June 2014 News in Brief

Jun 15

Old Navy sets up in Kanazawa, increases store opening pace

Gap Japan continues a rapid roll out of its Old Navy chain in Japan. It opened a new store at the end of May in Kanazawa (Hokuriku) within the Apita Town Kanazawa Bay SC. The 1,200 sqm store sports a bright, colourful interior, including the signature childrenswear area complete with play and drawing areas. As well as the main lines, the store also sells Japan only t-shirts and a tote bag with the Old Navy logo. Gap Japan opened the first Old Navy store in July 2012 and has seen solid support from Japanese consumers, particularly young families. Since then it has quickly expanded the chain through regional SCs, with this year expected to be the busiest yet. Including the Kanazawa store and other recent openings such as Wakayama and Chiba, Old Navy now has 23 stores in Japan, but already has several more stores lined up including in Nagoya. Given the current pace of openings, it is likely that the US chain will reach around 35-40 stores within the next 12 months.

Takashimaya & H2O RETAILING to expand merchandise collaboration

Takashimaya and H2O Retailing announced last month that they would expand collaboration on jointly developed products. The two department store groups flirted with a merger deal several years ago which ended in nothing more than a minor share swap. They still sell around ¥2.5 billion in joint merchandise each year and now plan to double this figure in 2014, and further expand the programme in coming years.

Iwataya Mitsukoshi to target younger crowd with new fashion floor

Iwataya Mitsukoshi will open a new fashion floor dedicated to young working women this Autumn. The department store says local working women tend to wear more casual apparel to work compared with their peers in the capital, and it sees an opportunity to create a dedicated space for this segment. Called LaChic, the 3,100 sqm space on the basement level will house 60 specialty store tenants, and connect with transport links and JR West’s Solaria Plaza SC. Apparel will make up just 35% of the mix, with the rest spread across accessories, cosmetics, home and other lifestyle merchandise. This is the second LaChic space following a smaller one opened within Mitsukoshi Sakae in Nagoya in 2005. The move marks another shift within the Isetan-Mitsukoshi group aimed at attracting a more diverse customer base to its regional stores. LaChic will be split into three areas in a street style format. The South Zone will be designed to look like a contemporary house with white walls and wood floors, the Centre Zone as a bazaar offering cute accessory stores and fashions, and the North Zone as a more sophisticated fashion zone. As with LaChic in Nagoya, the floor will be operated as an SC with tenants paying rent.

QVC Japan breaks ¥100 billion

TV shopping continues to evolve in Japan and one of the leaders, QVC Japan, announced sales exceeded ¥100 billion for the first time in FY2013. Turnover rose 0.3% on the back of solid sales of apparel and interiors. Internet-based sales rose to ¥30 billion of which around half came from mobile devices. Operating profit for the Japanese unit, a joint venture between QVC and Mitsui Bussan, looks to have fallen, although US reporting includes a significant hit from the fall in the Yen’s value against the US Dollar. Apparel did well for QVC, supported by popular brands like &Love and Azabu Provador. Other strong sellers were towels, down futons, tablets and other electronics. QVC has also invested in state of the art new studios, making it possible to deliver new levels of programming – new broadcasts include collaborations with big name direct marketing firms like Rakuten and Yumetembo (www.dreamvs.com). Other improvements included an upgraded webstore complete with a new call-back button to avoid customers having to hold, and faster delivery of orders, including same day delivery in some areas.

Bra sizes INCREASING says Triumph

Triumph International released the latest results of its Underwear White Paper, its 14th survey of underwear trends. According to the report, 26.5% of Japanese women were a C-cup and 24.2% D-cup. Women with B-cups accounted for just 26.4% of the survey, down dramatically from 45.6% of women in 2000, and marking the first time that the B-cup has not been the predominant bra size in Japan. In addition D and E-cups accounted for 40.2% of the survey, a 15.5% increase in the last 14 years, meaning that more than 70% of women had a bra size of C-cup or higher. The survey also asked women for their ideal bust size; A to C-cup sized women said they would like to be one to two sizes larger, and larger busted women said their current size would do just fine.

Mitsubishi increases stake in Life supermarket

Mitsubishi Shoji plans to re-establish its dominant stake in Life Corporation, the country’s largest supermarket chain, expanding to 22.31% early in June. This will make the trading house the largest shareholder in the chain by some way and consolidate its existing control. Mitsubishi originally  bought a 20.63% stake and installed its own COO, but shareholdings were consolidated by other investors in recent years, pushing down Mitsubishi’s interest to just 11.5%, making it the number two shareholder. It is believed that Life is central to Mitsubishi’s long term plans for its entire FMCG distribution system that today encompasses the largest food wholesaler, Mitsubishi Shokuhin, and the Lawson group of convenience stores.

Italian brand Fix Design in Japan

Italian womenswear label Atelier Fixdesign will open in Tokyo this month, its first store in Asia. Fixdesign was launched just 10 years ago but is well-regarded in Milan for its quality fabrics and design. As well as seven stores in Italy, it also operates one store in Russia as well as wholesaling to some 500 doors worldwide. The 350 sqm Japanese store is located in Omotesando (Jingumae 6-14-5) and has operated a soft launch since April. As well as apparel and accessories, the store sells furniture and home accessories on the 3rd floor. Fixdesign is being distributed by Robstep Japan.

Restaurant sales up in April DESPITE TAX INCREASE

While most retail sectors experienced at least a small dip in sales in April, not so restaurants – this despite many surveys suggesting that dining out would be one of the hardest hit sectors following the increase in consumption tax. The Japan Food Service Association (JFSA) reported that its members saw sales increase by 2.3% in April. Customer numbers fell by just 0.7%, but purchases per customer were up 3.1%, suggesting that demand for dining out remained completely unchanged from the previous year. Izakaya (pubs) were the only sub-sector to see a fall, down by 1.3%, but family restaurants enjoyed a 5% increase, having grown every month for the past year.

Aeon Mall delays shopping mall opening due to cost increases

Aeon Mall has announced that the opening of its planned new development on the site of the Kobe Central Wholesale Market will be delayed for as much as a year due to a sudden rise in construction costs. Aeon has sought approval for the delayed opening, now planning a completion in September 2016. The 37,000 sqm site has been available since July 2012 when the wholesale market was relocated. Aeon has already begun work on what is planned to be the largest mall in the city with gross space of 92,770 sqm over four floors. In addition to a shortage in skilled labourers, the shift of resources to new public works planned for the 2020 Olympics in Tokyo is expected to further increase new store building costs in coming years.

Sazaby signs Hawaiian organic cosmetics brand

Sazaby League has signed an exclusive distribution deal with Hawaiian organic cosmetics brand Malie Organics. It will start distribution from this Autumn, as well as opening the first store here for the brand – the first outside Hawaii. Malie uses flowers, fruits and other plants from the island of Kawai to create body creams, soaps and other spa-related products, and is sold in top end Hawaiian select shops as well as famous spas. Sazaby has been selling the line at Ron Herman stores since last Autumn and thanks to the strong response, quickly moved to sign the brand. This is the third brand Sazaby has signed due to good results at Ron Herman.

Bic Camera ties with Radishboya

Bic Camera has begun offering Radishboya’s subscription delivery service for fresh vegetables with purchases of certain electronics products at selected stores in a new tie-up. The Docomo-owned online food retailer’s subscription delivery service is offered to customers purchasing fridges and other kitchen related items in stores. Users of the service receive Bic Camera loyalty points and a ¥5,000 one time coupon for use on Radishboya. The service began at the Yurakucho, Akasaka Mitsuke and Lazona stores at the end of May, as well as at Kojima stores in Tokyo and Kawasaki.

Stores.jp ties with Parco

Stores.jp has signed a collaboration with Parco to help the latter’s tenants get online. Stores.jp operates an e-commerce platform that makes it simple for anyone to set up an online store – no coding skills required. A merchant need only register, upload pictures of his product and set prices and he can immediately start trading. Not surprisingly the service is popular and since launching in August 2012 Stores.jp has acquired nearly 100,000 merchants, and following acquisition by Start Today is gaining new members even faster. Parco has its own online store, but wants to encourage its smaller tenant businesses to get online and will encourage some 3,000 tenants to sign up with Stores.jp. To incentivise them, Parco tenants will get special deals on stores.jp marketing services and Parco itself will market the online stores through its blog and website, as well as through in-store promotions.

Lasalle buys Malera Gifu

Lasalle Investment Management has acquired Malera SC in Motosu, Gifu Prefecture. The mall was built in 2006 by Zymax Cube in a 185,000 sqm plot, previously home to a textile factory, and comprises 58,000 sqm of sales space housing 240 tenants and space for 5,000 cars. Key tenants include Edion, Zara, H&M, Uniqlo, Muji and Old Navy as well as Toho Cinemas. Lasalle will invest in refurbishing the SC and install new tenants to raise both footfall and profitability – the SC had a tenant refresh in 2012 with 56 new tenants including Zara, Bershka and H&M all opening in Gifu Prefecture for the first time. Lasalle plans to invest around ¥150 billion over the next two to three years in similar SC properties.

Coach to open Shinjuku flagship

Coach will open a major new store in Shinjuku this Autumn. The store will be the first in Japan to be designed under the stewardship of William Sofield, the brand’s creative advisor. The US brand opened its first flagship in Japan in 2002 and will have 10 including the Shinjuku store, of which five are in Tokyo.

Mitsubishi Estate-Simon sees sales up 12%

Mitsubishi Estate’s outlet subsidiary Mitsubishi Estate-Simon saw sales up 12% last year to ¥38.8 billion, and operating profit of ¥13 billion. The US-Japan joint venture, which is majority owned by Mitsubishi Estate, now manages 274,905 sqm of sales space and 1,450 tenants across its nine outlet malls, with total land holdings of 185 million sqm. During the year, the outlet operator opened the first section of its Shisui SC in Chiba and next year in November will complete the fourth expansion of the Sano SC. For the year ahead it is forecasting sales will fall to ¥37.7 billion, resulting in a smaller operating profit of ¥12.4 billion.

Familymart ties with Fujio Food, opens new convenience store hybrid

Familymart agreed a new tie-up with Osaka-based restaurant and cafeteria operator Fujio Food System in May, paving the way for convenience stores that combine with cafeterias. Fujio operates 687 multi-dish cafeterias under the Maido Okini Shokudo banner in Japan as well as nine more overseas. The new format will be a convenience store that includes an eat-in area and an open kitchen preparing both standard cafeteria dishes and take-out deli and ready-to-eat items. It will also offer to-order lunch boxes. The first is expected to open later this summer.

Seven Eleven BEGINS ROLLOUT IN JR West STATIONS

Seven Eleven begins its conversion of JR West Kiosks this month with the first five stores coming online immediately. The first will be in Kyoto Station. The new kiosks will be called Seven Eleven Kiosk or Seven Eleven Heart-In depending on location and size – kiosks vary in size from 15 sqm to 140 sqm. The new store network will feature more than 500 locations including major stations such as Osaka, Kyoto and Kobe, and stretching from Kyoto all the way down to Hakata Station in Kyushu. Seven Eleven is expected to take over the entire chain within five years.

United Arrows to open sports store with running station

United Arrows will open the first stand alone store for its new sports fashion chain En Route in September. Dubbed ‘Wearable Tokyo’ the new chain merchandises 60% own brands with the rest a mix of Japanese and international brands including Asics, Descente, Yoshio Kubo and Ponti. The first store will be in Ginza and will include a running station. Running stations – changing and shower facilities – are now widely installed in sports stores and other facilities, particularly around the Imperial Palace but also through Ginza to Tsukiji, and other popular running routes in the capital.

Arcs to merge Belleplus and Jois

Arcs has announced plans to merge its most recent two acquisitions in Tohoku, Jois and Belleplus, at an undisclosed date. The two chains will look to cut duplicate facilities and combine logistics and buying. Arcs’ acquisition of Belleplus will be completed later this year. In addition to the earlier acquisition of Universe back in 2011, Arcs now commands sales in Tohoku of around ¥200 billion.

GU hits 11 million online members

Fast Retailing’s GU subsidiary continues to strengthen its online presence. Celebrating its fourth anniversary in May, the site offered its first free deliveries, alongside discounts on some products. The 270 store ¥100 billion chain garners around 5% of sales from online, of which 50% come from mobiles. It was an early user of LINE and SNS and now claims some 11 million members across its website, mail magazine subscription list and LINE membership. Recent online campaigns include an Instagram timeline of the brand’s short history and blogger campaigns by celebrities sporting GU’s t-shirt campaign.

Futako Tamagawa Rise set for completion in 2015

Tokyu Corporation will complete the last leg of the Futako Tamagawa Rise development in Futako Tamagawa next year. This will include a new SC called Terrace Market. Featuring an open plan, tree-lined promenade, the mall will adjoin a new cinema complex, fitness club and a 30 storey tower complete with a Tokyu Excel hotel and spa on the top floors. The entire development comprises some 112,000 sqm.

Familymart renews its loyalty point system

With both Seven Eleven and Lawson offering their own unique loyalty cards, and Rakuten launching its multi-vendor R-Points system, Familymart will also update its own version of T-Point called Famima T-Point shortly. It is now the only major convenience store chain to stay with the third party loyalty points system offered by Culture Convenience Club (CCC). Under the new system, users receive 1 point per ¥200 spent if they buy less than ¥5,000 per month, but 2 points per ¥200 for ¥5,000 or more and 3 points per ¥200 for ¥15,000 or more. Familymart claims this is the first system to increase loyalty payback points by amount spent. For T-Point cards with built in credit cards, users can receive triple points every Tuesday and Saturday, and female shoppers get access to an additional day of double points every Wednesday. As of April, there were 5.47 million registered users of Famima T-Point.

Rakuten opens delivery lockers in Osaka

Rakuten has taken another idea from Amazon’s US playbook by setting up delivery lockers to allow customers to pick up purchases at central locations. Two sets of lockers opened in Osaka at the end of May under the Rakuten Box brand, located in Namba subway station and at Kansai University Senriyama Campus in northern Osaka. For now, the lockers will be used for just 500 SKUs of certain brands on sale through Rakuten’s Brand Avenue sub-site for fashion brands . Customers are sent a unique password to their email on completion of their order. The number of brands offering the service will be expanded in July.

Aeon and Sapporo launch discount beer

Having tied with Seven & I to introduce a premium, jointly branded beer, Sapporo has now started shipping discount beer made for exclusive sale through Aeon. The new ‘genre’ beer (fizzy, beer flavoured alcohol) sells for ¥100 including sales tax and went on sale in late May under the name Sapporo Sozai Ippin (roughly Sapporo Rare Ingredients) and is available in 3,500 Aeon and Maxvalu stores in 350ml cans. The same product is also being sold in Ministop convenience stores but at a higher price of ¥118. Aeon and Sapporo are aiming to sell 48 million cans in the first year. The new beer has been designed to target increasing price consciousness among consumers.

Get a concise monthly update on Japanese Consumer Markets – and a FREE copy of our monthly report.