Introduction
Have you ever experienced a situation where a famous, high-end brand had an excessively large price drop during a sale? The biggest reason for this decrease in value is...A sales strategy focused on low prices.That's right. As an example of how such a situation was overcome, the major sports apparel company "DescenteThere is a story of its reconstruction.
In March 2019, Itochu Corporation strengthened its management control and resolutely abolished the discounting culture that had been damaging its brand value. As a result, profitability improved. This case study will explain in detail what we can learn from it in business and in everyday life.
The truth about "discount management" that destroyed brand value
Descente’s long-term challenges areA sales system specializing in "discount sales"For over 10 years in the Japanese market, discounts of up to 70% were common during sales, and in Tokyo's Ueno Ameyoko shopping street, products were being sold for about 10% of the regular price.
This system had a cyclical structure where unsold inventory was dealt with through discounted sales, based on a plan to increase sales by 51 TP and 3 T in the previous year, with remaining stock being sold at a discount. As a result, the brand value was damaged, and it lost its sense of "luxury."
In March 2019, Itochu Corporation, a shareholder of the company, strengthened its control over management. At the time, while its operations in South Korea and China were performing well, its performance in Japan was sluggish, leading to ongoing internal conflicts. In this situation,"Acquisition without consent"At that point, Itochu's shareholding ratio reached 40%.
Specific measures of the three major reforms introduced by Shuichi Koseki
The newly appointed president, Shuichi Koseki, implemented the following three major changes:
Point 1: Prohibition of discount sales and changes to inventory disposal methods.
first,All discounts of up to 70% are prohibited.We did so. The remaining inventory was recycled as waste, and employees were required to inspect the disposal site. We also encouraged them to create analytical reports on "why the products didn't sell."
This is not simply a ban on discounts, but a fundamental shift in thinking: "inventory management for maintaining brand value."
Point 2: Restructuring of sales channels and price control
Descente itselfPricing available only at directly managed stores and online.We made the following changes. On the other hand, we separated the popular "MOVE SPORT" series and treated it as a separate brand sold through wholesalers.
This allowed us to clearly separate our own "Descente" brand from our wholesale brand, enabling us to control pricing effectively.
Point 3: Accelerating decision-making through micromanagement
The change in the logo color for "Mizusawa Down" is symbolic of this change. Previously, the logo was black on a black background, which made it difficult to see, causing discussions with the person in charge to stall. So Mr. Koseki brought color samples to the meeting and decided on "dark gray for black backgrounds and gray for white backgrounds." He took responsibility for the change himself.
This transformation took three years, but ultimately it became the face of the brand and improved the internal decision-making process.
Results of the reforms and future prospects
| Item | Before reform (year ended March 2019) | After reform (year ending March 2025) |
|---|---|---|
| Domestic sales | 56.8 billion yen | 42.5 billion yen |
| Final profit (target) | 〜 | Over 25 billion yen |
Key points:Sales decreased,Profitability improvedThis is important. The company's directly managed stores have become profitable, and the atmosphere within the company has changed significantly. "The employees are now working together in unison," says Mr. Koseki.
In January 2025, Itochu made Descente a wholly owned subsidiary. The Mizusawa factory underwent a renovation costing 2.8 billion yen, realizing a "premium brand worldview" that makes use of wood and natural light.
Future challenges:
- Reconstruction and expansion of the Japanese market
- Strategies for entering the European and American markets (simultaneous strategies)
Summary
The important insight we can gain from Descente's rebuilding story isPrioritizing brand value over short-term sales is the foundation for long-term growth.That's the point.
From a business perspective, the following commonalities emerge in this case:
- Reliance on low prices can damage a brand.
- Delays in decision-making prevent action from being taken before the situation worsens.
- Without the resolve and sense of responsibility of the top leadership, fundamental reforms cannot be achieved.
- To boost employee morale, it is essential to "understand the situation on the ground."
In Descente's case, sales decreased from 56.8 billion yen in the fiscal year ending March 2019 to 42.5 billion yen in the fiscal year ending March 2025. However, this was not simply a "loss," but rather an "investment to restore brand value." Mr. Koseki's words, that dawn is near, suggest that the transformation is beginning to bear fruit.
In our work and lives, it's crucial to strive for intrinsic value improvement, even if immediate results aren't achieved. True success lies in creating sustainable value over the long term, rather than focusing solely on superficial numbers.
The story of Descente is more than just a turning point for a company; it raises fundamental questions about "what is a brand?" and "what is value?" We hope that readers will be able to develop essential values that will enable them to thrive in the coming era, both in their own work and in their lives.
