Department stores expand own brands and small format retailing

Sep 15

Isetan-Mitsukoshi is leading the charge to diversify into small format retailing and raise the ratio of private brand product in department stores (see Focus, Page 13), but other department store groups are also working hard to catch up. Daimaru-Matsuzakaya has just unveiled two shoe brands and Tokyu has created an accessories specialty chain.

A further example of the growing control of sales space and merchandise selection within department stores comes from Daimaru-Matsuzakaya which introduced new private brands of footwear last month. The first is Adelina, a 17 SKU line of women’s fashion shoes with prices ranging from ¥15,000-20,000. The other is a much more affordable line of 30 SKUs aimed at working women with prices of around ¥8,000. The department store expects sales of ¥300 million in year one. Both brands have been designed with the help of customers – Daimaru-Matsuzakaya organised focus groups and customer feedback forums to gain understanding of what 30s and 40s women are looking for in both day to day footwear and shoes for special occasions. While design and materials differ, both brands emphasise comfort and being easy to put on and take off – a key consideration in a country where shoes are removed six times a day on average. Like other department stores, Daimaru-Matsuzakaya is aiming to expand private brands in order to raise operating margins and increase price/value, while also making stores more distinct from the competition – historically department stores have suffered from excessive similarity. Currently 40% of footwear sold in store-controlled sales areas is private branded.

Following Isetan-Mitsukoshi’s announcement of plans to launch a chain of fashion stores, Tokyu will unveil its own specialty store brand next month. Called Mikke by Tokyu Department Store, the brand has been designed for SCs and will first launch in the remodelled Tokyu Plaza Kamata in Tokyo’s Ota-ku next month. Mikke will sell apparel accessories in a 120 sqm space.

Tokyu is going after a young target with a concept it dubs ‘Wonderful ZAKKA Park’, aiming to make a fun, easily browsable store mixing private brand lines alongside higher end labels. Mikke is Tokyu’s first non-food small format venture and indicative of how widespread the efforts are by department stores to reposition away from general merchandise stores and also develop more private brand ranges.

These small format stores present opportunities for overseas brands, even if the increase in private brand merchandise means a narrowing of the channel overall. Tokyu is expected to launch more small format stores over the next year both within its own SCs and in collaboration with other group retailers, notably Tokyu Hands. Last year Tokyu also launched a small format food chain called Tokyu Show Slice in Musashi Kosugi.