One makes sure we look good; the other that our homes do. Swedish fashion and home furnishing retail giants H&M and IKEA have no plans to slow down their respective expansion in the Japanese market.
With IKEA having arrived in 2006 and H&M in 2008, the two companies are newcomers in a market that is (in)famous for valuing continuity and long-term commitment. One thing that companies—Swedish or not—have learned over the years is one cannot do a half-hearted launch in Japan.
“There are 128 million people living in Japan,” says Christine Edman, H&M Country Manager for Japan. “This is a market that is very interested in fashion. We hope and believe we still have potential to reach a lot more customers in Japan.”
A look inside H&M in Shinjuku
H&M currently has nine stores in Japan, so there is certainly room for expansion. At the same time, the fashion retail market is cutthroat in the true sense of the word—meaning that H&M cannot afford to be complacent.
In terms of capital investment, home furnishing giant IKEA continues to be one the biggest foreign companies in Japan. With five stores already open, the company has now set its sight on the southernmost of the Japanese main islands, Kyushu.
“We have bought land in Shingu, north of Fukuoka, and will build a store there,” says Lars Petersson, President and CEO of IKEA Japan K.K. “The opening date is not decided, but will be announced early next year.” He adds that plans for expansion into Nagoya are going at full speed, and that the company is looking to set up another in the Tokyo area, most likely in the western part of the city.
Like H&M, IKEA is facing a genuinely tough market, although in IKEA’s case most competitors are domestic. What makes the home furnishing business so special in Japan is that people have just recently started spending money on their homes.
One of a growing number of IKEA stores in Japan
“The Germans, for example, spend three times as much as the Japanese on furniture and home decoration,” Mr. Petersson says. “We therefore see huge possibilities for expansion in the future.”
While this may sound promising in terms of business opportunities, there is the not-so-small task of convincing the Japanese people that they should in fact spend money on their homes.
Appearance is very important in Japan, maybe even more so than in other countries. Japanese customers are used to a very high level of service, while both IKEA and H&M have more of a mass appeal.
“We believe that customers should be able to create their own style at H&M,” Ms. Edman says. “We have a variety of concepts from basic to high-fashion to suits every occasion. It is important for the stores to be inviting and always surprise customers with new and exciting campaigns, such as designer collaborations.”
IKEA has undertaken the mammoth task of investigating what exactly the Japanese home looks like. Numerous interviews and home visits have given them enough information to re-create a typical Japanese home.
The results of that work can be seen in the Tsuruhama store in Osaka, where a full-scale, 75-square-meter version of a 3LDK apartment has been created. The response has been massive so far, with 70 percent of all visitors to the store walking through the model apartment.
“The needs in the Japanese home do not differ much from other countries, but the solutions are often quite different,” Mr. Petersson says. “By learning more about our customers and how they live, we hope to be able to offer tailor-made solutions to meet their needs.”