October 4 2010

JapanConsuming Headlines: October 2010

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: Specialty apparel chains: Sales fall for 80%
Following on from September’s focus on apparel distribution overall, this month we take a closer look at the most dominant apparel retail format: specialty chains. Just as for apparel retailing overall, it was a terrible year for the specialty chains. Although the format extended its lead in market share, the impact of falling consumption, deflation and lower investment in stores, hit the sector hard. Many more firms saw sales fall than in FY2008, with a knock on effect on profits. FY2010 is proving an unstable year so far, but the fall out in the last few years has led to some pruning of the worst performing chains. What is clear is that apparel retailing has emerged from the downturn more competitive than ever, and any retailer which doesn’t focus on a great product range and dynamic stores and service, won’t see much joy from freer spending consumers.

Back with a bang: Mitsukoshi reopens in Ginza
Isetan Mitsukoshi announced last month that it expected annual sales of ¥63 billion from its newly expanded 36,000 sqm store in Ginza following the reopening on 11 September. This is less than it made with just 24,000 sqm back in 2000, but with the new store swamped with customers, is likely yet another deliberate understatement. The new store may not quite represent the department store of the future, but is a major improvement on what the sector has produced over recent years.

Cross Company: a top 10 specialty chain in 2015
Cross Company is the fastest growing specialty retailer of the last decade, increasing turnover by more than 3,500% since the late 1990s. It became a top 30 specialty apparel firm last year and is comfortably profitable. If it fulfils its new medium term plan, Cross will become a top 10 apparel chain with sales triple last year, from some 670 stores. As well as existing chains, Cross looks set to enter the select shop market too.

Aeon to decommission Jusco brand
Nowadays, Japan’s best performing retailers have much the same goals and ideas on how to achieve them as the best everywhere else. Aeon has struggled for 12 years to implement a streamlined, state of the art retail strategy, in the end producing very little return despite substantial levels of investment. It has now finally made a big leap forward with the announcement of new, uniform branding of stores.

Amazon: No. 1 non-store retailer
Despite 20 years of economic stagnation and deflation, one sector that has done consistently well and is now doing even better is non-store retailing, covering catalogues, TV shopping, and increasingly online sales. In the 20 years after 1990, total non-store retail sales have trebled according to one recent report. More significantly, Amazon Japan is again placed as the country’s number one non-store retailer by a massive margin.

10 to15 stores for TopShop Japan
TopShop launched tentatively in Japan at first, opening just one store in 2006 and then waiting three years to open the next. However, following the opening of its largest and fourth store last month, the Japanese franchisee wants to expand at a faster clip.

Lumine to get Seibu Yurakucho
Lumine looks set to slide into the current Seibu store in Yurakucho. If negotiations go according to plan, this will be a coup for Lumine, cause local competitors buckets of worry, and presages further investment by JR East in retail buildings beyond its existing station properties.

Marubeni: dark horse of food distribution
Marubeni is the smallest general trading house, but it has significant operations in food wholesale and retail. Claiming the dominant share in some imports of some key foodstuffs, the company is looking to build new own brands and may even consider overseas expansion of its retail operations. Problem is, it must first sort out Daiei.

109-2: men only
Sales at Shibuya 109 have been falling for the first time in 15 years. While expansion to new markets such as Yokohama are a source of growth, closer to its home market of Shibuya, the previously ailing 109-2 building has become a mecca for street menswear.

Itochu to merge wholesale subsidiaries
Itochu has announced it will merge four major food wholesale subsidiaries by sometime next year. It will not, however, include Itochu Shokuhin, one of the biggest Itochu operations, purely in order to protect its business with Seven Eleven. While this denies the economic benefits of having a single uniform operation with less duplication of functions and departments, personal relationships between suppliers and customers continue to trump rationalisation.

Ciggie wars: nicotine boosts conbinis
Convenience stores now saturate Japan and there’s not a lot of room for growth. Even so, all the big chains enjoyed a nice boost this summer thanks, once again, to changes in the way cigarettes are sold. From 1 October a new tax on tobacco pushed prices up by about a third, leading to bulk purchasing over the previous few months.

Parco to grow again – if Mori lets it
Parco’s latest three year plan includes more shopping buildings at home and overseas, investment in specialty retailing, e-commerce and entertainment ventures. While new investment is long overdue, unfortunately Parco’s largest shareholder is trying to hobble its independence.

Onitsuka Tiger the fashion brand
Asics is far ahead in export growth compared to its domestic sportswear rivals, not just in Asia but in the US and Europe too. A key component has been the success of its Onitsuka Tiger brand in the fashion world, and Asics is working to bolster its appeal further both at home and abroad.

News in Brief
Walmart launches own brand credit card
H&M sales double
Urban Outfitters to open in Japan
Seiyu targets Uniqlo with new pricing
38% shopping online – up 8 points on 2008
Aeon taking food orders by fax
28% of retailers more than 100 years old
Sanei takes over Cath Kidston
ABC divests United Arrows stake
Toys R Us investigated by FTC
Matsuzakaya Ginza the fashion building
Digital reading gaining traction
Yama Girls to keep climbing
ABC Mart’s new mega store format
Itochu grabs more share of surf market
More brands do TV ads
Uniqlo hires Hollywood
Candish Shoes
Mitsubishi to launch 18,000 sqm SC in Minato Mirai
Tutuanna prepares for expansion
Haruyama looks for high ticket sales
Zozo grabs Marc Jacobs
Shimamura opens biggest store
Point in Shinjuku
Moncler adds three stores
Aoyama sells more suits again
Ito-Yokado opens another new home centre
Reed Krakoff in Aoyama
Fast Retailing trials new Princesse tam.tam concept in France
ExxonMobil to sell retail business in Japan
Nitori to open in Venus Fort
Global flagship for Duvetica


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