April 10 2011

JapanConsuming Headlines: April 2011

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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The next chapter: recovery for Japan
Following the events of 11 March 2011, it is a difficult month to write about business topics in Japan. The terrible consequences of the earthquake cannot be understated, but Japan will bounce back. The response from Japanese and foreign companies alike has been fantastic (a long list of examples of generosity can be found on Page 3) and plans are already being laid for the future.

Second Harvest Japan: Delivering direct to those in need

The response to 11 March
The reaction from consumer brands and retailers has been quick and generous. We have compiled an extensive chart of donations of funds and goods by consumer brands and retailers.

Focus: Kanto: new demographics shaking up food retailing
It is no secret that Japan faces a major demographic upheaval in the next two decades, but the extent and impact of the changes is still only just beginning to be understood in terms of the problems and the opportunities they will present to retailers. With 50% of people single in Tokyo by 2020 and ageing communities everywhere, food and basic FMCG businesses will be deeply affected. Arguably, the capital is already one of the most competitive food retailing markets in the world with Aeon and Seven & I commanding close to 30% of sales, but things will intensify even more soon, and there is likely to be a major shake-out in the latter part of the decade.

Denim market recut: Levi Strauss sales fall by half
The massive pressure on apparel brands from specialty chains is perfectly exemplified by the denim market. With Fast Retailing now claiming sales of 16 million pairs of Uniqlo jeans, major brands like Levi Strauss have seen sales cut in half. The US brand is now fighting back, with plans to cut the ladder from under it and create a distinct and clear positioning as the leading premium brand in the market.
Box: Right On up and down again

New SC openings drop in 2011
The number of new SCs opening each year has been falling since 2007 from close to 100 at the peak to just 54 in 2010. 2011 looks likely to see the lowest number of new malls in more than a decade, but while investment in suburban and out of town malls declines, city centre investment is on the up.
Box: Shopping centre sales up in February

Even Shimamura going to China
If you are an apparel retailer here and you don’t have a China strategy investors are likely to be complaining or selling your stock, but opening stores there isn’t for everyone. Shimamura is the latest to suggest it will make the move to open in China just as its sales collapse following the earthquake and tsunami.
Box: Shimamura produces record profits again but 25% of stores damaged in earthquake

More Japan investment for Inditex
Inditex has been one of the most active foreign retailers in Japan since unburdening itself from its joint venture with Bigi in 2006. Up to now only the Zara brand has been sold here but from this month Bershka will add further growth to the fashion giant’s Japanese business.

Itochu to close down Raika
Another relic of the 1980s apparel boom will shortly be closed. Itochu Shoji has finally taken the axe to ailing subsidiary Raika as it continues to reshape its apparel business into a more streamlined, transparent operation.

Saikaya shifts to SC operation
Kanagawa based department store Saikaya has seen sales fall by half in five years, under performing a sector already replete with poor results, despite reasonable locations near key railway stations. It is now trying to make better use of these assets by converting to SC operations.

Facebook: appealing to international Japanese
Japan has its own social networking sites (SNS), notably Mixi for the PC and Gree for mobile phones to name just the largest. As a result, Facebook has made less headway here than in many countries, but it is catching on fast. In particular, Japanese with friends overseas are increasingly turning to the American SNS as the main means to stay in touch – and Japanese retailers and brands with international ambitions are also now signing on.

Isetan Men’s gets two floors in new Osaka Mitsukoshi store
The much anticipated JR Osaka Mitsukoshi Isetan will feature two floors as a dedicated menswear space as well as Isetan Girl targeting the younger women’s market. A good 30% of the entire store will be selected and run by the department store itself, a precedent set in its recently reopened Ginza store and one that looks like a potentially game saving strategy for department stores in general.

Uniqlo: a bit less smelly this Spring
Having successfully sold 80 million pieces of its winter lines, Uniqlo has shifted its marketing offensive to Spring/Summer. Quietly ignoring the fact that sales last season fell well short of the previous year, despite selling so many more items, the brand recognises that making a success of warm weather clothing could well bring it back on track. Let’s hope consumers, both in Japan and elsewhere, feel the same.

Smart phones offer new growth for online retail
All the major players in the online retail market are seeing sharp increases in purchases made through smart phones. Although these devices are still in the early stages of market penetration, they will soon overtake the standard Japanese mobile phone in terms of numbers. Online retailers are already enjoying the benefits of smart phones and making every effort to encourage users to shop with them.

Home Centres make major relief contribution on the ground
Home centres were looking particularly strong at the end of 2010, with the sector also growing strongly in January. More sophisticated branding and marketing, along with deep ranges and better services for tradesmen keep drawing people in. The Tohoku earthquake will hit some chains hard, but given that much of their merchandise ranges can be used in rebuilding, many expect a rapid bounce back.

Origin Toshu expanding under Aeon
The uniquely positioned Origin Toshu lunch box and deli chain that is so ubiquitous around central Tokyo has finally achieved a secure footing under its new parent Aeon and has announced bold plans for expansion over the next three years. Competition will be tough, however, and a lot may depend on how the chain takes advantage of links with rest of the Aeon Group.

Luxury brands gaining from Asia
While luxury brand sales were some of the first to be hit by the financial crisis two years ago, the bigger houses have come back strongly, reporting huge sales improvements in 2010. Asia is increasingly important, with several groups taking the highest share of global sales from the region.

Convenience stores: struggling to meet demand
Despite typical scare stories from the press and some reports of hiked prices and hoarding by petrol stations and rice sellers, the bigger supermarket and convenience store chains are behaving with typical professionalism and common sense following the 11 March earthquake.

News in Brief
J Front ups stake in Plaza chain
Reduce power: rent LEDs from Yamada Denki
Direct marketing sale up 2.5%
Miu Miu opens in Nagoya, Prada Japan up 16.6%
Two Tokyu Hands open in one month
Senshukai launches Aoyama Flagship
Shibuya 109 to open outlet store
Coop Net: Call back food ordering for elderly
Apparel sector salaries highest for buyers
L.L.Bean launches new brand
Adidas lends shoes
Seiyu suits for ¥3,800
Sumitomo announces key tenants for Shonan C-X
Nespresso adds second depachika corner
Cando appoints founder’s son as new CEO
Electronics stores bracing for major sales drop
Okuwa opens drive through net super
Meidiya opens new convenience formats
Hachette Fujingaho ties with Ringbell in new catalogue venture
Seven Eleven opens in Kagoshima Prefecture
Ecos moves to direct distribution
Price Hikes Slowly Taking Hold At Supermarkets
Himaraya plans 12 more stores
More new malls for JR East
Keio to refurbish Shinjuku flagship
Savoy: fast fashion bags
ABC Mart tries new Nuovo concept
Bicycle suits from Aoyama
Ron Herman expands
Point does TV ads too


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