November 6 2010

JapanConsuming: Headlines November 2010

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: Franchise bullies? The convenience store problem
Convenience stores are the one format that Japan has truly made its own. Appearing here first only 35 years ago, the big convenience store operators are some of the largest retail companies in the country and dominate the food distribution channel in terms of sales. It is also the most successful format of the modern era. Overseas companies may be criticised for not understanding the Japanese way, but it is the convenience store sector that proves the relevance of Western models for success in Japan, even though the local tweaks and changes have indeed produced something different. Now, however, a saturated market means the sector is facing increasing difficulties. Without major changes, their current position at the top of the pile could well be under threat.

Fast Retailing: hitting another wall
Fast Retailing announced improved annual results for the year to August 2010, with net profit up 24% to ¥61.6 billion. But the company then went on to dampen down expectations for the current year having seen same store sales plunge in recent months and a slew of new competitive options enter the market. The company still faces criticism for its roller coaster like performance and over dependence on a single brand and just a few, high selling products lines.

Sanei International and Tokyo Style to merge
The merger of Sanei International and Tokyo Style is one of the biggest upsets among listed apparel firms in the last decade, up there with Renown’s take over by a Chinese company. The deal reflects the intense pressures on these firms, saddled with over dependence on a contracting department store market, downward pressure on prices from Uniqlo and others, and more dynamic stores from SPA competitors. Being bigger may not be the only answer but it will give the combined management some breathing space.

TV Shopping: at the head of multi-commerce
TV Shopping has come of age. Programming has become more sophisticated certainly and the customer base has widened beyond the core housewife market thanks to new emphasis on sports and fashions, but the critical catalyst for change has been technology. With broadcasting now available across multiple devices it’s less TV and more Tube Shopping.

Shirt retailers: owning a niche market
The story of how shirt companies fought back against the decline in department store sales is representative of the history of apparel distribution over the last decade. By turning themselves into SPA retail chains and focusing on their core product, a few shirt companies have found a way to not only survive but prosper. Focusing on one product is clearly a risk but in a market where mall shopping now dominates, such category definition clearly works.

Ginza: new ideas bring new competition
Laox, once a major player in the consumer electronics sector before bankruptcy and rebuilding, announced it will open in Matsuzakaya Ginza this month. This move met with surprise from many, but it will add yet another facet to the repositioning of the store. This is just the latest in a series of efforts from stores competing with the new Mitsukoshi just up the street, but it also marks further evidence that Ginza is enjoying a genuinely sustained comeback as a shopping area.

GMS chains finally take to cost reduction
While seemingly 10 years or so late in coming, all of Japan’s largest GMS chains have begun major cost cutting exercises. Aeon, which achieved profitability last year entirely thanks to its first ever serious rationalisation, led the way and is increasing the pace of its activities further. The other big chains, as ever having seen the precedent set, are copying this lead.
BOX: Olympic to merge hypermarket subsidiaries

Young people make careful choices
A recent survey shows a more cautious and independent minded young generation

ABC Mart up 12%, leads Chiyoda
ABC Mart will become the largest footwear retailer this year, beating out Chiyoda which has topped the ranking for more than two decades. While ABC Mart may be a tough client to deal with, its importance in footwear distribution makes it hard to ignore, and continued innovation suggests profit as well as sales may be set to grow further.

J-Front invests to create hybrid department store SCs
J-Front Retailing will invest around ¥35 billion to update its flagship Daimaru Umeda and Matsuzakaya Nagoya locations. The bulk of the investment will be for Daimaru Umeda, but both stores will emerge more like shopping buildings than before.

News in Brief
Yodobashi Camera Kyoto targets ¥40 billion
H&M in Chiba
Senshukai takes control of mobile shopping site
Marubeni to develop station building at Oomori station
More brands for older women
Heatwear price wars
Don Quijote and Nagasakiya to develop hybrid discount store
Herman Miller opens world’s first stand alone store
Smart phones boost mobile shopping
Gree overtakes Mixi as largest SNS in Japan
PAL up 13%
Printemps Ginza hosts Mini Labo store
Haruyama offers suit that keep you working
4°C to enter China
FrancFranc expanding overseas
Parco to launch mini fashion format
Ace launches store with Made in Japan ranges
Columbia opens first Kanto stand alone store
Kyoto Isetan staff do design
Right On posts loss on lower sales
Brebis Noir comes to Japan
Descente sets up in Singapore
Christian Louboutin opens Ginza stand alone store
Uny makes progress in China
Familymart hits 600 stores in Thailand
United Arrows relaunches women’s flagship
Sanyo Shokai: a new brand from H&M designer
Tsuruha enters trading agreement to enter Thailand
H2O Retailing to open SC in Oimachi
New Pork Marketing App for Japan
Lumine Yurakucho confirmed


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