Mon, Oct 08, 2001 page19

• Spectacles putsparkle in eyesof the Japanese

  Intermestic Inc has made a splash on the eyewear scene with its Zoff stores that offer cool specs at cooler prices

  • REUTERS
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  Things are looking up for Japan's short-sighted: not only have spectacles become a hot fashion item but sporting them no longer costs a fortune, thanks to an entrepreneur breaking all the rules in a conservative industry.

  "There's always been this belief in Japan that prescription glasses were expensive to make and prices couldn't be lowered," says Teruhiro Ueno, president of discount eyewear retailer Intermestic Inc. "It's not true, and we're proving it."

  Intermestic has opened three stores called Zoff in Tokyo since starting business earlier this year. It is planning to open another soon in Japan's southern city of Fukuoka.

  Its spectacles come in a wide range of shapes and colors, but there are only three price tags -- ?5,000 (US$41.51), ?7,000 or ?9,000, including the cost of prescription lenses.

  This clear-cut system has been copied by some other eyewear retailers and has proved a hit with Tokyo's consumers, who are used to spending up to five times more.

  Japan's upside

  Elsewhere, frames and lenses are mostly priced separately, with the cost of the latter depending on the prescription and thickness. Thin lenses are dearer, but Ueno says that is not justified as there is little difference in manufacturing cost.

  Zoff's success, highlighted by its much-televised long lines, represents the upside of Japan's otherwise troubling two-year deflation -- businesses innovation and benefits to consumers.

  Ueno says he was inspired by Uniqlo, a chain of clothes stores operated by Fast Retailing, known for its colorful cotton t-shirts and fleece jackets made in China. One in five Japanese has a Uniqlo item in the wardrobe.

  "Uniqlo makes all of its products in China, and has broken down conventional theory that cheap equals bad quality," Ueno said.

  "We thought there was no reason we couldn't do the same thing with eyeglasses, and so we've ended up manufacturing lenses in China and doing frames in Korea."

  Uniqlo's success has angered local manufacturers who say their businesses are being crippled by cheap Chinese imports.

  But Ueno says most of the major players already manufacture their lenses in other parts of Asia so his shops cannot be singled out as a threat to domestic eyewear makers.

  In fact, he says, Zoff is doing the industry a service by turning spectacles into more of a fashion accessory.

  "Spectacles are so expensive, most people only buy one pair of glasses every few years. But people should buy new glasses every year, or even one every few months like a new shirt," he said. "We're changing the perception of eyewear."

  The prescription eyewear business is currently a ?600 billion (US$4.98 billion) industry and Ueno says that with Zoff's help it could turn into a ?1 trillion market in about three years.

  Analysts say Zoff's impact is hard to measure, but most predict a greater number of eyewear retailers will be forced to offer bigger discounts.

  "It's not likely that the entire industry will head toward the discount market and I believe large-scale stores like Paris Miki will survive, but it will likely have to participate in the discount war in time," said Yoshimi Yamamoto, an analyst at West LB Securities.

  In fact, Paris Miki, a profitable and well-known eyewear retailer listed on the main board of the Tokyo Stock Exchange, has already been offering lower-priced frames.

  Its share price has slumped about 20 percent over the past year, which is faring worse than the overall market because of worries over increasing price competition and weak consumption.

  Ueno, who boasts a solid background in the fashion industry and is confident that all three existing stores will show a profit by the end of the year, is no stranger to failure.

  He says his first eyewear venture several years ago in a rural city in northern Japan flopped because he couldn't find customers who appreciated his vision of eyewear as fashion.

  Smart set

  That is why he chose trendier shopping zones for his new stores. The latest one stands on Omotesando, Tokyo's answer to the Boulevard Saint Germain in Paris and a meeting place for the city's smart set.

  The company estimates about 70 percent of its customers are women, 80 percent of them in their 20s and early 30s.

  "We do mens' glasses too, but they are always lagging behind the trend. You have to target young women if you want to succeed in retail," he said.

  Ueno's move looks well-timed, with eyewear lately taking a more prominent role in Japanese fashion.

  Shops with names like Globespecs and Four Nines have sprung up around Tokyo's main shopping areas, offering designs so trendy some people feign bad eyesight to have an excuse to wear them.

  As in other retail sectors, designer frames from the likes of Chanel, Giorgio Armani and Prada are insulated from Japan's deflationary trend.

  Milanese style guru Armani recently opened his latest shop just a few blocks away from Zoff's Omotesando store, with a section devoted to eyewear.

  Analysts predict it will be the middle-range retailers and manufacturers without the brand-name status, benefit of scale or the ability to change who will suffer the most.
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