Yukiko Chiba whisks past the Shiseido cosmetics counter at a department store in Tokyo's Ginza district on her way to the Chanel display, where she stops to pick out a gift for a friend.
"I prefer buying foreign brands because they're cool," said the 21-year-old office worker, as she studies ?3,300 (US$25) tubes of lipstick. "I wouldn't buy Shiseido for a gift because it has such a plain image."
Opinions like that are undermining Japan's largest cosmetics maker, whose domestic sales are shrinking more than its overseas business is growing. Largely because of a failure to excite shoppers at home, sales fell for a fourth straight year in the company's fiscal year ended March 31, according to Shiseido's own estimates.
Decades of selling detergent, razors and other household products under the Shiseido name have given the company a humdrum image in Japan that advertising has failed to dress up. Shiseido's 13 directors -- all men, only two of them born since World War II -- have been unable to reverse the slide.
"Brand value is everything for companies like this, and Shiseido should have divided its premium and household products in the early stages," said Takahiro Nakajima, a fund manager at Norinchukin Zenkyoren Asset Management Co.
In spite of the image issue, the company's shares have risen 8.7 percent in the past year, beating the 18 percent decline by Japan's Topix Index, largely on optimism that a new inventory system and a narrowed brand lineup will boost profit.
Tokyo-based Shiseido also has tried to shore up its domestic image. The company tried to separate toiletries from cosmetics by creating its FT Shiseido brand for hand soap, scissors and other household goods in October 2000. Analysts and investors said that has achieved little because both lines bear Shiseido's name.
Shiseido's experience abroad, where it markets itself as a premium brand, is a different story. The company's overseas sales, which account for more than one-fifth of total revenue, rose 22 percent in the 12 months ended March 31, Shiseido estimated, following a 21 percent rise a year earlier.
The company doesn't sell its mainstream toiletries in the US and Europe. Instead, it focuses its foreign marketing on such products as its Le Feu d'Issey perfume.
"Once you set up a prestigious brand, customers will follow you," said Isao Isejima, a Shiseido's director who oversees the company's foreign operations.
It also helps fetch high prices. In Japan, Shiseido products range from oil-removing tissue paper priced at ?250, equivalent to about US$1.95, to facial cream that retails for ?50,000, or about US$385. Abroad, the range starts at US$20 for a lip-liner pencil and moves up to facial cream -- the same facial cream -- at US$450.
Since 1999, Shiseido has introduced its upscale overseas product line in 79 of the 300 Japanese department stores that carry its cosmetics. It plans to increase that number to 124 in the next year. "Our dream is to bring the domestic image up to the overseas level," Isejima said.
That may take some time. "I was so astonished by Shiseido's gorgeous image when I saw its display at Saks Fifth Avenue in New York," said Miyoko Ikemura, a 45-year-old Tokyo woman, while shopping earlier this month in Ginza. "The image there was super high-grade and sophisticated. It's a lot different in Japan."
RSS