September 2014 News in Brief

Sep 15

Aoki to introduce iBeacon smartphone service in October

Menswear retailer Aoki Holdings will introduce Apple’s iBeacon near field technology service to all its stores from October. iBeacon is a Bluetooth 4.0 service that scans for nearby smartphones and beams messages to them. Its adoption in Japan is expected to proliferate in the next year – NTT Docomo has become a reseller and is currently testing the service in department stores. In Aoki’s case iBeacon will be used to send discount coupons and other offers to store visitors carrying smartphones with the Aoki app installed – offers will be tailored to existing customers based on purchase history. The service will also be used to track customer movements around the store, such as how long they stand in front of particular displays, and the data used to improve store design and merchandising. While sending discount coupons to registered customers is common, including via GPS location tracking, iBeacon will allow Aoki to reach all store visitors who download the app. The service will be tested at three city centre stores and then rolled out to all 670 stores over time. The technology is part of a larger ¥90 million investment in new IT systems that allow for real-time comparison of sales and footfall.

Rakuten to close Play.com

Rakuten will shortly merge the business of its UK subsidiary Play.com into Rakuten and close down the Play.com website. The move is part of plans to create one global platform that will allow vendors from one country to reach all Rakuten customers around the world including in Japan. Rakuten.co.uk will launch this October but full integration will not take place until 1Q2015.

Cross Company launches cosmetics chain

Cross Company will open a new cosmetics chain this month called Scent of Varo, with the first store in Kyoto. Designed to look like an English sunroom – as the store is in an SC the lack of sun will make it all the more authentic – the stores will sell hand creams, soaps, body washes, and a variety of aromatherapy products. In addition, the chain features its own cat logo called Jardin that will appear on towels, bags and make up poaches. Prices will average around ¥5,000. Last month Cross Company opened the first store for another non-fashion chain called Maison de Fleur, a gift and cosmetics chain.

Aeon to open The Coffee Bean & Tea Leaf

Aeon will shortly start rolling out The Coffee Bean & Tea Leaf cafes in its 140 SCs in Japan. The US owned chain currently has 942 stores in 24 countries and has been looking to enter Japan for some time. The stores in Japan will be run as a franchise operation. Moving the other way, Hotland, which owns Tsukiji Gin Taco, Japan’s largest octopus ball (tacoyaki) chain, will also begin rollout in the USA. Aeon Mall owns 34% of Hotland and will be directly involved in opening franchises in the USA.

Fred Segal flagship due in Daikanyama in 2015

Californian retail brand Fred Segal will open its first overseas store in Tokyo next Spring. It will occupy three of five buildings in a converted railway site in Daikanyama totalling 730 sqm and include a cafe, spa and other luxury services. The 3,200 sqm development will also house a San Francisco bakery and a craft beer bar. The store is the first in a long-term partnership between Sandow, owner of Fred Segal, and Mark Styler, which will see stores across Japan, both stand alone and department store concessions. Fred Segal Daikanyama will bring together a mix of luxury products across menswear, womenswear and accessories, as well as home and lifestyle categories, from both independent brands and Fred Segal-branded merchandise. Both Japanese and overseas designers will be represented.

Lawson and Seven Eleven introduce private brand pet foods

Both of the largest convenience store chains have introduced new ranges of own branded pet foods, with price and convenience both key sales factors. Seven Eleven has a range of mostly cat foods that it says it designed with women and senior customers in mind. A single sachet sells for just ¥80 – in packaging that looks disconcertingly similar to its food brands designed for humans. Lawson has gone beyond food, adding other pet accessories to a range of around 60 SKUs that are being rolled out in certain stores using special displays. In both cases, the aim is to expand ranges of high margin, non-food items, reducing the reliance on food alone. Around Tokyo, good ranges of pet foods are only available in larger supermarkets, so the conbini chains are hoping to fill a gap in supply too.

@Cosme buys GlossyBox

Leading online cosmetics portal, @Cosme, has acquired Beauty Trend Japan, the operator of GlossyBox, a cosmetics delivery service. Singapore-based GlossyBox is a subscription-based online cosmetics retailer with sales in Japan and several other Asian countries as well as Europe. Customers sign up for a monthly subscription of ¥1,620 and receive a box of cosmetics each month with a range of brands included – each month is different, allowing customers to try out a variety of products and brands without the effort of research. GlossyBox also sells a men’s cosmetics subscription. iStyle, which owns @Cosme, will use GlossyBox to diversify and expand its retail interests, a move which could have a significant impact on online cosmetics market share. While GlossyBox has only around 50,000 users, @Cosme has nearly 3 million and partnerships with 850 cosmetics manufacturers.

Isetan-Mitsukoshi Osaka to house Tsutaya

As previously reported, JR West will reconfigure its SC at Osaka station over the next six months. Lucua will take over 30,000 sqm of Isetan-Mitsukoshi leaving the latter with 20,000 sqm while Lucua itself will expand to 53,000 sqm. Perhaps the most humbling news for the department store is that the ninth floor menswear section will be converted into a 4,000 sqm Tsutaya book store and cafe. Last month, Lucua revamped its existing SC, replacing 44 tenants out of 200 of which seven are new in Japan and 17 new to Western Japan. Highlights include 221 Restir, Rodesko Urban Research and Sports Lab by Amos. Once conversion is complete JR West forecasts sales of ¥80 billion from the 53,000 sqm Lucua SC.

Parco to add new building in Nagoya following Zerogate opening next month

Nagoya Parco will open a new building next to its current site, due to be completed by Spring 2015. The new building will take over land immediately adjacent to the current store, but will have just three floors and 1,180 sqm gross space. The Nagoya Parco store opened as two buildings back in 1989 and for a number of years was the top selling property in the Parco chain and one of the highest selling SCs in the country. It opened its South Annex in 1998 and this Autumn will open Nagoya Zerogate. Zerogate will house five tenants in its 7,500 sqm space: Forever 21, Stradivarius, American Eagle Outfitters, Sense of Place by Urban Research, and Super Sports Xebio. The new building opening next year will mean there are five structures in the complex in total.

Tokyu Hands opens in Singapore

Tokyu Hands opened its first store in Singapore in June, further expanding its successful format overseas. It opened a store in Shanghai back in April 2012, but the higher income market of Singapore is expected to be more suitable given the high cost of running a Tokyu Hands store with its very deep merchandise ranges. The first Singapore store was opened cautiously in Jurong East, a suburban shopping centre, but Tokyu Hands has confirmed that it has now agreed on a 700 sqm store for the main central shopping area on Orchard Road. This new store is due to open in November.

Venus Fort updated with 35 new tenants

Celebrating its 15th year this month, Venus Fort SC in Odaiba continues efforts to pull back customers in the face of intense competition. This month 35 new tenants will be opening and 15 other tenants will complete refurbishment of existing stores, accounting for around 30% of sales space. Highlights include the first Japanese store for frozen yoghurt business, Pinkberry, European travel goods brand, Alife Store, a Nike Factory store, as well as a pet service store called Joker’s Town featuring a pet beauty parlour and dog run. Direct marketing firm Felissimo will open a new concept fashion store called FelissimoCircus, while a store called Maverick will sell custom motorbikes and motorhomes as well as house a biker cafe.

Kenmin Department Store closes

Kenmin Department Store, a local retailer in Kumamoto, Kyushu, has announced it will close its doors next February. Kenmin had originally planned to relocate, but has been unable to find a suitable new site. The area where the store is located, Sakuramachi, is being redeveloped forcing the closure. The Kenmin store was originally opened as Iwataya-Isetan Shopping Centre in 1974, but following Iwataya’s financial troubles and Isetan’s restructuring of both its own properties and Iwataya, the store was sold to management in 2002, backed by the store’s landlord, Kyusanko. It was renamed and then went through a series of difficult management transitions. Sales fell from ¥16 billion in 2004 to ¥11.9 billion last year.

Itochu buys Renfro stake

Itochu acquired a 25% stake in US legwear business Renfro last month. Renfro currently manufactures for major retailers such as Walmart, K-mart and Costco through factories in the US, India, China and Mexico. The deal is part of Itochu’s aim to increase its share of down channel business overseas, creating a value chain from fabrics through to finished product. For Renfro the deal means a chance to expand its sales reach into territories where Itochu is strongest, including Japan, China, other Asian countries and the Middle East.

IKEA aiming for 14 stores by 2020

In August IKEA Japan introduced its new catalogue, a bedroom and bathroom promotion, and reconfirmed long-term plans to offer online sales in Japan. The announcements were made by the new country manager, Peter List. Aiming to further target new areas in Japanese homes, the bath and bedroom promotion follows on from previous campaigns highlighting interior design and storage solutions. As part of this, new room sets are being rolled out in all eight IKEA stores, with targets such as the ‘37 year old, single woman’ and the ‘55 year old couple with an empty nest’. IKEA also announced further smartphone enabled enhancements to its paper-catalogue, allowing customers to better visualise products in their own homes. List confirmed a target of 14 stores by 2020, including new stores in Nagoya, Hiroshima and Maebashi, and prospects for a store in Hokkaido and additional stores in both Kanto and Kansai. The online store is also slated to be available around 2020, but IKEA remains cautious around online sales everywhere and in Japan emphasis will remain on opening new physical stores and building the brand. Sales for 2013 hit ¥72.8 billion, up 8% on the previous year.

Aeon opens in Phnom Penh

Aeon opened its first mall in Phnom Penh, Cambodia last month. The new mall has total floor space of over 100,000 sqm, gross leasable area of 63,000 sqm, and parking for 1,400 cars and 1,600 bikes. It features an Aeon superstore anchor, and some 180 specialty tenants including major international brands like Mango, Giordano and Puma, but also a large number of Japanese tenants such as Lowry’s Farm, Wacoal, Sanrio, and Asme Estelle. Due to the few locally produced brands, Aeon is even selling some of its own Topvalu ranges at higher prices than in Japan – its mayonnaise is reportedly selling for ¥400 a bottle. The Cambodia opening comes close on the heals of Aeon’s entry into Vietnam, where it will add two more malls over the next 12 months, and will be soon followed by two planned malls for Indonesia, the first due to open this year. Aeon is already the largest retailer in Malaysia, has a long standing business in Thailand, continues to grow in China, and is actively researching possibilities in India.

Samantha Thavasa launches new apparel brand

Samantha Thavasa unveiled a new apparel brand for young women called RedyAzel by Honey Bunch last month. Operated by its apparel subsidiary, Burnedest Japan, RedyAzel launched in Lumine Est with plans for stores in leading SCs over the next two years. As is usual for Samantha Thavasa, the brand is fronted by a celebrity, in this case, Rina Fujii.

Big jump in ‘net dependent’ consumers

A recent study by the Ministry of Welfare & Labour pointed to a big jump in ‘internet dependent’ Japanese, growing 1.5 times since 2008 to 4.21 million people. This form of internet dependency is a growing concern in all developed countries, relating to excessive use of gadgets and time online to the detriment of work, family and face-to-face social activities. The survey estimated that 4.5% of men and 3.5% of women fell into this area, with a higher proportion of people aged 20-30 than any other group. Rapid diffusion of smartphones, online gaming, and increased use of social networks are all contributing to the increase. There was no mention of policies to offset the problem, but the report did note that 510,000 women and 690,000 had had medical treatment in relation to internet addictions.

Consumers “shun” McDonalds

Revelations that McDonalds Japan had used Shanghai Husi Food, a company confirmed to have supplied meat beyond its expiration date, has hit the company hard and provides just the latest lesson on Japanese consumer sensitivity. McDonalds had sourced its chicken nuggets from Shanghai Husi. Even though Shanghai Husi had also supplied meat to Familymart, consumers have been particularly unforgiving towards the American hamburger chain. Sales have reportedly dropped 15-20% compared to 2013 since the scandal broke, although the company says the fall has now stabilised. It cancelled the second of three major sales campaigns planned for the summer, with the third under review. Sales of chicken products in general came under suspicion. Lawson and KFC have had to launch PR campaigns to reassure customers that they used other suppliers. Meanwhile, Familymart, which did source from Shanghai Husi, said sales of chicken products fell briefly, but that the decline was minimal and short-lived.

Joyful Honda has poor first year after IPO

Major Ibaragi Prefecture based home centre chain, Joyful Honda, has reported flat sales in FY2013 to June, down 0.03% to ¥176.7 billion, with operating profits down 9.6% to ¥9.1 billion. This comes after Joyful launched its IPO in April. The company is known for very large stores and for catering to trades people as well as consumers. It runs just 15 stores and has not opened a new store since 2011. This is the second consecutive year of sales and profit decline. As with other retailers, Joyful enjoyed a brief improvement prior to the tax increase, with same store sales up 11% in April, but May saw sales down 12.7% with a further decline in June by 7.7%. It is forecasting a 0.2% increase in sales for FY2014, but expects profits to continue to fall, by 1.1%, to ¥9 billion.

Former Sogo chairman passes away

Hiroo Mizushima, the former chairman of Sogo Department Stores, passed away last month at the age of 102. The news is of passing interest as it illustrates just how far department stores have come in the past 15 years. Mizushima was one of the primary proponents of the now obsolete department store operational model where each store ran as an individual company, with little inter-store buying and control. His reign lasted 40 years from 1962 when Sogo had just three stores, building the group to some 30 stores at its peak both at home and overseas but resulting in ¥1.87 trillion in debt. The rationale for this business model was never fully understood until it was revealed that Mizushima drew salaries from each of the individual store companies, and in 2006 was found guilty of withdrawing money illegally from the group.

Tohoku sees further supermarket mergers

Four supermarket chains in the Tohoku region announced a merger last month, continuing the consolidation process led by Aeon’s expansion in the area and acquisitions by Arcs Group. The new group spans four prefectures, with Maiya in Iwate, Maeda in Aomori, Oban Holdings in Yamagata and Kikuchi in Fukushima Prefecture. By October the four chains will be amalgamated under a single holding company called Marks, which was set up as a joint buying operation back in 2010. As of March 2014, the group had sales of ¥78.6 billion and operated 66 stores.

126 retail bankruptcies in July

July saw the largest number of retail company bankruptcies this year so far, hitting 126 cases according to Tokyo Shoko Research. This was 18.1% lower than last year, although the rate has been increasing since April and was up by 20 compared to May. The largest default in July was Sanki, operator of Jewellery Maki and other chains. Overall large company bankruptcy numbers are down, with just 882 cases in all industries for companies over ¥10 million, a 13.9% drop on last year and the first time since 1991 the July figure has been less than 1,000 cases.

Tokyu Department Store to open second Thai property

Tokyu Department Store is due to open its second store in Thailand in February next year. One store is already open in MBK Center, one of the largest SCs in Bangkok, and Tokyu has now tied with PT Retail, a local developer, to begin work on new properties in the kingdom. The first development will be a new 13,000 sqm department store in a suburban mall.

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