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.
The Japan DIY Association, made up of 40 leading home centre (HC) retailers, has announced an estimate of total sales for the sector at ¥2.690 trillion for January to December 2013, an increase of 0.9% on 2012 and an improvement after dropping 0.7% the previous year. While some apparel retailers were caught out by the unusually hard weather in February, HC retailers have thrived, selling everything from blankets to heating and window insulating solutions.
Having said that, the sector continues to pile on volume as the largest chains race for dominance, with store numbers jumping 2.7% in the same 12 month period. This reveals a less promising picture, with the small sales increase derived entirely from new volume. On a same store basis, sales were ¥2.6 trillion, down 2.1%.
A further survey of 10,340 consumers carried out by MyVoice.com from 1-5 January revealed more about shopping behaviour at HCs. 45.4% of people visit an HC at least once a month, with 24.8% once every 2-3 months and 11.9% about twice a year. Some 9.2% said they didn’t shop at HCs at all. Not surprisingly, the most common reason for shopping at HCs is depth of range, with 72% enjoying the often bewildering number of SKUs in a particular category, a typical feature of HC stores. More than half (56.6%) thought HC prices were competitive, but another 43.7% used the format simply because of store location, and 39.3% said they found parking easy. Far fewer people, 28.3% and 22.4% respectively, thought products were easy to find in HCs or that quality was particularly good.
The survey also asked what people didn’t like about HCs. Female respondents found many of the package sizes and heavier items difficult to buy, and thought the format was inconvenient for women living alone. Similarly, the often barn-like size of HCs and the lower cost operation led to complaints about a lack of customer service, with too few sales assistants.
The HC sector is another that is expected to continue to add volume and which will almost undoubtedly move towards greater consolidation in the near rather than far future. Last year just a handful of companies, notably Cainz, DCM, Lixil and Komeri, made up much of the growth as these are the ones actively expanding store numbers. Others, such as Nafco and Shimachu, are holding steady, but with GMS chains becoming increasingly price competitive and often much better located, second tier HCs are under pressure to find new ways to attract customers.
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