March 5 2012

JapanConsuming Headlines: March 2012

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: 2011 proves resilience of major retailers
In the first few weeks after the natural disaster last March, prospects for retailing looked pretty bleak. Consumers immediately reigned in spending on non-essentials and the prospect of a further, man-made nuclear disaster seemed possible – something only narrowly avoided it is now revealed. Within a month though, consumers decided to enjoy life more in the moment, and spending picked up, helping both department stores and GMS chains to post solid results for the full calendar year.

JR East: 17 million passengers a day
JR East continues to rebuild and upgrade its many station shopping facilities to sell more to its 17 million daily passengers and has tripled the number of shopping centres and upgraded others. The latest are Hiratsuka Lusca, Lumine Ikebukuro and Atre Kawasaki. It will also add a new crop of higher end tenants at Lumine Shinjuku and has extensive projects at Shibuya, Kawasaki, Funabashi and Yokohama stations.

J Front to buy Parco
J Front will buy a large stake in Parco in the next few weeks. This is one of the largest acquisitions in retail distribution ever in Japan, and it is also hugely significant in what it says about the department store sector, shopping centre development, and the threat faced by the rise and rise of JR East’s retail empire, particularly its Lumine and Atre buildings.

BOX: Parco vs. JR East

Rakuten sets new records in 2011
FY2011 to December was a record year for Rakuten, not least in becoming the third largest fashion and apparel vendor in the country. It broke ¥1 trillion in product transactions on its portal for the first time and ¥3 trillion overall. As well as offering more SKUs than supermarkets, departments stores, home centres and convenience stores combined, it has also massively expanded its operations outside Japan and is well on track to become an English-speaking, global online shopping portal.

Uny to become holding company, absorb Circle K
Uny is Japan’s third largest retail group and the dominant mixed merchandise retailer in the Chubu Region centred on Nagoya, the third largest conurbation in the country. Sadly it has shown a conspicuous lack of innovation over the past 15 years or so, becoming increasingly entrenched in its home region and now an obvious takeover target. To ward off unwelcome acquisitors, Uny will ape its main GMS rivals and adopt a holding company structure.

Radishboya: fresh food from mobile phones
NTT Docomo, Japan’s largest mobile phone operator, confirmed its takeover of Radishboya last month. The acquisition is a new departure for the communications company, which recognises that the mobile market has only limited room to grow further and the best source of new growth is through add on services. Radishboya is a good start, an innovative direct delivery company offering organic and other fresh food to health conscious consumers – a market that has grown quickly in recent months.

Large scale shopping centre openings hit 20-Year Low
Only half the number of new large shopping centres will open in 2012 compared to the year before. Developers and property managers are seeing demand tail off, especially for out of town centres that require not only a car for most consumers to access them, but also government approval to get built. The new centres will almost all open in city centres this year, representing redevelopments rather than entirely new locations.

More multiple locations for convenience store franchisees
Convenience stores are hugely profitable, at least for the franchisors. In the background smaller franchisees struggle to make a living – often surviving without a proper salary even when the whole family help out for free. The model is now so unworkable that the sector leaders are shifting increasingly to corporate franchisees.

Box: Seven & I to open 300 petrol station convenience stores

UCC buys stake in Nissen, sells Shaddy
UCC is about to become Nissen’s largest shareholder and will work closely with the direct marketing firm to sell its coffee products across its vast database. More importantly, Nissen will be buying a UCC subsidiary called Shaddy, an unglamorous but potentially potent gift catalogue business that also happens to operate a network of 3,000 affiliated stores.

Box: Dinos ties with Cuoca

Nespresso builds brand loyalty
Nespresso has built a loyal following in Japan but is reaching out to new customers through stand alone stores as well as a new concept unique to Japan.

Beams, Sanei and Tamaya go ‘wakuwaku’ on highways
More retailers are catching United Arrows’ enthusiasm for locating stores in highway service areas and other transport hubs. Beams and Sanei International will launch similar stores next month even more unrelated to their core business than United Arrows’ version, and Tamaya sees a market for hair accessories and fashion jewellery. Meanwhile United Arrows itself has come up with yet another way to exploit its brand.

Box: Beams launches new sports chain with golf lessons

Isetan-Mitsukoshi cosmetics chain launches this month
Isetan-Mitsukoshi has never operated a specialty store chain before but this month will see the launch of its first. Focusing on high end cosmetics brands from around the world, the cosmetics select shop is the department store group’s first attempt at taking its merchandise to where the customer is, rather than waiting for her to come to it.

Box: Cosme Kitchen opens 4 more stores

News in Brief
Ben & Jerry’s plans 50 Japanese stores
Sanyo Shokai ends Blue Label menswear line
QVC Japan hits ¥1 billion sales a day
Mellow Yellow launches in Japan
Marui profit jumps 41%
Edion fined ¥4 billion for abuse of power over suppliers
Sanki Shoji starts Strenesse distribution
Electronics retailers see profits plummet
Mitsukoshi Nagoya upgrade
Belluna opens stores for 50s women
Japanese economy continuing to improve
Askul developing new lines with manufacturers
Jins opens eight new stores
Convenience stores up 1.7% to January
Otsuka Kagu forecasts profit upswing
Itochu to take Mila Schon into China
Thom Browne and Marni sign up for Zozo
Matsumotokiyoshi up, Sun Drug down
Aeon to open supermarkets China
Japan Tobacco no longer a Green Giant
Mitsui signs off on more new developments
Itochu expands LeSportsac sales in Europe
Tokyu Hands launches Hands+
Chinese and Korean electronics brands expanding in Japan
Expanded TopShop opens in Laforet


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