February 5 2011

JapanConsuming Headlines: February 2011

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: Who pays what in Japanese retailing: Salary survey
A recent survey published by Shogyokai provides a rare insight into pay scales at major retailers and service companies. For the average employee, salaries at major direct marketing firms are highest, with department stores paying the lowest on average. Employees at department stores are, however, incredibly loyal, so perhaps it is not the money that counts.

The all new Sogo-Seibu
Seven & I will implement wide ranging changes at Sogo-Seibu over the coming year. Already several important modifications have been made to the Ikebukuro flagship such as an innovative new food floor, but judging from the activity and excitement within the department store group, management will now become far more robust. This will be good news for department stores but very bad news for Japan’s bigger apparel groups.

Large stores: getting into shape
While consumers may be turning away from mixed merchandise stores in favour of specialty store solutions, it is not an entirely bleak picture for the bigger formats. Although overall sales have been patchy, a long term look at same store sales shows that it has been the poorer outlets that have closed, notably in the department store sector.

Online retail continues rapid growth
Online retailers continue to go from strength to strength, with dedicated non-store firms competing head to head with new channels set up by high street chains. So far, there is no sign of any major weakness among the leading players, suggesting plenty of room to continue to grow the channel. Indeed, consultants report an estimated 60% rise in internet based commerce between now and 2015, meaning that online sales alone could account for up to 11% of total retail sales within four years, more than double the current level.

Maruetsu goes small to gain big
Although it is mostly a concrete office jungle, there are still plenty of people living around central Tokyo poorly served by food retailers. After years of trial, error and acquiring smaller format food chains, Maruetsu thinks it finally has the solution with a new mini-supermarket format called Maruetsu Puchi.

Aeon Hapicom and Life do private brands
Expansion of private brands developed and sold exclusively by retailers continues to be a significant trend in retailing as a whole and particularly for supermarkets, drugstores and other FMCG sellers. New announcements occur weekly, but there have been a couple of interesting ones in the past month from Aeon’s Hapicom and Life supermarket.

36 million T-Card users for CCC
Although the majority of retailers have preferred to keep their loyalty card systems in-house, CCC is finding some success with its cross-branded T-Card service which has a stunning 36.5 million cards in circulation. The card offers a low cost way for other retailers to set up a loyalty point service as well as details of customer behaviour from the card’s data, and for consumers, it can conveniently be used in multiple retail chains. CCC, meanwhile, continues to move slowly towards a situation where it can really begin to leverage the power of the massive volume of data it collects.
BOX: CCC expanding e-book sales

Tobacco sales: Kicking the habit boosts retailers
With the increase in tobacco tax in October, as well as Japan Tobacco’s decision to add a few points to prices when it hoped few would notice, retailers have been enjoying rapid growth in sales of products aimed at helping those wanting to give up smoking.

Import jewellery market shrinks but brands find profit
The jewellery market continues to shrink, providing challenges for high ticket jewellery brands and retailers. Stores and brands are being cut to focus on the best and more use is being made of e-commerce. A recent survey suggests more women now buy their jewellery at specialty chains than at department stores but men still prefer the latter.
Box: Key trends in Jewellery

Point aims for ¥500 billion sales
Point’s 600% plus growth in the last decade has been generated by a small set of branded chains selling similar kinds of safe and friendly fashions. It now plans to go after the “other 98%” of the market in a bid to become a ¥200 billion business in a few years and a ¥500 billion business sometime after, but it will have to ween itself off trading company support to do so.

Mitsukoshi Isetan Osaka: More Isetan than Mitsukoshi
The new Mitsukoshi Isetan department store at Osaka station will actually be one of the smallest in the area once competitors have finished their hectic expansion, but it is already punching well above its size in the amount of speculation and anticipation it is generating. Whatever the final judgement may be, what is clear is that the surrounding development, which includes a new brand of shop building, will become one of the main shopping destinations in the region.

Hakata Hankyu and Amuse Plaza opens in March
Department stores and shopping buildings in Fukuoka are bracing themselves for some tough Spring trading with the opening of a huge 80,000 sqm of retail space at Hakata station in March. With a department store and pretty much every leading retailer represented, it is another example of retailing being further sucked into central hubs, largely around stations.

Top selling mooks: Cath Kidston and Kitson
Mooks continue to be popular with shoppers and brands alike, with the latest rankings showing the most popular brand mooks are selling more than a million per title.

News in Brief
Costume National sets up in Japan
Versace back in Japan
Lalaport Koshien: Zara and H&M
Origin Toshu to open alongside supermarkets
98% of housewives use flyer ads every week
Meiji Omotesando crossing tenancies confirmed
Bluebell signs Balmain
Kasumi opens Netsuper operation
Hankyu Yurakucho: men only please
Aeon expands stake in Sunday
H2O and Takashimaya launch joint brands
Krispy Kreme to open in Osaka
Ginza gets used goods store
Sogo-Seibu retails private brands
Nishimatsuya signs Cherokee
Strong New Year sales for 109 and Lumine
Marui: crowd sourced bags
United Arrows at Kansai Airport
JR East plans new station buildings at Sendai
Daimaru Nagasaki to close
Circle K Sunkus begins small store rollout
Strong 3Q for ABC Mart
Tokyu Hands expands Hands Be small format chain
Fast Retailing closes Candish chain
Renown down 53% but profits at last
Mitsui Outlet Park in Okayama


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