Nippon Express
Nippon Express
Nippon Express
This content was paid for and produced by Nippon Express in partnership with the Commercial Department of the Financial Times.

Tumultuous times in the pursuit of timeless

Nippon Express Italia’s warehouse in Verona, Italy handling global luxury brand merchandise 

Some fashions never change, but the industry of fashion is always changing. And the past year of the pandemic has been one of tumultuous change for an industry which strives for the timeless.

Supply-chain disruptions, lockdowns, and collapsing international travel, which generate a surprising share of brand purchases, have savaged the global luxury market. Sales for 2020 are expected to shrink by some 22 per cent to EUR217bn, a return to 2014 levels, according to consultancy Bain and Altagamma.

High-end brands have been rushing to expand their ecommerce channels to sell directly and offer white-glove services online. With digital sales soaring this year, online is on track to account for some 30 per cent of global luxury item sales by 2025.

Geographic change continues apace too. The centre of gravity for luxury demand is further shifting to Asia – which purchased about 40% of all bling in 2019 and provided the earliest signs of recovery last year. Memorable images of Asian shoppers in boutiques “revenge-spending” after lockdown underlined how resilient demand is in the region.

Equally significant, the coronavirus crisis is further disrupting an already fragmented fashion calendar. Venerable fashion houses have broken away from the traditional bi-annual schedule, embracing “seasonless” collections and offering shows, including on virtual catwalks, throughout the year.

Seamless solutions

Rodolfo Turolla
General Manager at Nippon Express Fashion and Luxury Division Nippon Express

Satoshi Otsuji
Associate Director of the Air Fright Business Branch Nippon Express

For those behind the scenes responsible for delivering the magic of high fashion to its fans, the past year has raised new logistics challenges.

“The high fashion market is moving so incredibly fast. Seasons and collections have increased. The range and number of items have increased. And ecommerce is surging,” says Mr. Rodolfo Turolla, General Manager at Nippon Express Fashion and Luxury Division. “It’s hard to know what the next season will bring. You need to be able to respond quickly and flexibly, to be prepared to meet all customer needs’ 360 degrees.”

Among the logistics companies which have been adapting to deliver seamless solutions for the evolving industry is Nippon Express. The Japan-based company, Asia’s largest and among the largest global logistics service providers in the world, has placed high fashion, along with pharmaceutical, automotive, semiconductor, and electronics as one of its key growth sectors. So far, it has been showing remarkable acumen in the domain.

Eurasian synergies

Arnaldo Vivoli
President of Nippon Express Italia

In 2013, Nippon Express acquired Franco Vago, the leading forwarder for top Italian and European fashion houses. In 2018, Nippon Express then acquired Traconf, specialising in warehouse, transportation, and distribution for luxury fashion and lifestyle brands in Italy and the world. Last year, these two Italian group companies were merged with the local branch of Nippon Express to form Nippon Express Italia, making it the second largest overseas subsidiary in terms of sales for the global logistics service provider.

“Currently, in addition to the 35 Italian offices, Nippon Express has its own offices and warehouses in major EU cities with direct daily connections to ensure on-time, perfect-condition delivery at minimum cost,” says Arnaldo Vivoli, president of Nippon Express Italia. “Isn't this what is required from every logistics provider?”

Combining the Italian forwarders’ know-how and assets in Italy –, long the production and logistics hub of high fashion in Europe –, with Nippon Express’ global forwarding capabilities has put the company in an enviable spot.

“Our winning cards have always been flexibility, listening to the customer, and proposing customs-made solutions together with speed choices and decisions,” explains Mr. Vivoli. “We believe that these are essential characteristics to be able to face and overcome the challenges that for some years, and more and more nowadays, the increasingly globalised and integrated markets offer us.”

European fashion brands looking to expand their sales in Japan (the world’s fourth largest luxury brand market and the Asian region’s trendsetter), China (set to account for over 50 per cent of the global luxury market by 2025) , and newly emerging markets in Southeast Asia, will naturally consider Nippon Express, the region’s champion.

“Few logistics service providers besides us have the logistics capabilities to deliver high fashion items end-to-end from European production to the Asian markets,” explains Mr. Otsuji , Associate Director of the Air Freight Business Branch at Nippon Express. “Combining this with the reputation and personal connections which Franco Vago and Traconf have built up, and we have a unique competitive advantage.”

Reflecting this edge, the company’s sales in the sector in Japan have jumped nearly ten-fold over the past five years. Nippon Express hopes to achieve 30 per cent growth in sales in the global luxury brand logistics market in the coming five years.

It aims to do so by expanding delivery of both traditional as well as new high fashion lifestyle products such as furniture, day-to-day life designer’s goods, wine, and food. Nippon Express already possesses ample experience transporting a wide range of products, domestically and internationally, using its inter-modal network by air, sea, and land. Such capabilities allow it to coordinate global delivery of products and store window displays for synchronised openings worldwide.

With its competitive footing in the production and consumption hubs of high fashion in Italy and Asia, Nippon Express also plans to further expand its services to the US, another critical market.

Online and on time

Achieving growth in this highly competitive market will require even more efficiencies and capabilities. As with most industries, digital transformation is key.

“The greatest challenge is to be capable of constant innovation and a prompt capacity to respond to the needs of markets,” says Mr. Vivoli, “For this reason, use of IT tools will be indispensable to offer dedicated solutions.”

Last year, Nippon Express unveiled its own proprietary warehouse managing system involving RFID tags and smartphone terminals for its high-fashion operations. The system can speed up warehouse shipping operations and stocktaking in shops by as much as 30 per cent.

In the future, combining the tags with blockchain technology will help comprehensive tracking and prevent theft as well as counterfeiting of high fashion items. The tags will be vital in keeping up with booming ecommerce trade, which is particularly sensitive to delivery time constraints and security risks. Besides these IT initiatives, the company has also been investing in automating operations through robotics – such as automated hangar systems in warehousing. The measures are not only to improve efficiencies, but also to prepare for the potential shortage of workers in the future, explains Mr. Otsuji.

“The expansion of ecommerce in high fashion will mean there will be an increase in smaller lot orders,” says Shinichi Kakiyama, executive director for Nippon Express Italia. “To respond to such changes, warehouses will need to be even more efficient in space utilisation and per item processing capacity. One solution is to adopt the kind of automation techniques and logistics knowhow which Nippon Express has already developed in other industries with similar multiple small lot orders, such as electronics logistics, for its high fashion operations.”

Faced with the accelerating tempo of ecommerce and fashion cycles, another key to on-time delivery is having an adequate network of physical assets. “We are one of the few logistics and supply chain management companies which have large-scale distribution centres near airports which allow us to sort and then deliver directly to stores while bypassing warehouses, ” says Mr. Otsuji. Nippon Express is building on an already extensive one. The company has recently invested in distribution centres near airports for emerging luxury brand markets including in the United Arab Emirates, Singapore, Malaysia, and the Philippines.

High fashion logistics is a volatile and competitive market, where clients expect boutique-like handling of their products from warehouse to store and door. But it is also a magical one, where the newest sensibilities of beauty are delivered in physical form to a global audience. For this challenge, Nippon Express is clearly committed to finding the way for fashion’s future.