Uniqlo: not coming to Spain

by admin on January 25, 2012

Modaes, a Spanish fashion journal, is reporting that Fast Retailing has pulled back from the plan to open its next European Uniqlo flagship in Barcelona. It says that plans have been put on hold indefinitely.

The company will now focus on expansion in the UK, according to reports, and has blamed the effects of the March 2011 earthquake for slowing down Uniqlo’s production and distribution process.

The more likely reasons are the current problems and uncertainty with the Eurozone as a whole, and with the medium-term prospects for the Spanish economy in particular. Uniqlo had also been slated to open in Milan. It is possible that this plan may also now be shelved, although the Japanese fashion world holds Milan in such high esteem that Uniqlo may still see the PR value of a store there as worth the effort.

The news of postponement in Barcelona comes in tandem with increasingly aggressive announcements of expansion plans for the USA – even though this market is seen by most retail experts as being far more difficult due to the very high levels of competition and the hugely diverse consumer market. The company has already noted that the massive new New York store is performing well under expectations – although this poor performance was immediately predicted by some experts who saw the store before opening.

In a recent interview, Fast Retailing CEO Tadashi Yanai stated, yet again, that he was looking for new acquisitions and noted that he would be willing to spend huge amounts of money to get the right company. This announcement alone immediately boosted the company’s share price as investors salivated over the possibility of a merger between Fast Retailing and another genuinely global fashion retailer, with one analyst even pondering the possibility of a bid for Gap. The problem, of course, is that Fast Retailing would be highly unlikely to ever consider a merger, insisting on full control of any newly acquired company. The conflict this would create within a large, established brand company would cast worry on the success of such an acquisition – and Fast Retailing’s record on successfully managing its acquisitions is patchy at best. It has learned, however, and now may well be the time for the one big move.

A major acquisition, particularly in the more fashion forward end of the market, is Fast Retailing’s only real possibility of long term advancement and the only way it will meet its outlandish goal of 2 trillion JPY by 2020. With sales in Japan now floundering, the company does now need to pull off a real coup to get it back on track. The good news is that if any Japanese company can do it, Fast Retailing can.

Japan’s retail workers say ‘No thanks’ to health insurance & pensions

by admin on January 6, 2012

A group of 16 industry associations and other bodies carried out a survey recently to confirm that part-time retail workers were actually happy not to receive health insurance or pensions. The Japan Chain Store Association, Japan Department Store Association, Japan Supermarket Association, and 13 other retail industry related bodies carried out its questionnaire survey late last year, presenting its findings to the government committee now looking at making it compulsory for firms to provide such benefits to part-time workers and contract employees as well as to full-time, permanent staff.

The retail sector is naturally very concerned that it will soon be legally obligated to provide such benefits to non-permanent employees. At present, with no exact minimum wage in place, the average hourly wage for a part-time retail employee is around ¥800 with many sub sectors, including convenience stores and supermarkets, relying on the low cost of part-time employees to maintain margins. Even in the fashion sector, a number of chains also take advantage of this by maintaing large numbers of part-time staff, even having store managers employed as non-permanent staff in some cases. This is possible because ‘part-time’ does not necessarily mean limited working hours in many cases. For married women and other people who are not the main household earner, keeping income levels below the minimum tax threshold is a key aspect of their work, meaning that their employed hours are limited too. For others, simply working without a contract means they have more flexibility in their work, but very little security. The majority of people working under these conditions are believed to be women.

The association led survey found what it hoped for, however. Asking 1,730 part-time employees during October 2011, the results showed that an overwhelming percentage, 63.4%, were ‘Completely Against’ or ‘ Against’ the introduction of mandatory pension, health insurance or social security provision. The main reason being that part of the payments would need to be deducted from their own wages. The survey showed that most respondents expected their potential incomes to drop considerably if such measures were introduced.

At present, the proposal is that part-time (i.e. non-permanent) employees working more than 20 hours per week would be subject to the new provisions. In response to the industry survey, 27.2% said they would either work fewer hours or actually stop working rather than pay the price of the insurance measures.

JapanConsuming Headlines: January 2012

by admin on January 6, 2012

JapanConsuming: January 2012 Edition

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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

JapanConsuming Headlines: December 2011

by admin on December 5, 2011

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Focus: Ever dynamic: Japan’s apparel market
Apparel consumption by value has halved in Japan since 1991. This massive fall is partially just because people are no longer as frenziedly over consuming as in the 1980s and because more competition and low cost sources have greatly reduced average unit prices – unit consumption of apparel has actually doubled in the same period. What is remarkable though is firstly how many of the old guard of apparel companies survived thanks to some stolid propping up by banks but also how fertile the market is, with new businesses emerging that promise to match the growth rates of the last decade’s winners like Point and Cross Company.

Department stores diversify
Department stores have been experimenting over the past few years. Up to now the focus has been on survival but the latest plans are about something more tantalising: exploiting their brand value in new types of formats ranging from cosmetics specialty chains to hybrid station buildings. All of which indicates the best chains are now stable enough not just to survive but to actually move to expansion mode. Box: Isetan Mitsukoshi to spend ¥90 billion on upgrades

Fast Retailing: pressure to rethink
Fast Retailing has come under unprecedented pressure over the past month, with both sales and share price falling. Despite all the criticism, it remains Japan’s best hope to become a global retail power. The question is whether it can think as globally as it wants to act.

Ito-Yokado: the GMS emperor’s new clothes plan
Ito-Yokado is well into implementing what it is calling its second big merchandising revolution for apparel. This may well be the second largest, but there’s been numerous other major plans in between and, so far, little to show in terms of success. The GMS giant now thinks it can get it right.

Rakuten acquires Kobo
Rakuten has taken a huge leap into the e-book market by acquiring Kobo, a Canadian manufacturer of e-readers and an e-book seller. Rakuten plans to continue expansion of the Kobo reader distribution internationally, and introduce the reader in Japan in 2012. The acquisition will also allow further options to expand the Raboo e-book sales site that Rakuten launched in August.

Dr Ci Labo using in-house SNS to involve customers
One of the leading cosmetics brands is increasing its use of social networking services to better involve customers and enhance loyalty. By having its own question and answer forum, and rewarding customers who give popular answers, it has identified key opinion leaders among its customer base.

New store development regulations not working
About five years ago, the government called a halt to a period of relatively free development of large scale retail facilities, returning to its historical stance of protecting small retailers and adding incentives to redevelop ailing town centres. It hasn’t worked.

Non-store food retailing
Online food retailing is still in its infancy, but the potential is undeniable and almost every supermarket chain has jumped on the bandwagon. There are also new niche markets too, and a series of recent acquisitions and business tie-ups show that high end organic produce is also likely to become a very strong market.

United Arrows sales surge again
It is the great come back story. Slumping sales in 2007-8 followed a questionable brand split just as consumers were taking their business to fast fashion stores, suggested that United Arrows was out of touch and losing its appeal. But UA is back. It continued to expand, same store sales have risen for nearly 24 months, and it looks set to have almost doubled sales in the last six years. UA is expecting strong growth ahead thanks to e-commerce, new formats and some unusual new location strategies, including opening stores in highway service stations.

Start Today invests in used clothing
Buying used clothing has become more acceptable in Japan and more effort has been made to recycle but the country remains way behind other markets like the US and South Korea. Start Today could change all this by making used clothing a key component of its Zozotown portal. If it succeeds, it will have convinced much of Japan’s fashion forward consumers that used clothing is cool.

Will you still feed me when I’m 64? What about 70?
The speed with which Japan’s population is ageing is an increasingly pressing problem for the country. Japan is about to increase the retirement age in stages from 60 to 65, and most salarymen seem happy about it.

Home centres getting into drugs
Over the counter drugs can now be sold by any retailer with the requisite number of qualified sales staff. Home centres, which pride themselves on selling almost everything except food, are keen to expand their share of the market too.

Cross Company launches first menswear brand
Cross Company has built a ¥50 billion business but it is almost entirely dependent on the 20s womenswear market. Next year it will launch its first menswear brand, with an aggressive roll out of 100 stores in the first year.

News in Brief
An At Home Christmas
QVC sells¥10 and ¥15 million rings
Costco to open two new stores
JR Kyushu to open new station SC in 2015
Fashion and station buildings strengthen direct marketing
New Aeon SC for Tokyo in 2014
Scroll invests in TV Shopping
Marui Curren to close
Desigual expanding fast
Megane Top powers ahead, up 21.4%
Cosmetics market to shrink 4.4%
Direct marketing sales up 1%
April opening for Tokyu Plaza Omotesando
Itochu invests in Satisfaction Guaranteed
Lumine and Atre sales up
J Front to open SC on old Matsuzakaya Yokohama store
Sumitomo plans more across Japan and Asia
Tourist sales down 5.4%
Land’s End Japan renews webstore
Familymart opens new concept store in Daikanyama
Mr Max to open in Ibaragi
Seicomart accepts Sapica e-wallets
More brands flock to Ginza
Heiwado announces supermarket acquisition plans
Aoyama acquires Fukuryo
Edia predicts traffic jams a month in advance

Aeon forces pace of supermarket M&A in Japan

by admin on October 6, 2011

Aeon has announced it will acquire  Marunaka and Sanyo Marunaka, two supermarket companies with significant shares in the Chugoku and Shikoku regions. The acquisition will cost Aeon a reported ¥40 billion and is set to go through by November. Aeon established business ties with the companies last year.

The news comes just a month after the revelation that Arcs Group would acquire Universe, merging the largest supermarket operations in Hokkaido and Tohoku respectively and effectively creating the second largest single supermarket operation in the country. The news was historic in some sense as many analysts have been predicting the consolidation of the supermarket sector for a long time. Such predictions seemed to be less and less likely, with few changes in the sector after Walmart moved in to acquire Seiyu beginning in 2002 and Tesco acquired C2 Network (currently Tesco Japan) in 2003. The entry of the world’s largest international retailers appeared to have caused domestic firms to circle the wagons and close all routes to new acquisitions. Consequently, the move by Arcs, one of the biggest regional chains, may well have broken the dam.

Aeon, the largest retailer when all affiliated businesses are included, has long been highly acquisitive – the whole group has grown out of a huge number of mergers and acquisitions over the past four decades. Following Walmart’s entry, Aeon has even used the ‘protecting Japan’s assets’ line when making it’s own acquisitions. Today, it is the second largest seller of food, but by far the largest overall supermarket operation with some 12 different supermarket subsidiaries and affiliates and the only nationwide supermarket supply chain. It also owns major shares in both Daiei and Maruetsu. The group has been active in other sectors, acquiring Origin Toshu deli chain and several drugstores in the past few years, but the move to buy Marunaka and Sanyo Marunaka is the first in the supermarket sector since the tie-up with Daiei.

According to press reports, Marunaka and Sanyo Marunaka have no capital ties but share the same founding family, which owns almost all stock in the two firms. Aeon will buy the firms with its own funds and turn them into subsidiaries. As normal, Aeon will not take direct charge but allow current top executives at Marunaka and Sanyo Marunaka to run the business for the time being. It will also not move to change the names of the supermarket store banners. Marunaka and Sanyo Marunaka have a total of about 210 stores, generating annual sales of roughly ¥330 billion.

Aeon is the only retailer with the potential for a modern, nationwide, branded supermarket operation, similar to Seven Eleven in the convenience store sector. There are still few signs that it intends to create one yet, however. While seven of its many subsidiaries operate under the Maxvalu banner or a variation thereof, there is only minor integration between subsidiaries and each regional chain claims to have significant independence in setting local strategy. Investors would welcome the news that new acquisitions such as those of the two Marunaka chains would be brought under a single banner like Maxvalu, but it appears that Aeon still has to offer continued independence to the original owners in order to get acquisition agreement, no matter how rich they make them.

For the time being, the main advantages of the acquisition will be to add further to Aeon’s turnover figures, but more importantly to expand volume in Aeon’s Topvalu own brands.

At the same time, with the move coming so soon after the tie-up of Arcs and Universe, it could well prompt other companies to move forward their own plans to consolidate too. Tesco, having just announced a pull out because it had failed to make new acquisitions, may have got its timing very wrong indeed.

JapanConsuming Headlines: October 2011

October 5, 2011

Shopping centres: only the best are good enough Shopping centres stormed ahead of department stores and GMS chains from the late 1990s and now dominate retailing as never before, accounting for some 20% of all retail sales. However, both development and sales hit a wall in 2008 as consumption fell and investment in new SCs [...]

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Uniqlo down 10.7% but better for others

October 4, 2011

Uniqlo announced September same store sales down 10.7%  and sales overall down 5.4%, a substantial fall. Fast Retailing blamed the warm weather for poor sales of Autumn/Winter apparel. Uniqlo closed four stores and opened six during the month. No such worries affected ABC Mart which saw brisk sales of footwear, rising 1.7% like for like [...]

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World buys Fashionwalker

October 2, 2011
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World announced October 1 the acquisition of fashionwalker.com, the online and mobile fashion site targeting women in their teens and 20s. This is another sign of World’s growing online expansion following the launch of its web-based outlet store as well as a store within the Amazon.jp portal at the end of last month. Fashionwalker was set up [...]

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Rakuten buys UK’s Play

September 23, 2011
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Rakuten yesterday announced it will buy the UK e-commerce business, play.com for £25 million. This is the third European acquisition by Rakuten in the last year, following the purchase of PriceMinister in France in 2010 and German online mall Tradoria in July. Play.com is one of the largest sellers of CDs and DVDs in the [...]

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JapanConsuming Headlines: October 2011

September 2, 2011

Tesco to pull out of Japan September began with the not unexpected news that Tesco will look to sell off its Japan operations. Although this will be chalked up as yet another overseas failure, the British supermarket has had a positive impact on food retailing in Tokyo. Focus: Specialty apparel chains FY2010: bigger is better [...]

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