Investing in Japan
Success Stories Søstrene Grene
Søstrene Grene is a retailer founded in Aarhus, Denmark dealing in Scandinavian-style home accessories, kitchenware, stationery and interior furnishings with over 140 outlets in Europe. To launch its store in Japan, Søstrene Grene established Hilmer Japan Co., Ltd. (“Hilmer Japan”) in Tokyo in May 2016, which opened Søstrene Grene’s first flagship store in Asia in October 2016 in Tokyo’s Omotesando district. JETRO interviewed the CEO of Hilmer Japan, Satoshi Kimura, who is eager to promote a better lifestyle to Japanese people through Scandinavian-design home accessories. He talks about Søstrene Grene’s business and its outlook in Japan.
Located in northern Europe, Denmark is known for the high levels of happiness among its people. The often-cited reasons for this happiness—which is the highest in the world—are the Danish culture valuing a lifestyle balancing work and private life, and its well-established social security system proportional to the high tax rates. However, there also seems to be another reason. In Scandinavia, one often hears the word hygge, a term difficult to translate into other languages. Hygge is a Danish word meaning “a warm and comfortable atmosphere produced by human contact.” People in Scandinavian countries—known for their long, cold, and dark days—place high value on the time they spend relaxing in a casual way in a comfortable space with their family and friends to shake off depressive feelings. Hygge is an expression representing the warm feelings that grow in their minds while they are sharing good times with others and a moment of satisfaction filled with humble happiness.
The story behind the creation of the Søstrene Grene brand
It was against this inherently Scandinavian cultural background that Scandinavian home accessory retailer Søstrene Grene was founded with its headquarters in Aarhus, Denmark. Søstrene Grene means the Grene sisters. Their brand is based on a story in which the two Grene sisters, Anna and Clara—who are good at finding beauty and delight in anything, even insignificant stuff, in everyday life—began to collect items that enriched their daily lives. This led to the foundation of their business, according to the brand story. Søstrene Grenes Holding ApS (“Søstrene Grenes Holding”), the headquarters of the Søstrene Grene brand, opened its first store in 1973 and started franchising in 1989 in order to more widely market its business. It has since become a popular brand with over 100 stores, including both those directly managed and operated by franchisees, mainly in Europe. To express its worldview shaped by the comfort of hygge, the company has chosen a unified color-scheme of dark hues composed of black, brown, and gray, which are reminiscent of the interior of a cave. It also plays classical music in the background and uses small light fittings with soft light, which is a method into which the company piled effort upon effort to make the displayed products highlighting. Søstrene Grene carries a wide range of products from interior decorations, stationery, gift wrappings, crafts and kitchenware to toys. Sophisticated Scandinavian-design products are available at affordable prices. The company also makes a point of changing the product lineup every week and every season to ensure that the brand continues to stimulate the interest of customers visiting its stores.
Bringing the Danish lifestyle to Japan
Scandinavian-style interior design has been drawing increasing attention in Japan: Japanese people appear to recognize the Scandinavian lifestyle as a happy lifestyle. Reflecting this situation, Omotesando (in Tokyo), where Hilmer Japan has a store, is lined with a great number of competitors managing retailers of Scandinavian-style home accessories.
Hilmer Japan was set up in May 2016 as a joint venture by three companies: Søstrene Grenes Holding; Watts Co., Ltd., a company managing 100-yen stores; and Motobayashi Co., Ltd., a company specializing in the planning and import of home accessories. In October 2016, Hilmer Japan launched the first flagship store of Søstrene Grene in Omotesando. With the planning and manufacturing of the products all managed by the headquarters in Denmark, Hilmer Japan focuses on the sale of the products imported from Denmark. Mr. Kimura explains that “90% of those visiting our store are women, with most of them in their late 20s and 30s.”
Asked about the reason why Søstrene Grene has chosen the Japanese market, which is famous for its fierce competition, Mr. Kimura answers: “The headquarters in Denmark has had a positive impression of Japan as the most mature market by far in Asia. In addition to Japan’s huge consumer market and high purchasing power, the headquarters has great expectations Japanese consumers’ sensitivity to differences in quality and their strong empathy with Scandinavian culture. For these reasons, Søstrene Grenes Holding has decided to enter the Japanese market and to establish its base in Asia there.” The headquarters is thoroughly committed at all stores to petit price, or the sales policy of dealing in low-price products, which enables customers to casual shop for trendy and well-designed products. Due to this policy, Søstrene Grenes Holding does not intend to raise its prices. It also regularly reviews products, and replaces slow-moving products with others to effectively express the calm worldview of hygge, as an important aspect of Danish culture, as well as to increase the frequency of customer turnout and their desire to buy. In this way, Søstrene Grenes Holding seeks to differentiate its brand from competitors’ brands.
Challenges in Japanese business: Communication strategy
Although steadily developing its business, Mr. Kimura confesses that Hilmer Japan is facing a large number of challenges derived from acute cultural differences between the Scandinavian region and Japan. Mr. Kimura explains: “Since we are managing a lifestyle store, we need to provide service adapted to the Japanese lifestyle with detailed care. Meanwhile, the decision-making process related to design and marketing is all controlled by the headquarters to ensure that the brand of Søstrene Grene is well managed through franchising. Our challenge is to communicate Søstrene Grene’s worldview and values to Japanese consumers without changing the brand concept which is pivotal to Søstrene Grenes Holding.” For example, the store has a shelf dedicated to wrapping products. Some of the customers coming to the shelf say that the wrapping products are lovely, but most of them do not actually purchase any of them. This is presumably because the Japanese customarily do not do their own wrapping. Søstrene Grene’s mission in Japan is to suggest an enjoyable way of using the products customers have purchased as well as to promote the lifestyle surrounded by such products. To achieve this mission, it is necessary for the brand to make full use of social media such as Facebook and Instagram, which are now indispensable as tools to disseminate information.
Future business outlook and JETRO’s support
Hilmer Japan is now studying the possibility of expanding its business to areas other than Tokyo to further promote the brand of Søstrene Grene in Japan. Concerning its business outlook in the country, Mr. Kimura says the following: “Since our unit sales price is low, the unit purchase price per customer is also low. In addition, the floor area of a store is premised to be 100 tsubo (about 330 square meters). Given these conditions, I think we need to go to urban districts with moderately large populations so as to be profitable as a company. Starting from the metropolitan area of Tokyo, we would like to consider opening stores in Kyoto, Kobe, Nagoya, Hakata and Sapporo, cities capable of drawing a large number of potential customers.”
At the time of incorporation in Tokyo, Hilmer Japan used the temporary office provided by JETRO’s Invest Japan Business Support Center (IBSC), which, in principle, is available for free for 50 business days during a company’s setup period. Mr. Kimura says, “The rental office helped us a lot because it was well equipped with business functions such as a Wi-Fi network and a photocopier. Since the office was centrally located in Akasaka, Tokyo, it was convenient for us to have meetings with people outside our company. I am deeply thankful for this system of JETRO.” In addition to Tokyo, JETRO also has temporary offices in Yokohama, Nagoya, Osaka, Kobe and Fukuoka. Each office is staffed by experts who can provide assistance with the administrative proceedings, including company registration, obtaining visas and taxation proceedings related to incorporation in Japan. The most attractive feature of this system is the one-stop support service to ensure that a company can establish its Japanese base. Mr. Kimura says, “It is very helpful that a company can use the temporary office again when setting up another base in another region, even if the company has already used it before. I would like to use this service again.”
(Interviewed in March 2017)
|1973||Søstrene Grene established in Denmark|
|May 2016||Hilmer Japan Co., Ltd. established in Tokyo|
|October 2016||Søstrene Grene’s first flagship store opened in Omotesando, Tokyo|
Hilmer Japan Co., Ltd.
|Established in||May 2016|
|Business overview||Management of retail stores dealing in Scandinavian-style home accessories under the Danish brand Søstrene Grene|
|Capital||20 million yen|
|Parent company||Sostrene Grenes Import A/S|
Watss Co., Ltd.: 55%
Sostrene Grenes Holding ApS: 40%
Motobayashi Co., Ltd.: 5%
|Address||4-25-13, Jingumae, Shibuya-ku, Tokyo 540-0001|
https://hilmer-japan.co.jp/ (Official website for Hilmer Japan Co., Ltd.)
http://sostrenegrene.com/ja/ (Official website for Søstrene Grene)
- Provision of a temporary office
- PR support (providing press release venue and solicitation for media )
- Provision of information related to the import of home accessories
- Reference to the Embassy of Denmark to Japan