March 2014 News in Brief

Mar 15

Old Navy to open 25 stores in 2014

Gap Japan plans to open 25 stores for its Old Navy chain in Japan this year. Launched here in July 2012, Old Navy already has 18 stores. The next to open will be at Aeon Mall Wakayama mid-March followed by another in Aeon Tendo five days later, and its first in the Chugoku region at the end of March in Aeon Mall Tottori Kita. As with existing stores, there will be a strong emphasis on childrenswear including a play area, and all stores will have around 1,200 sqm of sales space.

Fast Retailing eyeing J Crew

Nikkei and Wall Street Journal have published rumours that Fast Retailing is about to acquire US casual apparel brand J Crew for ¥510 billion. The news comes just a day after Reuters hinted at problems facing Fast Retailing’s rollout in the US, particularly inconsistencies in sizing and difficulties meeting US fashion tastes. J Crew would certainly help reverse such a viewpoint, giving the Japanese firm access to some 400 sales points in North America at a stroke, moving a small step closer to its typically astronomical target of around ¥2 trillion in sales from the US alone. J Crew is also a significant player in e-commerce, selling to 107 countries. The brand operated in Japan until 2008 under license to Renown and Itochu. Fast Retailing has made plenty of acquisitions over the past 15 years, including overseas buys such as Comptoir des Cotonniers, Princesse Tam Tam, Theory, PLST, Helmut Lang and J Brand, but none of these add real scale to Fast Retailing. While not yet confirmed, the J Crew rumours are significant. With just 17 stores in the US and five more due online this Spring, Fast Retailing is desperate to make a success of the US venture and analysts see the USA as possibly make or break as far as non-Asian expansion is concerned. Building to 1,000 stores in China is one thing, but the brand needs a successful Western market too in order to maintain its colossal production scale, as well as proving that it can compete outside of Asia.

IKEA to double sales by 2020

At a recent press event, IKEA Japan confirmed its aim to double sales in Japan by 2020. In 2013, the company saw sales rise 8% on a same store basis to ¥72.8 billion, making it the second largest furniture retailer in the country behind Nitori. While Nitori is way ahead at ¥348 billion, IKEA’s sales come from just six stores compared to almost 300 for Nitori. On 10 April, IKEA will open its seventh store, and the fourth in Kanto, in Tachikawa. It will be the closest IKEA to central Tokyo so far, and despite coming online after the consumption tax increase, IKEA expects the store to be swamped in the first few months. It has already confirmed a further store in Sendai for this coming Autumn – a relatively small affair for IKEA but still 16,723 sqm – and the company has secured land in Hiroshima, Gunma and, as just confirmed, Aichi. For the first time, IKEA outlined plans to open a store in Sapporo and further new stores in both Kanto and Kansai. Online shopping for Japan continues to be suggested, but with e-commerce still limited in the rest of the world, it may be a while coming to Japan.

Sazaby signs Raquel Allegra

Sazaby League has signed a distribution deal with LA womenswear label Raquel Allegra. Known for her innovative use of textiles ranging from recycled vintage t-shirts from the Californian prison system to deerskin, cashmere and lace, Raquel Allegra is sold in key stores around the world and one of the more popular labels on direct import sites like Laso. Sazaby League itself has been selling the label through its Ron Herman chain, and, seeing the response, quickly snapped up the brand for direct distribution. Prices in Japan will be around ¥10,000-30,000 for tops, ¥50,000 for cashmere knitwear and ¥80,000 and up for jackets.

Bow & Arrows: a new label from United Arrows

United Arrows has yet another new brand. Called Bow & Arrows, the new brand targets men in their 30s to 50s with prices of around ¥50,000 for coats, ¥10,000 for shirts, ¥80,000 for suits and ¥12,000 for knitwear. The brand has been designed specifically for department store menswear floors – part of United Arrows’ previously announced plans to create formats for all key distribution points in Japan, from department stores to highway service areas – with a tight range of premium casual and business wear. The first stores will open in April, one in Daimaru Umeda and another in Daimaru Sapporo.

Jewellery market booms in 2013 but WILL slow in 2014

A recent Yano Research survey estimated the jewellery market rose 5.6% to ¥961.7 billion in 2013. The primary drivers were strong sales of luxury international brands and large carat diamonds to wealthy consumers feeling the benefits of a stock market boom and high levels of corporate profits. Separate research by Senken shows that even in the staple bridal jewellery market, purchase values have also increased markedly in the last two years. Isetan-Mitsukoshi’s big three stores saw bridal jewellery sales jump nearly 18% in 2013 with average prices of engagement rings at nearly ¥500,000 and wedding rings at just under ¥300,000. Both Seibu Ikebukuro and Daimaru Sapporo reported purchase values for engagement rings up more than 10% on the year. Other reports suggest that top end jewellery above ¥10 million from brands like Harry Winston saw sales increase three times on the year. Brands have also been investing more in emphasising their provenance and quality, such as Tiffany’s special exhibition from its archives in May last year at Hankyu Umeda. Department stores are improving services too to help support higher end purchases, such as free brush up and repair services. For 2014 Yano forecasts modest growth of 0.8% – high growth in January to March followed by negative growth for the rest of the year – and a fall of 0.9% in 2015, but higher sales again in 2016 and beyond, likely breaking ¥1 trillion in retail sales in 2018.

UK brand French Sole to open

UK ballet shoes brand French Sole is coming to Japan. Lea Mills Agency, based in Ebisu, Tokyo, has signed an exclusive distribution deal for both the French Sole and London Sole brands. Set up in 1989, French Sole has become a major success selling ballet flats, as well as boots and casual footwear. Prices of around ¥30,000 are expected. This is Lea Mills’ first foray into footwear distribution. It represents a number of UK brands including John Smedley, a significant success in Japan with more than 300 doors, but because it and Lea Mills’ other brands are largely knitwear-based, the bulk of its sales are in A/W. Lea Mills hopes to balance this out through French Sole and other new brands.

Sogo & Seibu: new brand for senior couples

Sogo & Seibu is launching a new store brand this Spring produced and managed entirely in-house. Targeting men and women in their 50s and 60s, it is the first of a new range of ‘SPA’ brands Seven & I has tasked the department store chain with developing. Called Limited Edition Avec Mode, a spin off from the core brand of the same name, it will focus on smart casual apparel and accessories with about 200 items in the collection. Prices will be set at ¥30,000 for jackets, ¥20,000 for dresses and ¥10,000 and up for knitwear, about 30% cheaper than equivalent supplier brands sold at its stores. To produce the brand, Sogo & Seibu created a new planning team in September last year, recruiting merchandising and design staff from Japanese apparel retailers and manufacturers and supply chain experts from Sogo Shosha. By directly producing the brand, Seven & I hopes to significantly improve operating margins at the department store while also better competing with specialty chains on price/value. It also means faster response to trends – Sogo & Seibu will introduce new product every two weeks, unprecedented speed for the department store group. As is often the case with Seven & I, the new brand will emphasise its Made in Japan provenance in marketing. A pre launch began late last month at Seibu Ikebukuro with a full rollout from this month.

Takashimaya to open in Aeon Okayama

A first for Takashimaya and for Aeon: the department store group will open a mini store within Aeon’s upcoming Okayama SC. Due to open in November, Aeon Okayama ranks alongside Shintoshin as one of the most important new SCs in the retail giant’s portfolio. Located close to Okayama Station and just 200 metres from Takashimaya’s Okayama store, the 88,000 sqm 350 tenant SC will have a significant impact on Takashimaya and other nearby retailers just as other Aeon SCs have in key regional cities over the last decade. Takashimaya’s store will be a 2,000 sqm food focused format within the depachika style food zone on the street level of the mall and will be called Takashimaya Food Maison. Takashimaya says the new store will not compete with its Okayama store’s food sales area because the mall will attract a younger demographic in their 30s and 40s. As well as an Aeon GMS, Aeon Okayama will also include Tokyu Hands as another anchor tenant with a 2,200 sqm store, its 29th store, and only its second in the Chugoku region after Hiroshima.

Laura Ashley to expand home stores

Laura Ashley has long had a loyal if waning customer base at the premium end of the homeware market, but Aeon, the franchise holder for Japan, now plans to exploit the growing enthusiasm for sprucing up the home with new home only stores. There are currently only four Laura Ashley Home stores, each around 600 sqm, but these often struggle to make a profit. Aeon has been trialling a new 200 sqm format for SCs and already has three stores open including in Lala Garden Tsukuba and Aeon Shintoshin. These stores will sell homeware, furniture, gift food items and other accessories sold at the Laura Ashley Gift & Accessories chain. Aeon currently operates around 115 Laura Ashley stores in Japan but now plans to open 20-30 per year over the next few years of which half will be the new small format Home stores.

Daiei Tachikawa closes after 43 years

Daiei closed its Tachikawa store in late February after 43 years of operation. The store’s sales peaked at ¥10.5 billion, but that was way back in 1991, and Daiei’s inability to make a success of a store just 200m from one of the country’s busiest suburban transport hubs is testament to the retailer’s problems. The store itself never received enough investment after opening – a symptom of much of the chain’s demise although a problem not unique to Daiei alone – and despite loyal customers turning out to express their regret last month,  Aeon, Daiei’s new owners, let the axe fall all the same.

Beer sales booming

Japan’s big five beer producers announced that shipments for January were up 9.5% on the same month last year, the first January increase for three years. In addition to increased consumer spending, a longer than usual New Year holiday and at least some good weather all helped sales. Both commercial and retail sales were up, with 11.21 million cases of beer shipped. Producers are expecting similar results up to April as people stock up on alcohol.

Mitsukoshi changes its old bags

Mitsukoshi has introduced a redesign of its paper carrier bags – the first one for 57 years. The move marks yet another step on the road to the department store’s rebirth as a modern retailer and follows Isetan’s new bag design last year. And the new look, which will be introduced from April, fits the bill with a clean, modern pattern that still retains a traditional Japanese feel.

Ito-Yokado opens first store in China for three years

In mid-January, Seven & I opened a new Ito-Yokado store in China, its first for three years. The lull was caused by the continuing political spats between the two countries, in addition to Seven & I looking to consolidate its business around Beijing. The group has opened its full range of main brands, including Ito-Yokado GMS, York Benimaru supermarkets, and Seven Eleven convenience stores, all feeding from an overlapping supply network and closely managed with Japanese oversight. The latest store added to the five existing Chengdu stores. It is due to be followed by a new SC in the city this summer, which at 38,000 sqm will be the largest so far with target sales of ¥8.3 billion a year. It will also host a number of tenants brought in from Japan. Despite the political impact on Japanese brands in the republic, Seven & I says GMS sales grew 6% in Chengdu last year to ¥53.5 billion. Results in Beijing have been less encouraging, however.

Yahoo ties with Zozo, 109 and Parco on search

Yahoo Japan is determined to claw back some market share in online fashion sales, one reason it tied with Zozo on fashion search two years ago. It has now widened this collaboration and added Shibuya 109, Parco and iQon as partners to improve results for fashion searches on Yahoo. By merging the product and trend databases from these partners, Yahoo hopes to provide comprehensive results on fashion trends, product pages, and bargain sale information. For example if you search for coats, a one page ranking of the most popular items will be presented with ranking data from each of the partners, with easy switching between both the men’s and women’s rankings. Each item will display photos, brand name, price and links to purchase.

Daiei to close marche chain, write off DEBT

Aeon has decided to write off ¥8.6 billion in debts at Daiei’s specialty subsidiary Marche and close the chain down. Marche runs an eponymous chain of apparel basics and accessories stores, with 90 locations currently in operation, most of them corners in Daiei GMS outlets. At its peak, the chain ran 252 stores with sales of ¥13.5 billion, but the brand has been in the red for some time. All stores will now be closed by August 2014 and the company dissolved at the end of November.

F.Clio opens Marunouchi store

Ace opened a stand alone store in Marunouchi for Italian factory brand F.Clio last month. In 2010 Ace signed a joint venture with Italian bag manufacturer, Pelletteria Clio, to create a new bag and accessories brand for worldwide distribution by Ace. F.Clio was the result and launched in Spring 2010 with stores in Milan and Ginza. Ace is hoping F.Clio will help to expand its presence in women’s bags and reduce its dependence on the men’s accessory market in department stores, as well as help build its international bag and luggage presence. The F.Clio brand targets men and women with a range of totes, briefcases, handbags and clutch bags in nylon/leather and fake leather materials at around ¥40,000.

Amazon invests in merchants

In order to guarantee a greater supply of stable and innovative merchants, Amazon Japan has launched a loan fund to support them. It will loan up to ¥50 million in any one company and, to keep things simple, will take repayments and interest from the merchant’s sales on Amazon. Interest will be set at around 9-14% per year. Funds will be made available within five days with repayment terms of either three or six months. The fund is being handled by Amazon Capital Service and is similar to a service launched in the US in 2011.

Heart Market buys Clean

Womenswear specialty retailer Heart Market acquired t-shirts brand Lala last month. Owned by Clean, a manufacturer established in 1984, Lala produces t-shirts with colourful heart motifs and other designs. It currently operates 32 stores with sales of ¥2.3 billion. Heart Market itself is forecast to post sales of ¥9.2 billion from 47 stores for FY2013 ending February. Lala is a key supplier to Heart Market, and the latter hopes to create synergies through the acquisition, in particular strengthen its merchandising team and reduce retail prices. Heart Market hopes to double sales in the next four years.

Lula Magazine to launch in Japan

British fashion magazine Lula will get its own Japanese edition from October. Founded by Leith Clark, Lula targets women in their 20s and 30s who love fashion but with an emphasis on creativity and individual expression rather than status or brand name, and is popular for its high level of art direction. The Japanese version will be bi-annual and include similar content as well as interviews with popular celebrities and information on culture, food, cafes, music and other lifestyle interests.

Rakuten pressured to stop PRICING scams

A number of reports have surfaced recently of vendors on the popular Rakuten Ichiba shopping portal scamming customers. One of the attractions of Rakuten is the ease of ranking search results by price – unlike Amazon, Rakuten searches routinely throw up hundreds of identical products from different vendors. Some vendors are reportedly setting prices on Rakuten as low as possible to win the sale, but when customers submit an order, they receive an email saying a mistake has been made along with a bill for a higher priced product. Rakuten refused to comment on the claims, but does insist that vendor pricing is out of its hands. The online portal operator did announce in December that it would be forcing all vendors to use its own in-house payment systems in future rather than allow customers to pay vendors directly, a move which should help stop this kind of activity.

URBAN RESEARCH FLAGSHIP ON MEIJI-DORI FOR 2015

Urban Research will open a flagship store on Meiji Dori in Spring 2015 in a new SC being built by Tokyu Land. The new property will include a 7,273 sqm main building and 992 sqm annex. Bridesworld, an affiliate of bridal hall operator Take and Give, will occupy the annex. Urban Research will be the anchor tenant, taking the street facing ground level spot, with other retailers on mid-level floors – taking advantage of the great views over the park. Serviced offices and restaurant chains will be invited to occupy the top floors.

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