JapanConsuming Headlines: November 2013

Nov 11
JC1304

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Convenience stores: new models in fight to the finish
The convenience store sector is without doubt the most successful in the Japanese retail industry. The leading chains, Seven Eleven, Lawson and Familymart, are also some of the best performing retailers in the world and responsible for a good proportion of the innovations introduced into retailing over the past 40 years. Today they are the largest retailers in the country on many measures, with Seven Eleven holding the crown as the single largest retail chain by volume and, by a long way, the most profitable, for much of the past 10 years. The sector is now at saturation point with more than 50,000 stores in operation, but the same chains are turning to a range of new strategies to maintain growth.

Yahoo Japan fights back
Last month Yahoo Japan scrapped all fees and commissions for Yahoo Shopping merchants. The move is an effort to claw back market share lost to Rakuten and Amazon in the last five years. Rakuten is shrugging off the announcement, but may lose some custom and be forced to review its fees. Amazon will be affected much less and may end up being the winner in this battle. The real losers are likely to be late starters in the portal business like DeNA and Recruit as well as e-commerce facilitators like Stores.jp, Base and Creema.

Editorial: Convenience rules

Grandparents spend ¥246,000 per grandchild per year
Japan has more seniors and fewer children. While this represents a fast ticking demographic time-bomb, for now the silver lining is that older people are rich and just as willing to lavish gifts and support on their grandchildren. Businesses know it too.

NTT Docomo launches fashion mobile store with Magaseek
NTT Docomo has moved quickly to exploit the potential of its recent acquisition, online fashion mall operator Magaseek. As well as making a mobile version for smartphone users, it is also offering free shipping, matching Amazon and Zozotown and providing another headache for Rakuten. Zozotown too may be affected given NTT Docomo’s reach and marketing power.

Aeon to open string of urban SCs
Until now most of Aeon’s SCs have been in suburban or out of town locations, and have often decimated local rivals, including city centre competition. Having lost the bid to buy Parco to J Front, Aeon will now create a new chain of urban and inner suburb SCs, with a particular focus on station locations. These will compliment its existing 22 properties under the Vivre and Forus banners. It will also ramp up expansion in China and enter six ASEAN countries all in the next year.

Start Today’s Wear Service goes live
Start Today’s new Wear smartphone app has already created a good deal of controversy even before it was launched. By encouraging shoppers to scan barcodes in store it claims it will help consumers remember fashions they liked, so reducing lost purchases. Critics say it will do the opposite, encouraging showrooming.

Department store profits soar 50%
A new survey of department store businesses by Teikoku Databank suggests total department store sales fell in 2012, despite Japan Department Store Association members seeing a slight rise. Profits surged thanks to closure of loss making stores, investment in store conversion and upgrades, and higher sales for some. Although city department stores are seeing the most consistent growth, the best performing individual stores were all in the regions.

Costco aims for 50 stores by 2020
Costco was the first big-box retailer to enter Japan from overseas and the most successful. It has quietly built its own market, serving the increasing number of customers demanding low prices, as well as a growing number of cash-and-carry based businesses, to the point where it has a chain of 18 stores today and plans for 50 by 2020.

New large stores and SCs
The economy might not quite be booming, but as consumers ramp up spending, retailers are opening or planning new, large scale retail developments. A series of new stores will open between now and Christmas and several more large properties have been announced up to 2016, including a new Marui in Fukuoka.

Seijo Ishii launches new chain
Seijo Ishii is one of the most prominent, upscale supermarkets in the Kanto region, but one that has struggled for much of the past decade. Having been acquired by an investment fund with Mitsubishi backing, the chain has found a whole new level of access to exclusive imports and has launched a smaller footprint chain called Epicerie Bonheur for station locations.

Trial: Japan’s closest thing to Walmart
Trial Company has been around for almost 50 years although it is only in the past decade or so that the discount retailer has become known outside of Kyushu thanks to its efforts to bypass traditional distribution, leveraging low cost logistics and effective IT to compete squarely on price. In many of its locations this is a battle it seems to be winning.

Top 300 online retailers sales up 9.4%
Tsuhan Shimbun’s survey of the top 300 online retailers showed sales rose 9.4% to ¥2.35 trillion in 2012. The overall trend suggests a slower level of expansion, with the principle reason being increasing levels of competition among online retailers, but there is still plenty of growth about.

Retail Data: Major department stores up 4.3%

News in Brief
Inditex to open Stradivarius stores in Japan
J Brand opens in Japan
Factelier start up sees 70% repeat customers
Lumine to operate new Southgate SC in Shinjuku
Tourist sales double at Tokyo department stores
Biscaye launches select shop chain with 90% imports
Amazon to use customer data to develop new products
Childrenswear market expands 2.6% in 2013
Point to launch new select shop chain
KDDI signs joint venture with Luxa
Isetan-Mitsukoshi focuses on food
Big John signs Naked & Famous
Tutuanna posts tenth straight increase in sales
Sweet magazine opens online store
More high end private brands
Fewer smokers
IKEA runs two day Harajuku exhibition
Yamazaki Bread opening new convenience format
Furniture sales continue to improve for biggest chains
Golf popularity growing among over sixties
Kintetsu Abeno Harukas full opening confirmed
NTT Docomo takes 51% stake in ABC Cooking School

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