April 7 2014

JapanConsuming: Headlines April 2014

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Polarising Market: winners and losers in Japan’s leading city markets
Japan is facing a major drop off in population over the next 40-60 years – and the decline has already begun. Government forecasts expect a reduction of as much as a third of the current 127 million people. But not all cities or regions will lose population as quickly as others and some will actually increase. In Japan’s Top 100 Markets: Now to 2025, JapanConsuming has produced the first ever English language guide to Japan’s leading markets. The main conurbations, and especially the cities around Tokyo, will see an influx of new residents as people move for better access to entertainment, services, health care and jobs. These cities will gain the lion’s share of investment and marketing of consumer goods and services. The new report helps to work out which markets to focus on.

Urban Research: 50 stores a year pace, 20% plus sales growth
Urban Research used to be a standard select shop, but has begun to diversify into the premium brand business, providing opportunities for overseas brands, and into mass market SPA retailing. It has seen sales rise from just ¥3 billion in 2001 to an expected ¥35 billion in FY2013 and is projecting an increase of 20% to ¥43 billion this year.

Editorial: Identifying the best markets

Large store sales surge in 2013: top 50 department stores up 4.7%
2013 was a good year for retailing, and the results for the 12 months to December mirror the early financial year results now appearing. Department stores did particularly well, with the higher end stores far outperforming suburban and regional stores.

Number of new SCs remains steady
The number of newly opened SCs doubled in 2013 compared to 2012, and a similar number is in the pipeline for this year too. More competition is good news for retailers and brands, but means choosing ever more carefully where to locate stores and which retailers to sell to. A shift towards more diverse merchandising is creating opportunities for overseas retailers to bring in new formats, and for brands selling homeware, interiors, food, and fashion.

Price wars loom as tax hike takes effect
The much anticipated Consumption Tax increase came into force at midnight on 1 April, with consumers stripping shelves of some product and others buying gold bullion just in case. Unlike 1997 when the tax was last raised, retailers are much more savvy today and a range of price cuts and campaigns have already been announced. Price has suddenly become the key criteria for a lot of consumption choices.

MCM: ¥10 billion sales per year
German bag brand MCM was a major hit in Japan in the 1980s but pulled out more than a decade ago due to weak sales. Since being taken over by a Korean retailer, the brand has seen a revival and will relaunch in Japan this month with ambitious plans for sales of ¥10 billion in three years.

Lanvin up 10% to ¥37 billion
Itochu Shoji is master licensee for a myriad of brands, but some are more successful than others. One of its biggest hits in the last few years has been Lanvin, which it signed in 2002 and which it has built up from a ¥15 billion a year business to ¥37 billion largely through a successful licensed second line, Lanvin en Bleu.

Look buys Laisse Passe
Look has increased its share of the premium imported brand market in apparel, accessories and footwear through assiduous signings and investment in the last five years. It now plans to expand its own retail brands into Marui and the better shopping centres, acquiring womenswear retailer Laisse Passe last month to accelerate the process.

Seiyu introduces ‘satisfaction guaranteed’ policy for fresh foods
In an unprecedented move for Japan, Walmart has introduced a ‘satisfaction guaranteed’ policy for fresh foods throughout its entire 374 store Seiyu chain. Previous attempts to introduce what is a standard policy for Walmart overseas floundered due to dismissive store employees, but Walmart hopes the new move will help improve quality standards throughout its supply chain, reduce wastage, and impress the customer all at the same time – even offering money-back on food that has already been eaten.

GU: sales of ¥100 billion this year
GU has grown from scratch to sales of ¥83 billion in seven years and expects to hit ¥100 billion this year. It continues to expand store numbers rapidly while working on new, more fashionable merchandising as it begins to expand overseas.

Running Boom continues
Jogging has its fanatics in every country, but in Japan the sport has a fast expanding base of some 10 million people of all ages. Perhaps more than many countries, the enthusiasm for pounding the pavement is matched or even exceeded by the love of accessorising the daily ritual.

Sunkus loses another 100 stores
Circle K Sunkus is looking increasingly shaky. Owned by Uny Group, the chain used area franchises to expand rapidly in the 1990s, giving branding rights to companies with geographical exclusivity. Many of these contracts are now coming to an end and a growing number of franchisees are switching allegiance to one of the larger players. The latest defection by Sunkus Keihanna in Kansai is the biggest so far, but more are expected.

Nitori: 15 years of record profits, sales up 11% to ¥386 billion
Nitori appears to go from strength to strength. Despite having a business based on direct imports from China, last year it overcame higher costs due to the weakened Yen, and with particularly high demand in the final quarter, reported another record performance. The company is introducing higher quality lines and opening more stores, both at home and overseas. It sees demand rising again after a six month post tax lull, and expects more low cost homeware chains to emerge in the next few years.

Fashion retailers expect 10-30% of sales online
The growth in fashion e-commerce concerned many fashion retailers at first but most at least accept its inevitable growth, and some are now embracing it. A recent survey suggests more than half of firms believe online sales will account for 10-30% of the total, but a few think e-commerce should account for more.

Home centres grow 0.9%, but sector struggling to compete
Home centres are Japan’s answer to DIY stores in the West, but it is a sector that overlaps heavily with GMS chains and one that increasingly finds it hard to compete. 2013 was a reasonable year, but all of the 0.9% growth in sales came from new space added by just a handful of top companies. Like supermarkets and drugstores, the sector could well be in line for a major shake-out very soon.

Familymart to pull out of Korea
Familymart is the number three convenience store chain, but it is losing sales share to both of the larger two firms. Now, its core strategy of overseas expansion has taken a major blow with the chain planning to pull out of Korea, wiping out 60% of overseas stores.

Retail Data: Retail sales up 3.6%

News in Brief
More updates for Isetan-Mitsukoshi
IKEA to open in Tachikawa, Sendai store confirmed
J Front targets young women
Gransasso starts Japan sales
Itochu buys Edwin
American Eagle to add four stores this Spring
Sazaby League signs Rachel Ashwell Shabby Chic Couture
Zara Home opens in Aoyama, more stores coming
Hanshin Umeda to be rebuilt by 2021
Apparel imports rise 21%
Shibuya 109 to open in Kyushu
Uniqlo launches app to sell direct from flyers
JR East plans 66,000 sqm SC in Yokohama
Alibi Alley closes in Osaka
Life, Seven & I raise wages
Seven Eleven to acquire 500 JR WEST in-station stores
Grand Front Osaka gets 46 million visitors
Arcs acquires Belle Group
Felissimo opens two outlet stores
JR West expands retail ambitions
Familymart opens hybrid store in Tokyo
Izumiya & H2O Retailing report ¥920 billion in sales
Valor acquisitions continue
Yamada Denki introduces first checkout free, smartphone payment system

Company and Brand Index this month
Numbers indicate page of report:

[columns count=”4″]
Aeon, 3-5, 9-11, 14
Alpha Industries, 5
Alphablanca, 6
Amazon, 10
American Eagle Outfitters, 5
Aoyama Shoji, 5
Arcs, 9
Aurora, 6
Baroque Japan, 4
Belle Group, 9
Belle Plus, 9
BGF Retail, 11
Bic Camera, 3
By Malene Bilger, 1
Cainz, 11
CGC, 9
Chloe, 1
Chubu Electric, 11
Circle K Sunkus, 9
Coronet, 6
Costco, 3
Daimaru-Matsuzakaya, 4
Debut de Fiore, 6
Descente, 6
Deux Leux, 6
Eagle Retailing, 5
Eddy Grace, 4
Edwin, 5
Elite, 6
Erina, 4
Familymart, 1, 9-11
Fast Retailing, 7-8
Felissimo, 10
Furusato Meisan, 8
Golden Goose, 1
Gransasso, 4-5
Gunze, 6
H2O Retailing, 11
Hankyu Nishinomiya Gardens, 5
Hankyu Umeda, 3
Hanshin Umeda, 6
Honeys, 5
Huis Ten Bosch, 14
IKEA, 3-4
Inditex, 4, 6
Isetan-Mitsukoshi, 3
Ito-Yokado, 3, 5, 8
Itochu Shoji, 6
Izumiya, 9, 11
J Crew, 8
J Front, 4
Japan Imagination, 4
Jawbone, 8
Joix, 6
JR East, 7, 10
JR Kyushu, 9
JR Nagamachi, 4
JR West, 8-10
Keikyu, 9
Kintetsu, 9
Kohnan Shoji, 10
Komeri, 11
Kuipo, 6
La Perla, 6
Laisse Passe, 6
Laketown Koshigaya, 10
Lalaport Koshien, 5
Lalaport Tokyo Bay, 4
Lalaport Yokohama, 6
Lamer, 6
Lanvin, 1, 6
Lawson, 9
Life, 1, 3, 8
Lixil, 11
Look, 1, 5-6, 8-11
Loveless, 5
Marimekko, 6
Mark Styler, 4
Maruetsu, 3
Marui, 6
Mash Holdings, 4
MCM, 1, 5-6
Meitetsu, 6
Mitsubishi Shoji Fashion, 6
Mitsui, 3-4
Mitsukoshi, 3
Miyonodai Group, 10
Moda Clea, 6
Moonbat, 6
MyVoice, 11
Nafco, 11
Nike, 8
Nitori, 1, 9-10
Otsuka Kagu, 9
Pal Group, 10
Parco, 4
Phillip Lim, 1
Rachel Ashwell Shabby Chic Couture, 6
Rakuten, 10
Ralse, 9
Repetto, 6
Rodesko, 1
Ron Herman, 6
Rosso Urban Research, 1
Russet, 10
Sazaby League, 5-6
SDI, 4
Seibu, 9
Seiyu, 1, 5, 7
Sense of Place, 1
Seven Eleven, 8-9, 11
Shimachu, 11
Shimamura, 5
Sophila, 4
Summit, 3
Sungjoo Group, 6
Takashimaya, 3
Toho Sangyo, 11
Tokyu Malls Development, 7
Tokyu Store, 3
Tory Burch, 6
Toyota Tsusho, 5
Uniqlo, 5, 7
United Arrows, 10
Universe, 9
Uny, 9
Urban Research, 1, 10
Valor, 11
Vince Camuto, 6
Walmart, 7
Yagi Tsusho, 1
Yamada Denki, 3, 11
York Benimaru, 4
Zara Home, 4, 6, 9
Zozotown, 10


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