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Focus: Department Stores: short-term success or long-term paradigm shift?
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Same store sales at department stores rose for the first time in 16 years in 2012. The uplift came from more high ticket consumption, investment in renovation and enlarging of city centre stores, and better management. Department stores are not convinced that a benign consumer economy will last and are working hard to diversify, expand overseas, and raise profitability even when it means lower sales. These changes are radical and suggest a more robust sector going forward, but many ideas are new to department stores, and the skills needed to make them work may take longer to build than anticipated.
Lucua to expand at expense of JR Osaka Isetan-Mitsukoshi
Lucua, the shopping centre run by JR West at Osaka station, has been an embarassment to its neighbour Isetan-Mitsukoshi, outperforming the department store in less than half the space. Not surprisingly both JR and Lucua tenants are itching to get their hands on some of the 50,000 sqm Isetan-Mitsukoshi store, and negotiations are underway to find a face saving way to make this happen.
GU: coming up fast behind Uniqlo
The number of people between the ages of 15 to 24 has fallen nearly 30% since 1995 to just 12.3 million, yet numerous fashion chains have seen stellar growth in that time, including both domestic firms such as Uniqlo and overseas chains, including recent entrants like H&M. Fast Retailing’s second chain, GU, is firmly focused on this market, hoping to garner significant share both at home and overseas by offering fun fashions at low prices. It is the first promising project out of Fast Retailing since Uniqlo.
Tax hike won’t impact overseas brands
A recent Yano Research survey suggests fears of consumer meltdown post tax hike are unwarranted at least for overseas brands. The survey found that consumers were more forgiving of discounted luxury brands even though younger people actually turn out to buy more at full price.
Seven & I: stake in Daiichi signals shift in strategy
In late June Ito-Yokado took a 30% stake in Hokkaido supermarket chain Daiichi. While the PR is calling the move a “third-party investment” rather than a takeover, it still represents a sudden and significant change in strategy for Seven & I Holdings. With Aeon finally absorbing Daiei, there are now only two players in the national supermarket business. Aeon has spent the last 50 years acquiring ever more regional retail chains, while Seven & I has put faith in organic growth. That strategy simply won’t work any more.
Working population drops below 80m
Japan’s working population aged 15-64 dropped below 80 million for the first time last year, while the number of elderly exceeded 30 million. Although the total number of people continues to fall, there were net increases in eight prefectures, led by Tokyo and Okinawa, a long-term trend and where more and more consumer marketing will be focused. Prefectures affected by the nuclear disaster continue to lose population at the fastest rate of all.
Wholesale sector up 2.1%
Despite the continuing growth of retailers as the leaders in most distribution channels, wholesalers remain an integral part of the distribution industry, particularly in food, drugs, household products and books. The biggest wholesalers now turn over more than ¥2 trillion a year each, but growth is slow and profits increasingly difficult to achieve.
The RealReal comes to Japan
Flash sales businesses have received a warm welcome in Japan as have used luxury goods stores. Now US firm The RealReal is launching a flash sale site in Japan that marries the benefits of both, providing a chance to buy used luxury at a big discount while offering a convenient, friendly way to offload the contents of all those full to bursting wardrobes.
Belle buys Baroque Japan stake, aims to be leading Asian fashion retailer
With brands like Moussy and Sly, Baroque Japan is not only a hip, design led fashion business, it is in fact also one of the most financially driven fashion retailers in Japan, particularly since an investment by CLSA in 2007. It now has a new Chinese majority shareholder with plans to create one of the biggest fashion retailers in Asia. Since the new owner already owns some 25% of the Chinese footwear market, it is a forecast backed with substance.
Shueisha buys Mirabella brand, invests in online shopping
Old media has been slow to exploit the commercial potential of online channels. It is understandable that firms look to protect paid-for print circulation until an effective and pervasive paid digital model is fully established, but their failure to extract income from selling into their massive readership online is just odd. A switch seems to have been turned on somewhere in Shueisha which is now scrambling to build an e-commerce business of its own, including buying brands from competitors.
Parco in Matsuzakaya Ueno, new investment from J Front
Parco has been released from the financial straightjacket imposed first by bankrupt founding firm Seibu and then by tight investors like Mori and Aeon. J Front genuinely wants Parco to shine again and is providing both the locations and the cash to make it happen.
Monthly allowances increase
The average worker saw their monthly spending money increase for the first time in five years last year, but the figure still remains lower than at any time since 2004. Despite the increase and relentless government PR, people remain cautious and the lack of wage increases for most mean that there’s no obvious trend towards greater spending.
News in Brief
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Retailers to defer price increases
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Fast Retailing to open first Uniqlo In Germany
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JTB and department stores join forces to attract tourists
Amazon opens online outlet store
World signs outdoor brand Yeti, relaunches Basics range
Start Today buys Stores.jp
Shimamura goes after childrenswear market with Birthday
Aeon merges own brand supply companies
Five Foxes launches two SC chains
H&M announces new stores for Hamamatsu and Kagoshima
Non-store sales up 6% to ¥5.4 trillion in 2012
Valor to expand in Shizuoka
Furla Japan sales strong
JR Otsuka adds Atre Vie
Isetan’s ¥13,000 blouses demonstrate its brand power
Odakyu to reduce VIP accounts
Ecos experiments with reusable packaging
Izumi confirmed for Kure store
CPI rises in June and July but consumers still holding back