There are not many companies that can continue to grow in a mature industry. Izawa Towel Co., Ltd. has been achieving double-digit sales growth for more than 10 consecutive years in the towel industry, where innovation has not occurred for many years. All employees share the mission of creating a global standard for towels and continue to take on the daily challenge of creating appropriate towels that consumers truly want.
In the first part of this installment, we interviewed President Izawa, and for this second part, we interviewed four members of the senior management team, as well as director and JAFCO investment professional, Taishi Mizutani.
▶︎ Click here for the first part.
【Profile】
Keiko Kunimoto, Director and General Manager of the Product Division, Izawa Towel Co., Ltd.
Joined the company in July 2010 after working for several business companies and financial institutions. Appointed as Director in April 2021.
Yuka Fujita, Director and General Manager of the Sales Division, Izawa Towel Co., Ltd.
Joined the company as a new graduate in June 2011. Appointed as director in April 2021.
Takuto Miyoshi, Director and CFO, General Manager of the Administration Division, Izawa Towel Co., Ltd.
Joined the company in April 2022 after experience in audit firms and business companies. Appointed as director in August 2023. During audit firm tenure, handled accounting audits and assisted with IPO preparations. During business company tenure, worked as the Head of Administration, overseeing strategic planning and financial management enhancements. Certified Public Accountant.
Kazuhiro Hoten, Executive Officer, General Manager of the Corporate Planning Office and Internal Audit Office, Izawa Towel Co., Ltd.
Joined the company in October 2021 after over 30 years of service at a general trading company. During the tenure at the trading company, worked in the textile business, handling brand transactions and business investment management. Possesses two overseas assignments in Europe and Southeast Asia.
【About Izawa Towel Co., Ltd.】
Izawa Towel's mission is to establish a global standard for towels, ensuring that consumers always have a trusted source for high-quality towels, by consistently prioritizing the useability and comfort of towels as an essential everyday product. In addition to designing and selling towel products to retailers, the company has also launched an e-commerce brand called Towel Laboratory on Amazon, and has achieved rapid growth while capturing a leading position in Amazon's towel market. As of now, they proudly hold approximately 10% of the domestic market share in the towel industry, making them the industry's frontrunner and a true game-changer.
Portfolio
Not owning our own factory allows us to produce "proper" towels that are not bound by industry norms.
First of all, please tell us about your roles at Izawa Towel.
Kunimoto Our company's main business is towel original design manufacturing (ODM; designing and manufacturing products under other companies' brands), of which I am General Manager of the Product Division. The Product Division is a department of about 20 people, consisting of the Quality Control Department that checks product quality, the Factory Management Department that selects factories and manages order allocation, and the Design Department that handles design and marketing. In addition to managing each of these departments, I also manage the trade and sales support units.
Keiko Kunimoto, Director and General Manager of Product Division
Fujita The Sales Division, of which I am General Manager, is divided into the Planning and Sales Department and the Technical Development Department. The Planning and Sales Division is responsible for planning and proposing towel products to retailers and e-commerce sites. As General Manager of the planning and sales department, I manage the sales frontline to achieve the company's overall business policy and budget, and I also act as a sales representative myself. The Technical Development Department researches new towel manufacturing technology and develops new products. There are about 20 people in the entire Sales Division.
Yuka Fujita, Director and General Manager of the Sales Division
Miyoshi I have two major roles. The first is as the General Manager of the Administration Division, where I oversee general affairs, human resources, IT, finance and accounting, sales management, and product management. In order to move the organization forward, I am responsible for identifying problems and setting issues in each department, checking the progress of operations, and developing human resources. The number of personnel in the Administration Division is about 20, the same number as in the Product Division and Sales Division. In my second role as CFO, I strive to build relationships not only within the company but also with external stakeholders. With JAFCO taking the lead, I communicate our actual situation and future prospects on a factual basis to securities firms, auditing firms, banks, etc., and adjust their expectations.
Takuto Miyoshi, Director and CFO, General Manager of the Administration Division
Hoten I was hired as the head of the Corporate Planning Office, which reports directly to the President, and I also serve as General Manager of the Internal Audit Office, which was newly established at a later point. The scope of my duties includes the development of management infrastructure, overseas business studies, and internal audits among others. I collaborate closely with the three main divisions, and my role sometimes involves tasks that do not fall under any specific department. In essence, I see myself as someone who can adapt and contribute in any position as long as it serves the organization's needs, whether it's in a leadership role, a supporting role, or even an outfielder role.
Kazuhiro Hoten, Executive Officer, General Manager of the Corporate Planning Office and Internal Audit Office
Mizutani I joined Izawa Towel in 2021 as JAFCO's chief investment officer, and I am a member of the board of directors. I have worked with Izawa Towel to establish an administrative division and hire executives, and have built a system and environment that allows the management team and employees to focus on the work they are responsible for. Like Mr. Hoten I am a "jack-of-all-trades," so to speak. Since the foundation for organizational management was established, the company has been growing rapidly with the help of everyone. All the operations and functions that I was in charge of at the time of the initial investment are now being performed by the executives and employees of Izawa Towel.
Director and JAFCO investment professional, Taishi Mizutani
Izawa Towel has achieved double-digit sales growth for 10 consecutive years. Are there currently any initiatives being undertaken across the organization to achieve further growth?
Miyoshi Our company has grown through our continuous pursuit of being able to deliver towels that customers want at a fair price. We are increasing productivity through collaboration among all employees beyond the boundaries of departments and by optimizing the sequence of planning, production, and sales. We are particularly focusing on the IOPMS (Izawa Original Production Management System), a digital transformation project for operations related to estimation, logistics, and factory selection.
IOPMS (Izawa Original Production Management System) configuration chart
Kunimoto The conventional method of towel production has been a matter of purchasing prices set by factories based on labor costs and workforce availability. But that does not allow us to pursue the quality and price that consumers demand. We have disrupted this common practice by developing a unique method for ordering the right products at the right prices in the right quantities from the right factories.
Until now, this has been done by President Izawa and other experienced employees, but we are now digitizing this know-how so that even new employees can utilize it. This is the IOPMS project that Miyoshi mentioned earlier. The IOPMS is a revolutionary system that allows anyone to make appropriate proposals to suppliers and place orders appropriately using the same logic for all selected factories. As towel production's optimal values can vary significantly based on market trends of raw materials and products, we are in the process of constructing and operating the system through repeated trial and error based on these factors.
This initiative is possible because Izawa Towel does not have its own factory, but rather acts as a link between retailers and the factory. How do you view IOPMS from a sales standpoint, Mr. Fujita?
Fujita I think this is a major strength of our company. Even our sales staff in their first year after graduation are actually using IOPMS to negotiate with suppliers and factories. Although we are a fabless company with no factories of our own, we have a deep understanding of towel-making know-how and processes through IOPMS, so our sales staff can negotiate not only prices but also specifications and processes. I feel that we are steadily changing from a situation where the factory makes what it wants to make and the retailer sells what it wants to sell, to one where we can deliver towels that are truly appropriate for the customer.
For the factories' perspective, this is very different from the traditional approach of presenting estimates. How do they view Izawa Towel's policy?
Hoten I think there are some strict requirements because we have to provide detailed product specifications, recipes, and delivery prices, but of course there are advantages for the factory as well. Perhaps the biggest advantage is that the products will sell well and the number of orders will increase every year. Therefore, they will come to believe in our policy and work hard together with us. I think that the fact that we are able to talk with leading overseas factories on an equal footing while firmly sharing our vision is an asset that we have accumulated over the years.
Mizutani Izawa Towel is a rare company that has mastered the science of towels in the industry. We have an in-house R&D department that breaks down all sensory elements, such as texture, into data so that we can negotiate and make proposals based on clear evidence. It is truly a game changer. We're bringing to the towel industry what trading companies and the automobile industry have done in the past.
Why the executives who have driven double-digit growth rates for
10 consecutive years chose Izawa Towel
Ms. Kunimoto, you've joined Izawa Towel in 2010 and have been with the company the longest. How did you first join the company?
Kunimoto When I graduated, I started working at a department store and worked in the towel department. I studied each product and told customers about them, so I developed the ability to judge whether a towel was good or bad and whether it would sell or not. Later, I was introduced to Izawa Towel by an acquaintance. At the time, the Tokyo office was about to expand, and I was involved in recruiting new graduates while working in sales. I was working in a way that could only be done at a smaller company.
In my department store days, the biggest selling point of a towel manufacturer was whether or not it held a license for a famous brand. Having lived under that conventional wisdom, all the work I did at Izawa Towel, which does not have a license but is nevertheless able to make towels that please the end user, was an eye-opener for me. I learned the spirit of good manufacturing in the truest sense. Fujita and other new graduates diligently carried on this spirit, and as a result, I believe the company was able to grow at an astonishing speed.
Why did you choose Izawa Towel?
Fujita My initial inspiration came from studying textile design and fibers at an art university. Towels, being such an integral part of our daily lives and a product used by nearly everyone worldwide, felt very close to home. Moreover, I found the idea of being able to design towels that I personally liked, purely based on their texture, intriguing, which led me to choose to work at Izawa Towel.
After being involved in towel production for more than 10 years, have your values drastically changed regarding towels and manufacturing like Ms. Kunimoto?
Fujita I realize that it is deeper than I had imagined. All of our sales and development employees have mastered their "towel connoisseur" skills which allow them to tell the yarn count (thickness of spun yarn) just by looking at the towel, as well as the quality and comfort of the yarn just by touching it. During development, we sometimes evaluate the texture of towels by touching them blindfolded and arranging them in order of softness. The other day, we compared the results with the values from the testing machine to investigate the correlation, and made a presentation at an academic conference on the quantification of towel texture.
The way they are folded is also very important. By having customers see towels folded in a beautiful way, with no unnecessary unevenness or misalignment, as opposed to when laundry is folded, the product looks much better, and it also serves as a guide for quality control for factories.
Miyoshi Towels folded by new employees usually look nice, but when Fujita folds them, you'd be surprised at how much nicer they look (laughs).
Kunimoto All of our employees have many towels, and about half of the closets in my house are also filled with towels (laughs). The world of towels undergoes a refresh approximately every three years, and this cycle completely shifts the perspectives on value over a decade. To reflect on the technology from ten years ago, we need towels from that era. We often bring old towels in the company and check the condition of the fibers based on frequency of use and washing methods.
It is truly a "science of towels." I would also like to ask Mr. Miyoshi and Mr. Hoten from of the Administration Division how they became interested in towels?
Miyoshi My first job was at an auditing firm where I was mainly in charge of auditing technology companies, and my second was at a startup developing AI, so I had a desire to work for a growing company dealing with more familiar products. When I first learned about Izawa Towel, I was genuinely surprised. Continuous year-on-year growth in a mature industry? At the interview, President Izawa spoke with a high level of resolution about his clear mission of creating a global standard for towels and the measures he was taking to achieve it. Since I believe that the high aspirations of the top management are the future of the company and foster the organizational culture, I felt that under this president, the company would grow and I would be able to improve myself.
Another deciding factor was the capital alliance with JAFCO, which has a wealth of experience in IPO support. Since preparing for a listing was one of my major roles after joining the company, I was able to absorb the knowledge and know-how and experience a listing with Mr. Mizutani and everyone at Jafco, which gave me hope of being able to grow to a higher level as an individual.
Hoten I actually had a prior acquaintance with Mr. Izawa about 30 years ago. Back then, I was responsible for importing towels in the textile division of a trading company, and one of our clients was Izawa Towel. Mr. Izawa was a customer, and I was in the role of a sales representative at the trading company.
It's quite common in the trading industry that the first product you handle becomes the cornerstone of your business. For me, even when my field of responsibility changed, I always thought about things based on towels because I had learned the basics of manufacturing and logistics through towels. Whenever I went somewhere, towels would come up, and I'd find myself pulling out the threads, flipping the towels over, or checking product labels. It was during one of these instances, after more than 20 years, that I had the opportunity to reconnect with Mr. Izawa. I learned that the company was aiming for an IPO, and even though I had experience with establishing new corporations and M&A, I had never been through an IPO, so I became very interested.
Additionally, Mr. Izawa has had an interest in foreign markets since his twenties and had even gone on field trips to the United States and China. I vividly remember his strong determination to find winning strategies for the business without being constrained by existing norms during that time. It felt like a fortunate and outstanding opportunity, considering the personal connection, attachment to the product, and Mr. Izawa's visionary approach. So, I decided to make the career switch.
Our true goal is to establish a global standard for towels. We have no time to be complacent with the status quo.
What challenges do you need to overcome and what goals do you need to achieve in order to continue to grow at a rapid pace, go public, and establish a global standard?
Miyoshi Preparations for going public will now begin in earnest. One of the challenges we face is to build an internal management structure that will support our business growth without hindrance. As someone who joined the company in 2022, I am always conscious of introducing rules and systems in an optimal manner based on the best understanding of the successful experiences and organizational culture that you have accumulated so far.
To establish a global standard, it's essential for Izawa Towel to become widely recognized and enhance the company's value. Going public is a means to achieve this goal. We aim to first target the growth market, then move towards the prime market, and eventually, expand further through international listings and M&As. This will allow us to continue growing the company, making it an entity that garners interest from investors worldwide.
Hoten In my role as the one responsible for our international strategy, I've noticed that the towel industry abroad is not as complex as it is in Japan. There are vertically integrated factories, and major retailers sell towels. The consumer habit of actively 'choosing' towels isn't as prevalent, with many people simply using whatever is available. Therefore, our goal is to make 'high-quality towels at an affordable price' a common occurrence not only in Japan but also overseas by pursuing a global standard for towels and expanding our sales channels.
Through the success of our Towel Laboratory brand on Amazon, we have come to realize the potential of e-commerce (EC). As Mr. Izawa often mentions, unlike physical stores, EC sites have no shelf limitations, which means we can continuously sell the same product without the need for regular product rotation. This allows consumers to consistently purchase the towels they like. This situation seems ideal for providing a standard in towels.
Kunimoto It has been said that EC sites are not originally suitable for selling towels because you cannot touch the products. Due to this, many companies sell surplus products on EC, and consumers still do not have sufficient choices. Through the Towel Laboratory, we aim to optimize the Japanese EC towel market, while at the same time pursuing the production of global standard towels that are in demand both domestically and internationally. This is the task and mission of the Product Division.
Fujita I feel that both in sales and development, we must evolve to align with the global landscape. In sales, our perspective is to conduct sales activities with the aim of proposing products and merchandising solutions that satisfy consumers and maximize our clients' towel revenue. However, the question arises: what approaches work best overseas? In terms of development, we are currently conducting research and strategic planning to understand how towels are used and washed in different regions, and what technological developments are required to cater to these varied needs."
I know it's not easy to keep running without settling for the status quo. What is your underlying motivation?
Kunimoto What we are aiming for is to create the global standard for towels. Even if we achieved a 120% increase in sales from the previous year, we have by no means reached our ultimate goal. It's the awareness of this goal that keeps us all running, and I believe it is this determination that ultimately reflects in our sales.
Mizutani Expanding sales by 120% every quarter is indeed quite challenging, especially in the mature towel industry. Normally, achieving substantial growth from the previous year might lead to thoughts like 'Let's take a break next month' or 'Let's celebrate over a drink.' However, everyone at Izawa Towel remains unfazed. President Izawa has set a goal of achieving a 200 billion yen annual turnover for the company, but this goal is driven by a clear vision. It's not just about reaching sales figures or market share; it's about gaining a 20% share in the global market, establishing a standard, and innovating in the stagnant towel industry to expand consumer choices. It's because we focus on genuinely thinking about the consumers and working together to create the global standard, rather than merely targeting sales or market share, that we can continue to grow in the end.
Thank you very much. Finally, please give us a few words of enthusiasm for the future growth of Izawa Towel.
Kunimoto We are often referred to as a game changer in the towel industry, but we are not trying to change the game in a bizarre way, but rather we are working with the awareness that we are bringing the issues facing the industry to an appropriate state. We will merge this approach with the spirit of continuous challenge that Izawa embodies and aim to make it a part of our company culture, not only internally but also with our partners. This is how we will work diligently towards growth.
Fujita I have the pride of having joined the company as a new graduate and having worked here for more than 10 years, and I carry the company's philosophy passed down from Izawa. Rather than keeping the philosophy to myself, I aim to communicate it effectively to other employees, making Izawa Towel's strengths even more resilient.
Miyoshi I find that Izawa Towel is a company with an extraordinary level of ambition and energy when it comes to reaching our goals. To ensure this attitude permeates throughout the organization, I want to keep challenging ourselves.
Hoten In the future, as we enter various uncharted territories, I anticipate that there will be numerous twists and turns. However, I am determined to firmly establish our longstanding management philosophy within the company and lead us all forward as a united front.
Mizutani In my capacity as a JAFCO representative, my final role with Izawa Towel is to provide maximum support for going public and moving on to the next step. Moreover, as an investor, I consider it my mission to apply the company's rich experiences, both in terms of successes and failures, to other industries and companies. My aim is to focus on how we can continue to expand Izawa Towel's presence in Japan.
