April 2014 News in Brief

Apr 15

More updates for Isetan-Mitsukoshi 

Isetan-Mitsukoshi continues to tailor its key department store properties to suit a narrower target profile. At Mitsukoshi Nihonbashi, a new ‘culture and resort’ area has been created on the 7th floor as part of plans to make the flagship into a cultural emporium for older consumers. The space includes a cafe with long communal tables to allow customers to interact, and sections covering areas of interest for active seniors such as hiking, electronic gadgets, health foods & supplements, travel and sports such as golf.  At Shinjuku, the 4th floor international section and 5th floor business section were re-opened last month, with 120 brands installed. As well as clearer lines of site across each section, Isetan has introduced more very high end brands; cufflinks at ¥2 million for example, and bespoke suits starting at ¥600,000, while at the same time, store branded suits at just ¥66,000. Over the next year, Isetan will update its Living Floor (5F) and Children’s floor (6F). The refurbishment continues the theme of improving the design spec begun with the main fashion floors, while introducing a more actively managed and selective range of merchandise to appeal to affluent and fashion-conscious shoppers. A soft opening will take place this Autumn followed by a full opening in Spring 2015.

IKEA to open in Tachikawa, Sendai store confirmed

IKEA Japan’s seventh store will open on 10 April next to the Tama Toshi Monorail terminal in Tachikawa. The new store is the most central to Tokyo so far, complimenting the three existing stores in Minami-Funabashi (Chiba), Shin-Misato (Saitama) and Kohoku (Kanagawa). The new store will be 40,000 sqm, one of its largest in Japan. IKEA ran a ‘Tachikawa Street Party’ promotion in typical highly visible style outside Tachikawa Kitaguchi at the end of March. The Tachikawa store has huge potential, with IKEA getting to the site early. A Mitsui Lalaport is planned to open on the same redeveloped military base in 2015, followed by new stores for both Bic Camera and Yamada Denki, and according to rumours, even a Costco. Tachikawa is one of the few cities in Japan still enjoying a growing population and is expected to be one of the most popular commuter towns around Tokyo for the next 10 to 20 years at least. Last month, IKEA Japan also reconfirmed plans for its store in Sendai. The new store will open in July near to JR Nagamachi, another major redevelopment site. IKEA will again join a number of retailers in the area, following the opening of Supersports Xebio in 2012 and York Benimaru last year. The IKEA mini-store operating in central Sendai in response to post-earthquake demand will close in late May.

J Front targets young women

J Front is striking deals with a range of womenswear businesses with the aim to rapidly grow its market share in the teens, 20s and early 30s women’s fashion market. It will create a series of brands that can be rolled out across both Parco and the Ufufu Girls fashion areas located within Daimaru-Matsuzakaya stores. While J Front’s efforts at bringing in younger women have largely focused on collaborating with brands aimed at the early 20s market, it now plans to create more brands for the late 20s/early 30s woman who wants more than mass market fashion chains can offer. J Front’s partners include Japan Imagination and Erina, with brands like Eddy Grace and Sophila, but it is also planning brands with Baroque Japan, Mark Styler and Mash Holdings.

Gransasso starts Japan sales

Italian knitwear manufacturer Gransasso has signed an agency agreement with Tokyo-based importer SDI for the Japanese market. SDI began trial sales in A/W2013-14 to a few select shops and started a round of sales exhibitions from S/S2014 to department stores and fashion retailers. Gransasso is a 60 year old family business with 400 workers in its own workshops producing 1 million pieces of high quality contemporary knitwear a year, including a range of lightweight cotton and silket knits for summer such as polo shirts and loose fitting casual sweaters, and collections made from alpaca/nylon and cashmere/wool for A/W. It also produces accessories, including cashmere smartphone cases. Although Gransasso sells to more than 40 countries it has had little exposure to the Japanese market. S/S cotton pieces average around ¥14,000 and knitwear ¥18,000.

Itochu buys Edwin

Itochu has formalised its ongoing support for beleaguered denim brand Edwin by purchasing all outstanding stock in the company. It won the bid over Toyota Tsusho and World which also both applied to be sponsors. Itochu has long been a supplier and partner to Edwin, particularly on fabric supply, licenses, sales and financing. Edwin has been in financial difficulty since 2012 following a huge loss on foreign exchange derivatives, although the main denim business continues to operate normally. As well as the Edwin and Something brands, Edwin also handles licenses for Lee, Wrangler and Alpha Industries. To expand Edwin’s business, Itochu will likely look to bring in more overseas denim licences, use its foreign subsidiaries to sell Edwin overseas particularly in China, and diversify the product range.

American Eagle to add four stores this Spring

Eagle Retailing, 90% controlled by Aoyama Shoji and which operates the American Eagle Outfitters franchise in Japan, will open four more stores for the US chain this Spring. These will include the first Kansai store in Hankyu Nishinomiya Gardens in early April, quickly followed by a second Kansai store in Lalaport Koshien. In mid-April, the first Hokkaido store will open in Sapporo, albeit an outlet store, and then a further shop in Niigata. American Eagle now has six stores in the Kanto region since opening in 2012 but, pleased with the success, Eagle Retailing will roll out the chain nationwide over the coming year, picking up the pace of expansion. Last year, it also opened an online store.

Sazaby League signs Rachel Ashwell Shabby Chic Couture

Taking advantage of the growing enthusiasm for home fashions, Sazaby League has announced an exclusive distribution deal for US luxury interiors brand, Rachel Ashwell Shabby Chic Couture. Sazaby League says there is growing demand for interior design in Japan but few high end home fashion brands to meet it. It opened a corner for Rachel Ashwell within the refurbished Ron Herman store in Futako Tamagawa last month and this summer will open a flagship store near its headquarters in Sendagaya. As well as a range of bed linens, tableware and decorations, Rachel Ashwell also offers custom made sofas, beds and vintage furniture. Beds are priced at around ¥500,000 and sofas for between ¥800,000 and ¥2 million.

Zara Home opens in Aoyama, more stores coming

Inditex Japan will open a flagship store for Zara Home in Aoyama this month. Zara Home is a home fashions chain with 70% of merchandise in bed linen, bathroom, fabrics and tableware as well as accessories and roomwear. It already has 400 stores in 47 countries and the Aoyama store will be its third in Japan following those in Grand Front Osaka and Lalaport Yokohama last Spring. Inditex will open a fourth store on the street level of Meitetsu Department store at Nagoya station in September.

Hanshin Umeda to be rebuilt by 2021

Hanshin Umeda is set to be rebuilt at a cost of around ¥45 billion. The property will begin restricted operation from this month, aiming towards a final reopening in 2021. First opening in 1933, it is the oldest of four department stores immediately adjacent to Umeda Station. The store comprises 47,000 sqm, almost all run by Hanshin, but the new development will include the neighbouring Shin-Hankyu Building, an additional 3,000 sqm. Re-opening is scheduled to begin in Spring 2018 before full relaunch in Autumn 2021. The reborn Hanshin store will be housed in a new 38 storey property, with gross space to just under 100,000 sqm. The department store will occupy two basements and nine storeys above ground, with the higher floors given over to office space.

Apparel imports rise 21%

The soft Yen increased the value of imports last year, but still hasn’t deterred fashion importers or Japanese enthusiasm for overseas apparel. Imports of clothing and accessories rose 21.1% in 2013, totalling ¥3.25 trillion. Imports from the EU showed the biggest gain, up 25.3%, followed by the USA up 21.8% and 20.9% from Asia. China made up the bulk of Asian imports but grew the slowest of all regions, up 17.2% compared to a huge 41% increase in Asean imports, reflecting the growing diversification of production to non-China Asian countries.

Shibuya 109 to open in Kyushu

Tokyu Malls Development will open a new branch of Shibuya 109 in Kagoshima in Kyushu this Autumn. Shibuya 109 Kagoshima will open within the upcoming Amu Plaza station building, taking over one floor with around 20 tenants, a similar format to Shibuya 109 Abeno that opened in Osaka in 2011. With the main 109 in Shibuya itself seeing sales decline consistently in the last 18 months, Tokyu is looking to regional expansion to make up for the loss.

Uniqlo launches app to sell direct from flyers

Uniqlo has launched a smartphone app that makes it possible to place an order direct from a newspaper flyer. Called Chirashi Scan, the app uses a phone’s camera to scan barcodes on newspaper flyers which link directly to Uniqlo’s online store. With a push of a button, orders can be completed. To celebrate the launch, Uniqlo planned to offer free shipping on all orders for four days.

JR East plans 66,000 sqm SC in Yokohama

JR East has unveiled plans for a 66,000 sqm SC at the west exit of Yokohama station. The SC will be part of a new two tower complex rising 26 floors, and totalling 120,000 sqm. The development is expected to open in 2020.

Alibi Alley closes in Osaka

Furusato Meisan closed in March. The underground string of stalls beneath Hanshin in Umeda had sold souvenirs (o-miyage) from almost every prefecture in Japan since 1951. Colloquially known as ‘Alibi Alley’, the stalls were a favourite of both forgetful and less truthful husbands passing through Osaka on business travel, both genuine and illusory. At its peak, there were 200 metres of stalls, offering items from 41 prefectures, but when the area finally closed, just four stalls remained.

Life, Seven & I raise wages

A number of companies have announced wages increases over the past six weeks. Life, the largest single supermarket operator in the country, announced that negotiations with unions resulted in a ¥2,000 increase in monthly base pay for permanent staff, the first increase the company has agreed to for 16 years. Along with standard annual increases and increases in allowances, it expects average pay for its full-time, permanent employees to rise by ¥10,683 or 3.98%. Seven & I Holdings, which is expecting record profits this year, increased base pay at a number of its group companies. Initial negotiations saw unions calling for an increase of ¥2,600 to base pay at Ito-Yokado, the main GMS chain in the group, but in the end Seven & I settled on an increase of ¥907, the first for four years at the chain. Other companies in the group will raise base pay by ¥1,000 to ¥4,000. Seven Eleven, which as a franchise chain is not unionised, will see no wage increase for employees, but HQ staff will receive a one month salary bonus in response to the profit performance.

Seven Eleven to ACQUIRE 500 JR WEST in-station stores

Seven Eleven is to take on 500 stores operating on JR West station platforms. Beginning this summer, the largest convenience store chain will gradually take over the existing station convenience stores and kiosks, rebranding them as Seven Eleven. The process is expected to complete within five years. JR West sees some 5 million customers a day pass through its stations around Kansai, Chugoku and Hokuriku. The stores will be franchised to JR West Daily Service Net, which has been running the kiosks directly until now. High footfall in stations means that all of the leading chains are looking to expand their on-platform chains. There are some 2,700 in-station stores already in operation nationwide, but the top chains operate just 20% or so of the total at present. Lawson currently has just 50 stores with Tokyu, but Familymart operates around 400 stores with JR Kyushu, Seibu and Kintetsu. Seven Eleven has about 60 stores with JR Hokkaido and Keikyu.

Grand Front Osaka gets 46 million visitors

Osaka’s latest city centre SC, Grand Front Osaka, opened in April last year with a string of high profile tenants including the first Zara Home store in the country. In the first 10 months, the SC says it received 46 million visitors and turned over just under ¥40 billion, meaning it will beat its first year forecast of ¥40 billion and 36 million visitors by a comfortable margin.

Arcs acquires Belle Group

GMS and supermarket chain Arcs, owners of Ralse in Hokkaido, has announced its third acquisition in the Tohoku Region. It acquired both Universe and Jois during the past 18 months, establishing its ambition to expand into Honshu and challenge the larger, national players. Now in September it will complete the further acquisition of Belle Group, a small Morioka based chain operating under the banner Belle Plus. Sales for Belle stood at ¥40.6 billion in FY2012 from 25 stores in Iwate and Miyagi Prefectures. While Aeon and others are on the prowl for ever more regional acquisitions, and H2O and Izumiya set a precedent for high end mergers only last month, Arcs is taking advantage of its position as the leading chain in the CGC buying group – all three Arcs acquisitions have been of CGC member chains. Arcs will almost certainly look to acquire more and its relationship with other buying group members will be an important deciding factor for chains looking to sell. CGC has more than 200 member chains covering the entire country.

Felissimo opens two outlet stores

Fashion direct marketer Felissimo will open its first outlet mall stores this month. It plans to have as many as 10 in operation by 2020. The first Felissimo physical store of its kind will open at Laketown Koshigaya’s Outlet mall on 18 April, with the second following in Nasushiobara in Tochigi on 22 April. The aim is to sell leftover stock from the previous season, with prices 30-40% below initial retail. The stores will also carry lines of accessories and clothing from the current Felissimo catalogue. Felissimo provides a collection of apparel that’s updated on a monthly basis with relatively low production runs and rapid lead times to market, but increasing competition and difficulty in attracting new customers has led the brand to look for alternative sales channels.

JR West expands retail ambitions

JR West continues to follow its larger railway counterpart, JR East, in developing its own retail interests to take advantage of both surplus land holdings and access to customer traffic. At the end of March, the train operator opened a new commercial facility next to Okayama Station. The new development includes both residential and retail, with a Kohnan Shoji home centre the main tenant. The site is a former JR dormitory. JR West is forecasting sales of ¥700 million from the development, with around 300,000 customers a year. The site is on the opposite side of the station to the upcoming Aeon SC also due to open in central Okayama in the Autumn.

Familymart opens hybrid store in Tokyo

Familymart opened its first convenience-drugstore in Tokyo in late March. As with earlier hybrid stores in Kansai and Chubu, Familymart has tied with specialist drugstore operators, in this case two separate companies. The household drugstore operation will be run by Kawasaki based firm Kusuri no Nakayama, while prescription services will be offered by Motoki Yakyoku, part of the Miyonodai Group of prescription drugstores which has 44 stores in seven prefectures around Kanto and Kansai. In the past year, Familymart has established formal agreements with nine drugstore companies around the country and has a target of 1,000 hybrid stores within five years.

Izumiya & H2O Retailing REPORT ¥920 billion IN SALES

The merger of H2O Retailing with Izumiya was confirmed at extraordinary AGMs in March. At the same time H2O and Izumiya announced sales forecasts of ¥570 billion (to March) and ¥350 billion (to February) respectively. The newly merged operation is hoping to break into the ¥1 trillion club in the new financial year, but it will also look to consolidate group operations rapidly in order to improve profits. Izumiya is likely to oversee Hankyu’s existing supermarket business with Izumiya’s SC operations coming under the responsibility of H2O’s developer and property management arm.

Valor acquisitions continue

Fast growing Chubu supermarket chain Valor announced a minor acquisition last month, taking a 90% stake in mushroom supplier Toho Sangyo from Mie. The remaining 10% stake is held by Chubu Electric. As with Aeon and Seven & I, Valor continues to expand its direct supply routes for agricultural products. Toho had annual sales in FY2012 of around ¥187 million.

Yamada Denki introduces first checkout free, smartphone payment system

Yamada Denki, the leading consumer electronics retailer, introduced a new smartphone app service this month developed in conjunction with Paypal.  By registering their credit cards and a mugshot through the app, Yamada Denki customers will be able to checkout without visiting cash registers, simply by having shop assistants scan in product barcodes. The app will also alert assistants when a shopper visits the store, providing access to the customer’s complete purchase history. It will also provide options for up selling and links to Yamada’s online site. Yamada plans to sell home delivered rice with rice cooker purchases for example.

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