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Focus: Apparel Retailing FY2011: growth from better value
Apparel sales rose 2.3% in FY2011 while the top 100 chains grew around 5%. It was a solid year all round, and the higher growth for the top 100 gave them more than 50% of apparel market share for the first time ever. While specialty chains continued to deliver most of the growth, e-commerce businesses were also to the fore. GMS chains and department stores continued to lose market share, but the enticing story for mixed merchandise formats is the constructive efforts of top firms to fix problems and take control of apparel retail floors through marketing and, above all, own brand development. Prices seem to be on the rise too as consumers shift back to a focus on value. Just how long apparel sales can grow depends on the extent customers look for value not only in apparel but also in their lives, with more competition than ever for discretionary income from life balance services like travel and hobbies.
Yamada Denki acquires Best Denki
Consolidation in the retail sector continues. Following the merger of Bic Camera and Kojima, Yamada Denki has created a ¥2 trillion business by buying Best Denki. This comes five years after it originally bid for the company. Yamada also gets 50% of the Kyushu market, and a platform to expand in Asia.
Old Navy opens in Diver City
Gap opened its first Old Navy store in Japan in July, the first for the brand outside the US. There are many different opinions about its potential here, but just the volume of chatter about the brand shows how concerned the local industry is about an overseas entrant taking a significant share of the value fashion category. The high spec design of the first store combined with the low pricing will indeed give the local chains a run for their money.
Look signs Alice + Olivia
Look has been a remarkable turnaround story, emerging again as one of the leading distributors of quality overseas brands. Its success with Tory Burch and Marimekko has encouraged other brands to sign with it, the latest of which is Alice + Olivia.
Non-store retail sales expand by 9%
Various estimates suggest that non-store retail sales of physical products reached ¥6 trillion in FY2011 and that the top 300 firms in the sector accounted for about 80% of this. The market share of the top 40 may well have reached 50% and the top 10 nearly 30%, a clear indicator of the winner takes pretty much all tendency of the internet.
Takashimaya launches cosmetics chain as Isetan expands
Takashimaya has followed Isetan-Mitsukoshi in setting up its own cosmetics specialty chain, a cosmetics select shop selling premium Japanese and international cosmetics brands. Isetan-Mitsukoshi itself will open its second store this month and, just like a select shop, will also introduce its own brand of cosmetics.
J Front completes Parco take over, Parco Ginza next?
J Front now controls Parco, winning the battle with Aeon and Mori for ownership of the fashion building chain. The deal gives J Front a new source of diversification and access to, and expertise in, the fashion building market. This will help in the management of shopping centre style operations within its department stores and should allow some properties which simply no longer warrant department store branding, to be converted. Matsuzakaya Ginza in particular could well benefit from a new name: Parco Ginza perhaps.
Queens Isetan to expand again
Queens Isetan, the well respected upscale supermarket chain run by Isetan, has had to sit patiently while its parent was busy merging with Mitsukoshi. This has meant four years without any store expansion. Now, having been rolled into a new food company, the chain is once again looking to open more stores, providing opportunities for premium overseas food brands.
ABC Mart, others expand outdoor footwear and fashions into
Outdoor brands are proving popular and stable profit engines in Asia. In Japan the popularity of outdoor sports fashions among urbanites is proving a boon to overseas brands, making up for the slow down in actual participation in outdoor sports themselves. More investment is being made, and ABC Mart has made its first overseas acquisition in 17 years, buying a US outdoor footwear business which it plans to use to expand sales in Asia.
13% of specialty retailers now overseas Japanese
Japan is the only fully developed market in Asia, but, with a shrinking population and fewer children, more specialty chains are following the examples of Uniqlo, Honeys and Point in looking to open in Asia. Greater expansion in Asia means less interest in North America – and hardly anyone wants to go to Europe.
Wholesale consolidation accelerates
Japan may be behind the curve in terms of retailers controlling channels, but the wholesale sector is aware that its role is under threat. The result has been a long process of consolidation in the wholesale industry, but one that accelerated further in FY2011. and as the ranking shows.
Retailing: the succession dilemma
Japan is one of the countries that values family business very highly and it is often surprising how much influence founding families have even in large, public companies – whether they retain a significant stake or not. Retail is one area where family run businesses are common, with a staggering 55% of CEOs among the leading 78 retailers having direct links to founding families. The question is whether new generations of senior executives really have the requisite skills to take the companies further.
Aeon at centre of beer pricing row
Price fixing within distribution channels is more common than most admit, and especially so in sectors with little outside competition. Long protected sales strategies that include rebates, loaned sales staff and promotional payments all help keep wholesalers in business and retail prices high. Unfortunately these practices don’t work so well in a declining market and the beer sector has been caught out pandering to Aeon.
News in Brief
Seiyu set to open 30 new stores annually
Tiger too popular: store closed to restock
Itochu buys UK’s Bramhope
Seven & I to close Sogo Kure
Xebio opens Next store in Kyushu
Department store sales down 3.3% in July but Tokyo flat as tourists return
Cosmetics sales up 0.2% in 2012
Golf market up 2.7% in 2012
Aeon to help develop new station building SC
Ryohin Keikaku to raise apparel to 40% of turnover, launches in Germany
Point launches new brand, raises profitability
Part-time wages on the rise
Forever 21 to open first Osaka store in 2013
Sanyo Shokai signs Pringle 1815 license
J Front simplifies floor management in Tokyo
Imported brand market up 8.3%
Tobu investing ¥3.8 billion in Ikebukuro upgrade
Sumitomo to launch TV shopping in Thailand
Inageya to acquire Miuraya
Giuseppe Zanotti back in Japan
Loft opens fourth biggest store in Tachikawa
Seven-Eleven targeting 1,500 new stores in FY2013
Lixil plans 10 Large Home Centres by 2015
Uniqlo ties with fashion magazines
Cocokara Fine to acquire Kodama drugstore chain