May 6 2014

JapanConsuming Headlines May 2014

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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Focus: Retail groups: M&A to shape retailing future
Retailing in Japan has been consolidating since the late 1990s, starting with Itochu’s acquisition of Familymart from the now defunct Seibu Saison Group, and the bankruptcy of Sogo soon after. After several years of tentative exchanges and realignments, M&A has at last become a core part of retail strategy, just as it is in many other countries. Over the past three years, the pace of consolidation has continued to increase. We’re now at the stage where many sectors are close to saturation, making acquisitions even more likely in coming months.

Apparel retailers to launch major new chains for global markets
Womenswear fashion retailers like Cross Company, Pal, Baroque and Mash Style Lab are now medium-sized firms with sales as high as ¥100 billion, but all have recently announced new chains that will hopefully let them escape the confines and limits of young womenswear fashions and become genuinely big businesses. The solution is the mass market at home and global expansion, including Europe and the USA. All have come up with ideas on how to tackle both, with plans for as much as ¥1 trillion in sales.

Editorial: The coming consolidation

Retail sales surge in March
So, with the consumption tax introduced on 1 April, just how well did retailers do in March? On the whole, the situation was similar to the last increase back in 1997, but with far greater buying of high end items and, for some categories, sales increases that were as high as the month before the tax was first introduced in 1989. Supermarkets expect the consequent downturn to last no longer than April and May.

Cosmetics brands enjoy buying rush
Major cosmetics brands enjoyed large sales boosts in March as customers rushed to stock up on product before the price increase – this despite the fact that some in the industry had said to expect little impact given that ‘customers only buy when they need cosmetics’. The same executives are expecting a short sales lull, which they will offset with expanded promotional campaigns, and that the rebound will begin by July.

Seiyu preparing for more direct imports, introduces new price cuts
Seiyu is again taking a lead in the FMCG sector. Two years after shocking the industry with price cuts on basic goods, causing rivals to complain bitterly about excessive competition, the US owned chain announced more price reductions in April. In addition, it is now preparing to better leverage Walmart’s global supply system, bypassing Japanese trading houses and other routes to reduce costs and so offer even lower prices, even on some vegetables and fruits.

Middle aged women enjoying their time alone
There’s an increasing need for companies to look carefully at catering to older Japanese. There are already 16 million households over 65, of whom more than 5 million live alone. With the number of permanently single people in their 40s and 50s continuing to grow, this is a new, important segment and one that’s not going to disappear over the next two decades. But what do they want?

Used luxury goes mainstream
Used luxury goods sites might seem like a threat to sales of new luxury product at retail stores but, as with luxury cars and indeed gadgets, having an easy way to offload unwanted items often encourages further consumption, and brings new customers to brands without the budget to shop at full price. The problem has been finding an easy, trustworthy way for buyers and owners to deal. With the former head of Louis Vuitton Japan heading up one of the leading platforms, this problem looks to have been solved.

Sanyo Shokai prepares for Burberry departure in 2015
It is already widely accepted that Burberry will not renew its key Japanese apparel license with Sanyo Shokai and master license with Mitsui Bussan next year. Given that the UK brand accounts for as much as a third of Sanyo’s sales and significant royalty income for Mitsui, it will be a blow for both firms. Sanyo has had plenty of forewarning, however, and is positive it can make up the loss.

Showrooming on the rise as online sales expand
The future of retailing is in the so-called omnichannel, seamlessly linking physical stores and customer pick-up points, with the ease and low cost of selling direct online. NRI’s latest lifestyle survey run in 2012 and published recently provides further evidence for this trend. Although more people are browsing in stores to check out products before buying, increasingly the final purchase is online.

Parco forecasts 10% increase in sales
Parco now has money and it plans to spend it too. With backing from new main shareholder J Front Retailing it is sprucing up long-neglected buildings, adding new ones, and even expanding its specialty chain business again.

United Arrows launches new brands
United Arrows has big plans to double sales by 2021 and has already launched four new brands in the last few months, with more to come.

Cosmos Berry’s: Yamada Denki’s way into the senior market not so secret weapon
Yamada Denki is the dominant consumer electronics retailer with 25% of the market. The company faces pressure from declining sales due to market saturation, and has begun diversifying into new businesses as a result. But it has not given up on expanding market share yet, and already has 8,000 independent stores signed up as franchisees.

Retail Data: Department stores up 25.4% in March

News in Brief
Musashi Kosugi becomes key suburban retail hub
Japan to get largest Stradivarius store in November
Aoyama Shoji launches new chain for shopping centre market
ABC Mart launches men’s and women’s fashion footwear stores
Isetan-Mitsukoshi and Japan Post launch joint venture
Kintetsu Hoop relaunches
Sogo Chiba gets a facelift and web orders
J Front and partners confirm Matsuzakaya Ginza replacement
Low cost carriers enter the mobile phone market
Nitori to expand smartphone marketing
World launches new lifestyle chain
Amu Atsugi replaces Parco building
Harman opens first Japanese store
Department stores suffer in April
Kisarazu Mitsui Outlet Park to open expansion in July
Rakuten expands loyalty points system for retailers
Rice consumption still declining
Cheese producers take opportunity to increase prices
Seven & I, J Front, Lawson all report record profits
Hermes thanks Japan for sales increase
H2O to open in China
Joyful Honda completes IPO

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

[column count=”4″]
ABC Mart, 4-5
Abeno Harukas, 5
Active Sonar, 7
Adidas, 3-4
Aeon, 4-6, 10-11, 13, 15-16
Akachan Honpo, 3, 16
Amazon, 16
American Eagle Oufitters, 4
Amu Atsugi, 8
Aoyama Shoji, 4
Arcs, 13, 15-16
Asda, 5
Astraet, 10-11
Avec Mode, 6
Bals, 3, 16
Barneys New York, 3
Baroque Japan, 1
Belle International, 1
Bic Camera, 6
Billy’s Ent, 4
Bonica Dot, 1
Bourjois, 5
Bow & Arrows, 10
Brand Off, 7
Brandear, 7
Burberry, 1, 8
Calbee, 5
Charlotte, 4-5
Circle K Sunkus, 9
Colony 2139, 3
Cosme Kitchen, 3
Cosmos Berry, 11
Cross Company, 1, 3
Culture Convenience Club, 9
Daiei, 10, 15-16
Daikoku, 7
Daimaru-Matsuzakaya, 8
Dressterior, 7
Edion, 6, 16
Edy, 9
En Route, 10
Epoca, 8
Familymart, 13
Fancl, 4-5
Frame Limited, 1
Francfranc, 16
Freak’s Store, 5
George, 5
H2O Retailing, 11, 13
Harman, 8
Helmut Lang, 6
Hermes, 11
Hitachi, 11
Inditex Japan, 3
Isetan-Mitsukoshi, 5, 8
Ito-Yokado, 3, 5
Itochu Shoji, 13
Itoham, 5
Izumiya, 13, 16
J Front Retailing, 6, 10, 13
Jacob Coen, 9
Japan Post, 5
JBL, 8
Joyful Honda, 11
JPMitsukoshi Merchandising, 5
Jupiter Shop Channel, 15
Kai Lani, 8
Kao, 5
Kardon, 8
Kintetsu Hoop, 5
Kisarazu Mitsui Outlet Park, 8
Komehyo, 7
Kose, 4-5
Koshien SC, 3
Kukuruza Popcorn, 9
Lala Terrace, 3-4
Lawson, 6, 10, 15
Louis Vuitton Japan, 7
Loveless, 8
Lucien Pellat-Finet, 9
Lumine, 3, 17
Mac House, 8
Mackintosh Philosophy, 8
Maison Martin Margiela, 11
Manhattan Portage, 5
Mark Levinson, 8
Marubeni, 13, 15
Maruetsu, 15
Marunaka, 15
Mash Style Lab, 1, 3
Matsuzakaya Ginza, 6
Mecari, 7
Meiji, 10
MI Plaza, 8
Mila Owen, 3
Mitsubishi Shoji, 13
Mitsui Bussan, 8, 13, 15
MM12, 11
Morinaga, 10
Moussy, 1
Muji, 3, 5
Muller of Yoshiokubo, 6
Navy Store, 8
Next Blue, 4
Nike, 1, 4
Omise Parco, 10
Pal Group, 1, 3
Parco, 1, 8, 10, 13, 17
Paul Stuart, 8
Plaza, 5, 8
Pola Orbis Holding, 4
Pringle, 8
Rakuten, 9
Reclo, 7
Refco, 13
Rokko Butter, 10
Sanyo Shokai, 1, 8
Saucony, 4
Seibu, 3, 6, 8, 13
Seiyu, 1, 5, 16
Seven Eleven, 16
Shiseido, 4
Sly, 1
Snidel, 3
Sogo, 3, 6, 8, 13
Sotetsu Rozen, 15
Soup Stock Tokyo, 5
Stradivarius, 3
Sumally, 7
Sumitomo Shoji, 13
T-Point, 9
Tege United Arrows, 11
Tenmaya Store, 16
The RealReal Japan, 7
The Suit Company, 4
TicTac, 10
Tokyu, 3, 8
Toshiba, 11
Townes, 3
United Arrows, 1, 10-11
Valor, 13, 15
Vans Vault, 4
Walmart, 5
Yamada Denki, 6, 11, 16
Yukijirushi Megmilk, 10
Zerogate, 10 [/column]


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