For Martha, Land of the Rising Glue Gun

Is Japan's love affair with Stewart a passing fancy?

The Japanese consumer may be in a penny-pinching panic. But at the height of their angst, Japanese homemakers clearly still have a profound need--for gingham bedspreads, lime-green gardening clogs, and blackberry cobbler recipes from the American Goddess of Gracious Living: Martha Stewart.

The Yankee marketing phenomenon has descended with a vengeance on the land of tatami mats and sushi. Six months after opening its first boutique in a Tokyo department store, Martha Stewart Living Omnimedia Inc. (MSO ) is already ramping up. Along with local retail partner Seiyu Ltd., the company plans to accelerate its rollout of retail locations, pump up Japanese sales of Stewart's popular magazine, and pour on the promotion for Martha Stewart Living, the TV show. "Business is brisk, and the rollout [in Japan] has been easier than expected," says company CEO Sharon Patrick.

If Martha continues to translate well into Japanese, the company that turned the glue gun into the sine qua non of gracious American living will soon launch beachheads in other parts of Asia and Europe. While risky, it may be necessary. Though Martha's ventures in the U.S. are fundamentally sound, the forward momentum is meeting resistance in everything from an advertising downturn to the bankruptcy of her key retail partner Kmart Corp. Lucrative royalties from sales of Martha Stewart Everyday products are down because of closed stores, inventory backups, and reduced traffic at the discounter.

That's why what happens in Japan--the company's first overseas foray--is so important. And so far, so good. The Japanese Martha Stewart boutiques are crowded with women who want to bring home a piece of New England to their crowded apartments. "I like her color schemes," says Takako Matsubayashi, a 50-year-old store clerk who stopped into Martha Stewart's flagship outlet in Tokyo to buy a pair of blue pinstriped slippers. "Martha's palette is hard to find in traditional Japanese homes." Local partner Seiyu sells some 1,500 licensed products at 201 outlets, from lace curtains to power tools, and says it's on track to rack up $120 million in sales of Martha Stewart products.

To help spread the gospel, Seiyu and Stewart's company publish a glossy Japanese language edition of Martha Stewart Living--called Martha--six times a year. The magazine, which features gardening tips, recipes, and local content, is selling a respectable 200,000 copies per issue. Meantime, Tokyo-based SKY Perfect Communications Inc. runs a dubbed version of Martha Stewart Living four times a day on the LaLa TV cable network, while the Shop Channel hawks "Martha by Mail" kitchen and bath goods.

The invasion is well under way. But long-term success in Japan is far from assured. Many foreign firms have started well, only to lose touch with the nation's finicky shoppers. To avoid a similar fate, Martha gets personally involved. According to Momoko Sano, Martha Stewart Living's brand manager in Japan, the boss vetoed a Seiyu proposal for bath towels in browns and reds as being too "muddy." More to her taste are products designed exclusively for Japanese. These include square frying pans used to make traditional cube-shaped omelets, faux-lacquer wooden chopsticks in pastel colors, and cute bedroom slippers--a must-have in every Japanese home. All goods are subject to more rigorous quality standards than those made for less-demanding American consumers. "Kmart standards aren't necessarily our standards," says Tomoko Matsuoka, who oversees the Martha Stewart line at Seiyu. "Japanese consumers won't buy a poorly made product no matter how cheap."

Will Martha Stewart endure in Japan? One real danger is that her current popularity will turn out to be a passing fad. Moreover, her appeal may not so easily translate to other parts of Asia. Still, even if the Japanese experiment fizzles, Martha and her company are insulated: Seiyu has put up most of the initial capital. As America's domestic diva so often says: That's a good thing!

By Chester Dawson in Tokyo, with Diane Brady in New York

— With assistance by Diane Brady

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