On October 14, major Japanese apparel companies World Co., Ltd. and TSI Holdings Co., Ltd. announced that they had agreed to integrate their management operations and establish a joint holding company named INFINITY UNITED Inc., which will make both World and TSI wholly owned subsidiaries. The integration is scheduled to take effect on March 1, 2027, with the new company expected to have capital of 5 billion yen. A simple addition of the two companies' financial results for the fiscal year ended February 2026 shows that the integration will create a fashion company with combined sales of 451,099 million yen and a workforce of 11,202.

Both World and TSI are apparel companies with a diverse portfolio of distinctive brands, offering a wide variety of products in small quantities. World’s brands include Untitled, Takeo Kikuchi, and Indivi, while TSI’s include Margaret Howell, Pearly Gates, and Natural Beauty. In announcing their business integration, the companies stated that they aim to “establish a third pole of an overwhelmingly diverse group, distinct from global SPA (Specialty store retailer of Private label Apparel) operators and mega-retailers.” They also aim to make investments in procurement, logistics, IT systems, and e-commerce that neither company could afford on its own, while improving cost efficiency across the apparel industry.

The integration of the two companies had a significant impact, making headlines in major newspapers with reports such as “Japan’s third-largest apparel company is born.” As for the ranking, Fast Retailing Co., Ltd. comes first, followed by Shimamura Co., Ltd. However, sales figures have different implications for retail and wholesale businesses. In the apparel industry, it is customary to use the term “apparel companies” to refer to businesses whose main activity is wholesaling products to department stores and specialty retailers. Furthermore, the industry as a whole is referred to as the “textile industry,” which encompasses all stages of the manufacturing process and is divided into specialized sectors such as raw cotton and yarn, spinning, twisting, weaving, knitting, and sewing. For this reason, neither the Japan Textile Federation nor the Japan Apparel Fashion Industry Council includes these two companies (Fast Retailing and Shimamura) in its membership list, even though they would be expected to rank first and second.

The domestic apparel market has contracted from approximately 13 trillion yen in 1991 to approximately 8.5 trillion yen in 2025*¹. Unit prices have also fallen sharply, the import penetration rate has risen to 98.6%*², and the number of business establishments has plummeted from a peak of 117,000 to just 13,000 (as of 2021, Ministry of Economy, Trade and Industry). In 2022, the Industrial Structure Council drew up a vision for the textile industry toward 2030. It recommended pursuing technological innovation in yarn and materials (upstream), creating a virtuous cycle of resources in production regions*³ (midstream), and developing high-quality products with aesthetic appeal (downstream). There is no reason to disagree with these directions. However, even for Onward Holdings, once the undisputed leader in “department store apparel,” the sales of its department store and e-commerce businesses are already approaching parity. The company expects its own e-commerce sales alone to surpass those of its department store business by 2030.

The future of the “industry” can no longer be envisioned by thinking solely from the conventional perspective of an industry structure divided along individual manufacturing processes and of production regions specializing in specific products.

 

*¹Source: “Apparel Industry 2026” (Yano Research Institute Ltd.)

*²The import penetration rate: volume of clothing imports divided by (domestic production volume + imports – exports)

 *³In the textile industry, production is concentrated in specific regions, where production centers have developed, such as Senshu for knitwear, Sanbi for denim, Tokamachi for silk fabrics, and Imabari for towels.

 

Takashi Mizukoshi, the President
This Week’s Focus, October 25 - October 26, 2026