Real insight into Japanese consumer markets

Focus: Japanese General Trading Companies’ ever deepening role in the fashion market
Many of Japan’s general trading companies started out trading textiles. While they may now be into everything from nuclear power stations to food retailing, they all retain active textile divisions and are involved in every layer of the fashion market. In the last decade they have increasingly invested down the channel and now often own retail chains and brands themselves. Behind every successful Japanese apparel retailer of the last 15 years is a powerful trading company partner – without which these retailers would likely be a fraction of the size they are now.

Facebook doubles to 13.5m users
Facebook is growing at a tremendous rate in Japan with market penetration rapidly catching up with other countries. A recent survey suggests many Japanese prefer Facebook over local rivals for its global reach and use of real names, both making it easier to find their friends, new and old – Facebook’s tools for commercial companies are also far more mature. Not surprisingly, brand marketers are taking advantage of this growing user base.

Mixi launches online mall with DeNA
Mixi largely owned the SNS market in Japan until last year but under threat from Facebook, and Gree it is now looking to deepen ties with users through add on services that also generate more income. The latest is a shopping mall linking Mixi users to DeNA’s e-commerce backbone.

Beams launches shopping mall brand
The select shop chains are attempting to evolve from their upscale origins into retail groups that bridge the higher end with mass markets. To hit this mass premium zone, they are creating new chains solely for this market. Beams’ latest idea is targeted squarely at Japan’s regional shopping centres with prices 30% lower than a typical Beams store and will, says the company’s senior creative director, be “nothing like the Beams stores you see today”.

Aeon Topvalu brands: new horizons
Aeon’s range of Topvalu private label brands represents the most advanced attempt at supermarket own branding despite 25 years of trying. Own brands in FMCG are common, but their share of the market is tiny in a country where manufacturers dominate. Now, Aeon is about to begin a complete overhaul of the 6,000 or so lines it currently has on offer, including new monthly promotions specifically aimed at boosting awareness and popularity of Topvalu over manufacturer produced rivals.

Look Inc:Strong growth for fashion importers
Japanese subsidiaries of European brands have been boosted by the weak Euro in the last two years, all the more so as retail prices have not really fallen much in response. Japan’s importer-distributors have also been enjoying the benefits along with a rise in spending on premium brands. Many forecast several good years ahead with Look leading the pack.

Qol helps Lawson get into drugstores
With the exception of Recods, a drugstore and convenience store hybrid developed by Aeon Group, this highly anticipated crossover between retail sectors has been slow to appear. Now Lawson and Qol look set to be the second group to develop the new concept to any serious volume.

J Front amalgamates Daimaru and Matsuzakaya online shopping sites
In mid March J Front Retailing reopened its online shopping site, combining the web stores for both Daimaru and Matsuzakaya into a single destination. It also expanded the number of products available for purchase online.

Tokyu Hands opens HINT7
Tokyu Hands is one of Japan’s most distinctive retailers. It balances having a massive inventory of merchandise with the fact that many of its products are unique. Even then Tokyu Hands cannot compete with the internet in terms of range, so the company is now experimenting with stores that encourage customer involvement and community. It is also about to open its first directly operated store overseas.

Uniqlo reopens to big crowds in Ginza
Uniqlo’s new Ginza store opened on 16 March to considerable fanfare. In addition to the seemingly frenzied popularity of its collaboration with Undercover, Fast Retailing fired up its PR team to outline another new strategy to dominate the world, beginning with Asia.

Young consumers love e-money
Younger consumers are making increasing use of e-money through e-wallet smart cards and payment enabled mobile phones. Loyalty points and discounts are attracting more people to use these services as consumers become increasingly cost conscious. Younger consumers have the time, energy and understanding to make the best use of these sometimes complicated systems and many treat the accumulation of points as an end in itself.

Ufufu Girls continues expansion
J Front Retailing has scored a hit with its Ufufu Girls sales floor concept introduced in Shinsaibashi as recently as 2009. It is now open in seven of the company’s main stores, but each store is briefed with making the sales area work in its own market.

Narumiya targets shopping centres
Children’s clothing retailer Narumiya will open more shopping centre tenancies over the next couple of years with 10 new
stores scheduled for this year alone. The aim is to switch sales away from department stores and to get closer to consumers.

News in Brief:
Ted Baker comes to Japan
JR Hakata City gets 54 million visitors in year one
4 new stores for Forever 21
More railways invest in malls and JR East brings farms to Tokyo
World launches basics
Bershka in Kansai
Comptoirs des Cotonniers gets new Aoyama store
Itochu invests in Damiani Japan
J Front to close Daimaru Lalaport
Takashimaya boosted by overseas operations
Lawson opens joint store with Kurukku restaurant chain
Scroll announces cosmetics acquisition
Fewer than two people per household in Tokyo
Seibu lures men with fashion show
Netprice launches another fashion brand app
Futako Tamagawa Rise gets 18 million visitors in first year, starts Phase 2
Sotetsu to rebuild Vivre Yokohama SC
Ministop to open in Kazakhstan
Beisia Denki begins taking telephone orders
Amazon to open major new logistics centre in Gifu
Dinos and Cecile launch joint brand
H2O Holdings raises ¥11 billion for Umeda store investment
Sumitomo tidies fashion business, launches TV and e-commerce in Asia
Recruit launches fashion app with Beams and Lumine
Montbell continues fast growth at home and abroad
Prince Hotel Akasaka to be rebuilt
Cocokara Fine, Growell both opening in China

Focus: 2011 proves resilience of major retailers
In the first few weeks after the natural disaster last March, prospects for retailing looked pretty bleak. Consumers immediately reigned in spending on non-essentials and the prospect of a further, man-made nuclear disaster seemed possible – something only narrowly avoided it is now revealed. Within a month though, consumers decided to enjoy life more in the moment, and spending picked up, helping both department stores and GMS chains to post solid results for the full calendar year.

JR East: 17 million passengers a day
JR East continues to rebuild and upgrade its many station shopping facilities to sell more to its 17 million daily passengers and has tripled the number of shopping centres and upgraded others. The latest are Hiratsuka Lusca, Lumine Ikebukuro and Atre Kawasaki. It will also add a new crop of higher end tenants at Lumine Shinjuku and has extensive projects at Shibuya, Kawasaki, Funabashi and Yokohama stations.

J Front to buy Parco
J Front will buy a large stake in Parco in the next few weeks. This is one of the largest acquisitions in retail distribution ever in Japan, and it is also hugely significant in what it says about the department store sector, shopping centre development, and the threat faced by the rise and rise of JR East’s retail empire, particularly its Lumine and Atre buildings.

BOX: Parco vs. JR East

Rakuten sets new records in 2011
FY2011 to December was a record year for Rakuten, not least in becoming the third largest fashion and apparel vendor in the country. It broke ¥1 trillion in product transactions on its portal for the first time and ¥3 trillion overall. As well as offering more SKUs than supermarkets, departments stores, home centres and convenience stores combined, it has also massively expanded its operations outside Japan and is well on track to become an English-speaking, global online shopping portal.

Uny to become holding company, absorb Circle K
Uny is Japan’s third largest retail group and the dominant mixed merchandise retailer in the Chubu Region centred on Nagoya, the third largest conurbation in the country. Sadly it has shown a conspicuous lack of innovation over the past 15 years or so, becoming increasingly entrenched in its home region and now an obvious takeover target. To ward off unwelcome acquisitors, Uny will ape its main GMS rivals and adopt a holding company structure.

Radishboya: fresh food from mobile phones
NTT Docomo, Japan’s largest mobile phone operator, confirmed its takeover of Radishboya last month. The acquisition is a new departure for the communications company, which recognises that the mobile market has only limited room to grow further and the best source of new growth is through add on services. Radishboya is a good start, an innovative direct delivery company offering organic and other fresh food to health conscious consumers – a market that has grown quickly in recent months.

Large scale shopping centre openings hit 20-Year Low
Only half the number of new large shopping centres will open in 2012 compared to the year before. Developers and property managers are seeing demand tail off, especially for out of town centres that require not only a car for most consumers to access them, but also government approval to get built. The new centres will almost all open in city centres this year, representing redevelopments rather than entirely new locations.

More multiple locations for convenience store franchisees
Convenience stores are hugely profitable, at least for the franchisors. In the background smaller franchisees struggle to make a living – often surviving without a proper salary even when the whole family help out for free. The model is now so unworkable that the sector leaders are shifting increasingly to corporate franchisees.

Box: Seven & I to open 300 petrol station convenience stores

UCC buys stake in Nissen, sells Shaddy
UCC is about to become Nissen’s largest shareholder and will work closely with the direct marketing firm to sell its coffee products across its vast database. More importantly, Nissen will be buying a UCC subsidiary called Shaddy, an unglamorous but potentially potent gift catalogue business that also happens to operate a network of 3,000 affiliated stores.

Box: Dinos ties with Cuoca

Nespresso builds brand loyalty
Nespresso has built a loyal following in Japan but is reaching out to new customers through stand alone stores as well as a new concept unique to Japan.

Beams, Sanei and Tamaya go ‘wakuwaku’ on highways
More retailers are catching United Arrows’ enthusiasm for locating stores in highway service areas and other transport hubs. Beams and Sanei International will launch similar stores next month even more unrelated to their core business than United Arrows’ version, and Tamaya sees a market for hair accessories and fashion jewellery. Meanwhile United Arrows itself has come up with yet another way to exploit its brand.

Box: Beams launches new sports chain with golf lessons

Isetan-Mitsukoshi cosmetics chain launches this month
Isetan-Mitsukoshi has never operated a specialty store chain before but this month will see the launch of its first. Focusing on high end cosmetics brands from around the world, the cosmetics select shop is the department store group’s first attempt at taking its merchandise to where the customer is, rather than waiting for her to come to it.

Box: Cosme Kitchen opens 4 more stores

News in Brief
Ben & Jerry’s plans 50 Japanese stores
Sanyo Shokai ends Blue Label menswear line
QVC Japan hits ¥1 billion sales a day
Mellow Yellow launches in Japan
Marui profit jumps 41%
Edion fined ¥4 billion for abuse of power over suppliers
Sanki Shoji starts Strenesse distribution
Electronics retailers see profits plummet
Mitsukoshi Nagoya upgrade
Belluna opens stores for 50s women
Japanese economy continuing to improve
Askul developing new lines with manufacturers
Jins opens eight new stores
Convenience stores up 1.7% to January
Otsuka Kagu forecasts profit upswing
Itochu to take Mila Schon into China
Thom Browne and Marni sign up for Zozo
Matsumotokiyoshi up, Sun Drug down
Aeon to open supermarkets China
Japan Tobacco no longer a Green Giant
Mitsui signs off on more new developments
Itochu expands LeSportsac sales in Europe
Tokyu Hands launches Hands+
Chinese and Korean electronics brands expanding in Japan
Expanded TopShop opens in Laforet

Focus: The old and the single: two burgeoning but still untapped markets
That Japan’s population is getting old is not news. Neither is the fact that those who are still young are staying single. What is news is just how quickly these trends are impacting society now, not in some distant future – 10 million people are becoming eligible for retirement as of this year. With a forecast population of just 86 million people by 2060, the implications of demographic changes for consumer distribution are equally profound but as yet few brands and retailers have taken advantage of the shift.

E-wallets break ¥2 trillion in value
Japanese shoppers and commuters love e-wallet smart cards – but retailers love them even more. For consumers the cards are convenient but for retailers it means cash in advance, tying up the customer’s loyalty, and a whole raft of market promotion and shopper analysis opportunities. Growth has been massive in the last two years, but the key players are looking to consolidate their gains as the number of cards rapidly approaches saturation.

Yamada Denki’s plans for smart homes
The consumer electronics sector is in decline and there’s no getting away from it. After two big, short-term sales boosts from Eco-points and then the switch to digital TV, all the big chains are seeing sales fall compared to last year. The only hope is that the top firms continue to soak up share from the others or, as is likely, that retailers and manufacturers will convince the government to provide another round of prop-up support through more Eco-point campaigns. Meanwhile, Yamada is trying something new.

Kao to reduce cosmetics lines to just seven
Kao is looking to restructure its entire domestic retail operation for cosmetics. It will begin by reducing the number of brands earmarked for future development to just seven. As a part of this process, the number of brands and staff under its Kanebo business will be reduced. Cosmetics sales for Kao and Kanebo combined are second only to Shiseido in Japan, but the operation continued to make a loss last year and such a consolidation is overdue.
BOX: Kao overhauls overseas sales network

Sky Tree, Tokyo Station: the big openings of the year
Although shopping centre development is now down from its peak, there are some highly anticipated projects coming online this year. In addition, we can expect an increasing number of plans to revitalise existing, regional centres.

Bare Minerals to expand in Asia
Shiseido has announced its expansion strategy for the Bare Minerals brand that it acquired back in 2010. This will include a new range of skincare products developed jointly between the two companies and aimed squarely at the skincare obsessed Asian market.

Scroll launches online retail brands
Catalogue firms have reaped the rewards of shifting to digital retailing but in apparel they still struggle against the specialty SPA chains that dominate the high street and shopping mall. The key issue has been the long lead times for production which, unless they are really good at fashion forecasting, leaves them out of the seasonal fashion market. To fix this, catalogue firm Scroll is rewriting the way it does business, shortening production cycles to match the best specialty chains.

JR East to convert three station buildings
JR East continues to upgrade its stations, largely by creating spaces suitable for retail tenants who themselves provide the light, entertainment and colour that make stations much more pleasant places to traverse. The latest due for an upgrade continue the theme of rebranding, focusing on the Lumine, Ecute and Atre names for most, but the Celeo brand is also making another appearance.

United Arrows opens more station stores as Tokyo Metro opens malls
United Arrows continues its relentless expansion wherever customer traffic flows. It will open in Tokyo Station this month and on another highway out in Shizuoka in April. With other retailers keen to co-opt the strategy, railway, highway and metro operators are only too happy to oblige, building new retail shells providing brighter, more colourful stations for passengers to walk through on the daily grind, while bringing themselves some lucrative new income.
Box: Another United Arrows store on the highway

Valor to enter South Korea
Chubu based supermarket retailer, Valor, will take the surprising step of moving into the South Korean market. It becomes the first major Japanese retailer other than convenience stores and a few apparel chains to enter Korea. It is also a risky move. Korea has one of the most mature food markets in the region with four powerful local players – and it has already seen off both Carrefour and Walmart. The move says as much about the difficulty of expanding in Japan as it does about market opportunity in Korea.

Tokyu to rebuild Shibuya store
When Tokyu opens a new retail space called ShinQs within the Hikarie tower in Shibuya in April, it will also close another. Tokyu Department store in Shibuya will lose its East wing from March but this will be replaced by a vast second stage tower in 2018 as it continues its efforts to revitalise Shibuya.
Box: Vince Camuto comes to Japan

Tourists down but recovery expected this year
Department stores lost much of their tourist trade in 2011 and December was down again. There is much to be optimistic about, however. Per customer sales have risen strongly as more Asian tourists spend on high ticket items, and the Japan National Tourist Organisation now forecasts a record year this year and a doubling of tourist numbers by 2020. If it works, the development of a tourist economy will benefit international brands and retailers too.

Top shoe chains battle it out as shoe market contracts
ABC Mart took over as the top footwear retailer last year and continues to pull ahead, with record results expected for FY2011. Chiyoda is fighting back and while its sales are likely to continue to contract until the overhaul of its store portfolio is complete, profitability is accelerating as it shifts to store branded lines and cuts loss making outlets.

News in Brief
Walmart to expand Seiyu chain
Point launches accessories chain
Columbia Sportswear to open first store in March
Triumph to rapidly expand Shape Sensation
Advantage Partners acquires 75% of Megane Super
Bebe to open second Japanese store
Cosmetics down 4.4% to ¥2.846 trillion
Aeon to open mall in Tsukuba
Rakuten breaks ¥1 trillion
Docomo to acquire Radishbo-ya
Life targets 400 stores
Tokyu Hands comes to Omotesando
Senshukai launches catalogue for nurses and apps for expectant mothers
Matsuzakaya Nagoya to add 72 tenants including H&M
The Triumph of Kawaii
More stores for Versace
J Front to revamp Marucollet cosmetics catalogue
Baroque to launch two new brands in Omotesando
Tokyu starts on Futako Tamagawa Rise Part II
Agnes B fights back
Direct marketers strengthen interiors line up
Mikimoto open in Harrods of London
Strong New Year’s for Lumine and 109
Sazaby signs Frank & Eileen
Tiffany to open in Odakyu
Growell to expand in prescription services

Focus: Online market to hit ¥14 trillion by 2016
The online shopping market is currently the one sure bet in terms of consistent growth year after year. The latest forecasts suggest a doubling in market value by 2016. As important as the market expansion is the way consumers are changing the way they both shop online and how they find brands and stores. The rise of the smartphone and the explosion in tablet sales means more shopping will be done through apps than browsers, and Google and Yahoo now own less of the click through as consumers increasingly buy through links on social networks, with Facebook now rapidly gaining on local rivals.

Ikea and Costco: fun places to shop
What sets truly great retailers apart is a clear, tangible consumer focus. With few exceptions, such a strategy is conspicuously rare in Japan, a point emphasised by international retailers doing so well. Domestic experts often doubt the suitability of overseas formats for Japan, but a focus on the customer wins in all markets.

Yagi Tsusho, Itochu expand import line up
Consumption of branded apparel and accessories has clearly made a comeback in the last 18 months as the results from select shops, branded stores and premium station and shopping buildings show. The seeming stability of the high yen is also giving importers the confidence to expand, providing more opportunities for overseas brands without their own distribution in Japan.

United Arrows and Seijo Ishii: highway service area stores
Shopping centre development has slowed and competition for space and consumer attention at shopping and fashion buildings gets ever more intense. So where next to grow your chain? Where the traffic is. Leading retailers, even in fashion, are now springing up in every transport hub across the nation, from airports to metro stations to highway rest stops.

Skechers sets up Japan business, plans to double sales
Skechers has seen sales fall recently in other markets but Japan has been one source of growth. The US brand will now take over Japanese distribution and plans to greatly increase sales. Whatever its own potential, the timing at least looks good with Japanese sports shoe brands all announcing strong results in the last year and showing optimism about growth in the future too.

World, Jun and Cross Company add to the station store rush
Highway service areas may still be experimental locations, but opening stores within station concourses is becoming common for fashion retailers. Uniqlo and United Arrows have been the most high profile examples, but a stream of other retailers have set up shop within the ticket gates of railways and metro stations in the last year.

Ebook market to triple by 2015
Despite a love for all kinds of electronic gadgets, Japan is not as technologically savvy as some may think. It is, however, quick to catch on. Ebooks are fast becoming a boom market in Japan as a result, with software and content suppliers rushing to catch up and correct issues with the many existing hardware solutions. One area of promise is electronic magazines, free papers and catalogues – all with direct links to shops selling featured product.

Younger women supporting department store cosmetics sales
A regular survey of women’s cosmetics shopping habits shows a clear and expected shift not only to internet sales, but to lower price channels in general. Drugstores are now overwhelmingly the most popular format for cosmetics shopping, and online sales are growing at the highest rate. However, younger women continue to support the department store channel given that they have more time and, arguably, a greater need to learn about cosmetics through counselling services.

Toys R Us Japan: aiming higher with new stores
Christmas 2011 looks to have been a decent year for Japan’s toy retailers, led by market leader Toys R Us. Until recently Toys R Us was beginning to look past its peak in Japan, having stuck with the same model for almost two decades. But it is now looking for new gains from a change in store design. Customers still love it and, with no obvious competitors, there is plenty still to do and lots of market share to gain.

Daiei to push forward on EDLP
Everyday Low Price is seen by some as the holy grail of FMCG retailing. Difficult to implement anywhere, traditional supply practices and an addiction to short-term, manufacturer supported and financed price promotions means that few Japanese retailers have come even close to implementing the idea. Now, Daiei is having another go.

Nafco enters food sector as Kyushu market hots up
Nafco, a hardware and furniture retailer, opened its first supermarket last month, albeit without the three main fresh food categories. Like many of its Kyushu counterparts, the home centre retailer is looking to pull as many customers as possible to its stores as the local economy continues to be sluggish.
Box: Lawson establishes further farm operations in Kyushu

Locondo making a come back
Locondo was launched back in February 2011 as a local competitor to Amazon’s Javari online footwear store. While an immediate hit in its first month, the venture was hurt badly by the earthquake and took several months to gain additional venture funding. Now, however, Locondo’s young, internationally educated management team are looking to expand not only through direct sales, but also by renting online space to major brands.

Bic Camera expands TV shopping channel
Bic Camera is the leading high street retailer in terms of non-store sales, growing the channel by almost 20% last year alone. It has its own small broadcasting arm and has been experimenting with TV sales since 2007, and it has just taken the decision to expand the business to other regional networks, increasing weekly broadcasts to six hours.

News in Brief
Sanrio buys Mr Men
Sotetsu to sell 20% stake to Marubeni
Bags and accessories market fell 4.7% in 2010
Logistics: price less important, risk control is key
Mitsui’s Diver City to open in April with American Eagle Outfitters
Mitsubishi plans new mall in Shizuoka in 2013
American Eagle plans 10 stores within two years
Seven & I introduces new cafe banner
Zozo invests in cosmetics
Maruetsu introduces a simpler netsuper model
Itochu snags Franck Boclet brand for Japan
Toys R Us charged with abuse of channel power
Department stores down 1.9%, tourist sales too
The am/pm name converted to Familymart
Sumisho to open TV shopping netsuper
Pigs contribute to skincare
54 new shopping centres in 2011
Senshukai to revamp catalogues
Belluna opens stores
Aeon to enter Cambodia
Pola opens in Hanoi
Aeon plans more malls
Nespresso opens stand alone store in Osaka
Renown to launch new brand for 20s women
Drugstores adopting medical record databases
Xebio signs with Toyota Tsusho for China expansion
Itochu signs Hind
Ginza Komatsu to open in Marc