japanese magazines devoted to catalog shopping are no longer the advertising medium they were a year ago when the dollar was lower. Besides, Steuck said, "we never really got very involved in that.
"The Japanese used to do that kind of promotion but with the dollar near 130 yen not much is going on in that area." Lands' End, he said, has not been hit much by the currency fluctuations. "It takes a while to get to us."
Unlike most other catalogers the company has built an infrastructure in Japan with trained local help and such key items as call centers and warehouses in place.
"We are getting a lot more efficient in what we do and can pass that ability on to our customers by not raising prices as much as we do increasing real value."
But he pointed to another "unknown" that could have substantial impact on US catalogers in Japan. Beginning in April Japanese housewives and others will be able to buy foreign financial instruments like US mutual funds.
"It will be interesting to see how many housewives will take money out of Japanese banks and invest it abroad." Housewives are major catalog buyers in Japan.
Consumer spending has already slowed in Japan following last April's tax hike, dropping 5 percent a month ever since then. "People are saving more and spending less."
Still, Steuck believes that his company's "tremendous service and value will allow us to see some growth this year."