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FOCUS: Supermarkets trying to develop own brand goods.

TOKYO, April 3 Kyodo

Japanese supermarkets are beefing up their commodity strategies, including developing their own brand goods, to cope with the rise of Uniqlo, GAP and other specialized clothing stores.

''We would like to create an image that ours are reasonably priced and have a sense of beauty,'' said Yukio Fujimaki, a director and head of the clothes business headquarters of Ito-Yokado Co., a supermarket chain operator.

To reform the sales-sluggish clothes division, the company invited Fujimaki, famous in the apparel industry as an expert on sales floors, from department store Isetan Co. last April.

He has introduced a business model enabling costs to be reduced by the thorough carrying out of the entire process, from planning to manufacturing and selling of goods, as being done by Uniqlo Co.

It began to sell Ito-Yokado's brand ''pbi'' goods in February.

By modifying the company's business policy of selling low-priced goods, Fujimaki has given priority to a balance in prices and quality of commodities while pursuing fashion.

Aeon Co., another supermarket chain operator, with guidance from a well-known designer, is also trying to strengthen its ''TOPVALU'' brand of goods. Uny Co., a medium-size supermarket chain operator, has tied up with trading house Itohchu Corp. to develop commodities.

Ito-Yokado's clothing sales in the business year ended in February 2005 totaled 314.6 billion yen, down about 40 percent from a decade years before.

Despite that, the company is trying to strengthen its clothing division because its sales are still the second-largest after the food division, accounting for about a quarter of the company's total sales.

Therefore, the company regards the reform in the clothing division as the ''key to recovery,'' said Noritoshi Murata, president of Seven & I Holdings Co., a holding company of Ito-Yokado.

But Fast Retailing Co., which runs Uniqlo stores, whose clothing business supermarkets regard as a model, is suffering from slower growth. Its fleece became a big hit in 2000, and its sales surpassed 400 billion yen in the business year ended in February 2001.

But in and after 2002, the company's business performance has been slow because its commodities became widespread among consumers. To maintain growth, the company has started new businesses of underclothes, children's clothing and uniforms, and at the same time is involved in mergers and acquisitions.

Fast Retailing has also tied up with Daiei Inc., a supermarket chain operator in financial trouble, though Daiei cannot afford to develop its own brand goods, and plans to supply to Daiei new brand goods whose prices will be about 30 percent cheaper than those sold at Uniqlo stores this fall to increase profits.
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Publication:Japan Weekly Monitor
Date:Apr 3, 2006
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