February 5 2012

JapanConsuming Headlines: February 2012

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: The old and the single: two burgeoning but still untapped markets
That Japan’s population is getting old is not news. Neither is the fact that those who are still young are staying single. What is news is just how quickly these trends are impacting society now, not in some distant future – 10 million people are becoming eligible for retirement as of this year. With a forecast population of just 86 million people by 2060, the implications of demographic changes for consumer distribution are equally profound but as yet few brands and retailers have taken advantage of the shift.

E-wallets break ¥2 trillion in value
Japanese shoppers and commuters love e-wallet smart cards – but retailers love them even more. For consumers the cards are convenient but for retailers it means cash in advance, tying up the customer’s loyalty, and a whole raft of market promotion and shopper analysis opportunities. Growth has been massive in the last two years, but the key players are looking to consolidate their gains as the number of cards rapidly approaches saturation.

Yamada Denki’s plans for smart homes
The consumer electronics sector is in decline and there’s no getting away from it. After two big, short-term sales boosts from Eco-points and then the switch to digital TV, all the big chains are seeing sales fall compared to last year. The only hope is that the top firms continue to soak up share from the others or, as is likely, that retailers and manufacturers will convince the government to provide another round of prop-up support through more Eco-point campaigns. Meanwhile, Yamada is trying something new.

Kao to reduce cosmetics lines to just seven
Kao is looking to restructure its entire domestic retail operation for cosmetics. It will begin by reducing the number of brands earmarked for future development to just seven. As a part of this process, the number of brands and staff under its Kanebo business will be reduced. Cosmetics sales for Kao and Kanebo combined are second only to Shiseido in Japan, but the operation continued to make a loss last year and such a consolidation is overdue.
BOX: Kao overhauls overseas sales network

Sky Tree, Tokyo Station: the big openings of the year
Although shopping centre development is now down from its peak, there are some highly anticipated projects coming online this year. In addition, we can expect an increasing number of plans to revitalise existing, regional centres.

Bare Minerals to expand in Asia
Shiseido has announced its expansion strategy for the Bare Minerals brand that it acquired back in 2010. This will include a new range of skincare products developed jointly between the two companies and aimed squarely at the skincare obsessed Asian market.

Scroll launches online retail brands
Catalogue firms have reaped the rewards of shifting to digital retailing but in apparel they still struggle against the specialty SPA chains that dominate the high street and shopping mall. The key issue has been the long lead times for production which, unless they are really good at fashion forecasting, leaves them out of the seasonal fashion market. To fix this, catalogue firm Scroll is rewriting the way it does business, shortening production cycles to match the best specialty chains.

JR East to convert three station buildings
JR East continues to upgrade its stations, largely by creating spaces suitable for retail tenants who themselves provide the light, entertainment and colour that make stations much more pleasant places to traverse. The latest due for an upgrade continue the theme of rebranding, focusing on the Lumine, Ecute and Atre names for most, but the Celeo brand is also making another appearance.

United Arrows opens more station stores as Tokyo Metro opens malls
United Arrows continues its relentless expansion wherever customer traffic flows. It will open in Tokyo Station this month and on another highway out in Shizuoka in April. With other retailers keen to co-opt the strategy, railway, highway and metro operators are only too happy to oblige, building new retail shells providing brighter, more colourful stations for passengers to walk through on the daily grind, while bringing themselves some lucrative new income.
Box: Another United Arrows store on the highway

Valor to enter South Korea
Chubu based supermarket retailer, Valor, will take the surprising step of moving into the South Korean market. It becomes the first major Japanese retailer other than convenience stores and a few apparel chains to enter Korea. It is also a risky move. Korea has one of the most mature food markets in the region with four powerful local players – and it has already seen off both Carrefour and Walmart. The move says as much about the difficulty of expanding in Japan as it does about market opportunity in Korea.

Tokyu to rebuild Shibuya store
When Tokyu opens a new retail space called ShinQs within the Hikarie tower in Shibuya in April, it will also close another. Tokyu Department store in Shibuya will lose its East wing from March but this will be replaced by a vast second stage tower in 2018 as it continues its efforts to revitalise Shibuya.
Box: Vince Camuto comes to Japan

Tourists down but recovery expected this year
Department stores lost much of their tourist trade in 2011 and December was down again. There is much to be optimistic about, however. Per customer sales have risen strongly as more Asian tourists spend on high ticket items, and the Japan National Tourist Organisation now forecasts a record year this year and a doubling of tourist numbers by 2020. If it works, the development of a tourist economy will benefit international brands and retailers too.

Top shoe chains battle it out as shoe market contracts
ABC Mart took over as the top footwear retailer last year and continues to pull ahead, with record results expected for FY2011. Chiyoda is fighting back and while its sales are likely to continue to contract until the overhaul of its store portfolio is complete, profitability is accelerating as it shifts to store branded lines and cuts loss making outlets.

News in Brief
Walmart to expand Seiyu chain
Point launches accessories chain
Columbia Sportswear to open first store in March
Triumph to rapidly expand Shape Sensation
Advantage Partners acquires 75% of Megane Super
Bebe to open second Japanese store
Cosmetics down 4.4% to ¥2.846 trillion
Aeon to open mall in Tsukuba
Rakuten breaks ¥1 trillion
Docomo to acquire Radishbo-ya
Life targets 400 stores
Tokyu Hands comes to Omotesando
Senshukai launches catalogue for nurses and apps for expectant mothers
Matsuzakaya Nagoya to add 72 tenants including H&M
The Triumph of Kawaii
More stores for Versace
J Front to revamp Marucollet cosmetics catalogue
Baroque to launch two new brands in Omotesando
Tokyu starts on Futako Tamagawa Rise Part II
Agnes B fights back
Direct marketers strengthen interiors line up
Mikimoto open in Harrods of London
Strong New Year’s for Lumine and 109
Sazaby signs Frank & Eileen
Tiffany to open in Odakyu
Growell to expand in prescription services


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