October 2015 News in Brief

Oct 15

Isetan-Mitsukoshi to open in Tokyo Midtown

Isetan-Mitsukoshi has announced plans to open a 1,000 sqm select shop in Roppongi SC, Tokyo Midtown, next Spring, one of a series of smaller format select shops planned for key city centre SCs across the country. It has already announced a 3,000 sqm store in Nagoya slated for next year. These will be essentially larger versions of the airport stores opened recently. Exploiting the product selection and merchandising skills of buyers at Isetan Shinjuku, the select shops will be positioned similarly to Isetan Shinjuku’s fashion floors but in a format that can be adjusted to fit SCs, allowing the department store to take its wares and service to new customers. As a chain operation, the small format business should also be more profitable than department stores, especially given the opportunity to sell its own private brands – similar to the model of United Arrows and Beams, but more upscale. Isetan is keeping mum about its plans for the store, but women’s apparel and accessories are likely to make up the bulk of product, while maintaining a similar diversity of merchandise to Isetan Haneda.

Metrocity opens pop up store in Takashimaya

Italian handbag brand Metrocity opened a pop up store in Takashimaya Shinjuku last month prior to a full scale launch in the Japanese market. Established in 1992 in Florence, Metrocity is already well-established in South Korea where it has 100 stores and will now start expansion here. The main target is women in their 20s to 40s selling bags, shoes, and accessories with prices of around ¥60-70,000 for handbags.

Yagi Tsusho signs Helen Kaminski and Lorena Antoniazzi

Yagi Tsusho has signed a distribution deal with Australian hat brand Helen Kaminski. Helen Kaminski is known for its handcrafted hats made from raffia but also now sells accessories, including handbags and some apparel. Started in 1993, the company was bought by US hat business Bollman in 2007 and in 2008 opened a store in Roppongi Hills. The agreement is a joint venture 51% owned by Yagi and will sell both the main women’s line and the men’s Kaminski XY label. Helen Kaminski has been selling to Japan for 18 years, but now wants to expand through retail stores as well as wholesale. Yagi has also signed a deal with Italian high end knitwear brand Lorena Antoniazzi, owned by Sterne International in Perugia. Yagi has already started wholesaling Lorena Antoniazzi in Japan, but wants to invest in department store concessions and stand alone stores. Yagi will open the first store in Aoyama next April. Cashmere sweaters will sell for around ¥100,000 and jackets and coats from around ¥120,000.

Singapore’s Croesus expands in Japan

Singapore retail property giant Croesus Retail Trust plans to expand its presence in the Japanese market over the next two years. It is looking to buy more suburban malls and refurbish them with a particular focus on non-retail tenancies. It notes the trend towards new suburban SCs being designed as community hubs, with a mix of retail and services including community needs such as medical clinics, libraries, kindergartens and dining, and sees an opportunity to convert older SCS to match. Croesus recently acquired One’s Mall in Inage, Chiba for ¥11 billion, its seventh SC in Japan, a portfolio with a total asset value of around ¥82 billion.

Kintetsu downgrades profit forecasts as Abeno Harukas flops

Kintetsu Department Store has revised its forecast for FY2014 to February down from a previous ¥4.2 billion net profit to a much more modest ¥1 billion. The 70% reduction comes on the back of poor performance at the recently rebuilt Abeno Harukas shopping complex in southern Osaka. Sales forecasts for the main Abeno store have also been reduced by ¥28 billion to ¥117 billion, with total sales for the retailer now ¥17 billion lower at ¥287 billion. Kintetsu blames the tax increase in April with HQ sales down 20% on 2013 for Q1, but, in addition to excess department store capacity in Osaka, the store is simply poorly done. While the building itself is brand new and glitzy, it is as if Kintetsu preserved its old dreary store in a warehouse and installed it as is into the new build. Apart from the shiny escalators and new lighting, it is like being back in 1980s Japan. Kintetsu has displayed a stunning lack of imagination in store planning and tenant selection, a study in contrasts with Hankyu Umeda. And the competition isn’t helping. Although Hanshin Umeda is just beginning its own rebuild and is due to finish its first phase in 2018, having had to wait for the completion of its Hankyu Umeda sister store across the road, all other major department stores in the city completed their own refits and expansion long before Kintetsu. Kintetsu’s most recent addition of the Solaha SC annex adjoining the department store has also suffered due to poor branding and positioning, meaning most young people continue to flock to Cues Mall across the street.

Nine new MI Plaza stores this year including in Aeon

Isetan-Mitsukoshi will open nine new MI Plaza stores in the year to November 2015. Part of the department store group’s efforts to diversify into small format retailing, MI Plaza is a select shop chain for the over 50s selling a mix of foods, fashions and lifestyle merchandise in suburban neighbourhoods. Taking over from Mitsukoshi’s traditional satellite stores, MI Plaza offers a high level of service, much more attractive and distinctive store designs, and includes a community space with kitchen facilities to encourage local residents to use it as a kind of upscale neighbourhood store. The first store was opened in September 2013 in Uome in Tokyo with six stores open so far. Following adjustments and private brand development, the nine stores to be opened in the year ahead will include five in Aeon SCs. Isetan-Mitsukoshi’s small format store division currently operates 80 stores nationwide, but through 2016 expects to double this to 150 stores, and will also convert the remaining 55 satellite stores to the MI Plaza banner at the same time.

Post Office renews store concepts, move towards retailing

Japan Post has opened a new store concept in the underground area in Tokyo Station on the Yaesu side. The new store features a lot of whites, wood fittings, and lower than usual post counters that, the company says, will appeal to female customers. More importantly the store is 170 sqm with lots of room to display a wide range of gift samples from its own direct mail catalogues now being offered in a new venture with Isetan-Mitsukoshi. Japan Post is planning to move away from the old, functional post offices of the past and towards genuine retail outlets, while maintaining the standard postal, insurance and finance services of its core business. During hours when the post office part of the store is closed, the rest of the space will concentrate on sales events. Japan Post will open the first post office featuring a powder room in Kanazawa in November, and is planning another concept store in Fukuoka for next Spring, this time as the first post office designed to attract family shoppers.

Isetan hopes to revive department store childrenswear

Isetan aims to reboot childrenswear sales at department stores by rebuilding its Shinjuku childrenswear floor. A soft opening will take place this month but completion is scheduled for next Spring. Central to the new floor will be a store-managed area called Le Style Kids. The Le Style moniker is the in-house high fashion area, and is now being used for other segments including the over 60s (see page ?? side bar). Brands will include Stella McCartney, Little Marc Jacobs, Bape Kids and Mina Perhonen. Another area called Tasteful Style will sell a mix of apparel, accessories and household items for mums and kids with brands such as Bluebird Boulevard and Athena New York Girl. An event space called Park will offer workshops, a kind of mini, upmarket Kidzania, alongside a healthy juice bar and a high end hobby zone offering science, art and cultural toys and tools. In December a maternity area offering designer maternity apparel will open. Isetan-Mitsukoshi will then refurbish other childrenswear floors in its chain.

Itochu Shoji signs Casabella

Tapping into the growing demand for designer home gadgets, Itochu Shoji has signed US cleaning and kitchen goods brand Casabella for the Japanese market. Founded in 1988, Casabella products are now sold in more than 80 countries. Day to day distribution will be handled by Doshisha, a wholesaler of a variety of household product categories including apparel, bags and jewellery, and one of Itochu’s affiliates in Osaka, which also sells brands like Havaianas (another deal with Itochu) and British mug brand Dunoon.

Uniqlo to double childrenswear sales

Uniqlo’s childrenswear is popular for its quality and reasonable prices yet to date Fast Retailing has never really exploited the potential in a market still short of exceptional nationwide childrenswear chains. It now plans to fix this, increasing the number of stores carrying childrenswear by 60% and the volume of apparel by 50%, in the hope of doubling sales of childrenswear this year. Currently 426 stores carry childrenswear, about half the domestic chain, but this will be expanded to 680 stores and the number of SKUs from 300 to 450. While many items were unisex designs in the past, more distinct ranges for boys and girls will be created. More collaborations with famous characters are also planned including Disney characters, Snoopy and Hello Kitty. At the same time, Uniqlo will expand childrenswear sales to 16 countries. One of the best places to view the new ranges will be Uniqlo Kichijoji, a new 2,700 sqm store which opened October 3 complete with a 500 sqm childrenswear area.

Ginza6 begins tenant selection

J Front Retailing and its partners have begun selection of tenants for its upcoming SC in Ginza. Replacing Matsuzakaya Ginza, the 46,000 sqm SC will be the largest in the area, and looks like being the most upmarket too. Although some headline tenants look to have been confirmed already, the space will have 250-300 tenants in total and a website has been posted to help select tenants (ginza6.tokyo), which is even in English. The building, operated by J Front, Mori, L real Estate and Sumitomo, is expected to open in November 2016 catering to both affluent local residents as well as the fast-growing tourist traffic – the basement will include a tourist bus terminal and tourist information centre – and will also house the Kanze Nohgaku Theatre and offices. The retail space is being designed by Gwenael Nicholas, a Tokyo-based French designer with a host of luxury store projects to his name, including Maison Moynat, Berluti, several Fendi stores and Louis Vuitton Townhouse.

Pieri SC to reopen in December

Pieri SC in Moriyama, Shiga is currently completing a major refurbishment and will reopen this December with major new tenants, including H&M, Zara, Stradivarius, Bershka, Gap and Old Navy among the 150 tenants. Pieri Moriyama is one of the largest SCs in the region with 55,000 sqm of sales space and has been a popular shopping destination since opening in 2008 given its location next to Lake Biwa. It has faced stiff competition from Aeon Kusatsu which opened the same year very close by as well as Foleo Otsu. While the Aeon mall has been upgraded, complete with hot springs, and now has 86,000 sqm of leasable space, Pieri suffered from the financial troubles of its original operator. Milestone TM and Samty took over recently and have invested in a complete overhaul of the SC to turn it into an entertainment destination.

Ikebukuro gets new SC

A new SC opened in Ikebukuro last month behind Yamada Denki. Operated by Eima which had previously used the land for parking, the new SC is called Wacca Ikebukuro. The 7,500 sqm SC includes 27 tenants mixing fashion such as Sports Lab by Atmos and many services such as spas, a pet centre and a cooking studio.

Duty free sales up 30% at Takashimaya and 50% at Tokyu

Takashimaya says tourist sales rose 30% in 1H2014. Although total duty free sales amounted to just ¥7.2 billion in FY2013, the fast growth has encouraged the department store chain to add more duty free counters at its stores, with new counters opening at its Nihonbashi, Shinjuku, Yokohama,and Kyoto stores this month. Takashimaya will also introduce a tax free system for its smaller stores developed by Global Blue, a tax free shopping business. Other department stores are also investing in services for tourists. As well as Mitsukoshi Ginza’s duty free store announced last month, Tokyu will open a tax refund room in its three Shibuya locations and Sapporo. It has also opened a souvenir shop in Shibuya. Tokyu says tourist sales at the three Shibuya locations increased 50% last year.

Sogo trials virtual fitting rooms

Sogo Seibu installed its first virtual fitting rooms in Sogo Omiya last month. This follows the high profile trial launched by Urban Research earlier in the year (JC1407). Sogo’s iteration is being used to promote its increasingly high profile private brand Limited Edition. The system has been installed through Toppan Printing and allows customers to try on four styles and 28 colourways in an instant. Unlike Urban Research’s model, which allows social networking of customer pictures, Sogo has catered for its older customer base by allowing colour printouts of outfits with product numbers on them, making it easy to order later from Sogo Seibu’s online store – one more example of Seven & I’s efforts to create a seamless ominchannel retail experience.

World plans more accessory and home stores

World will launch two accessories chains next Spring. One called Location will focus on bags including luggage, and the other, Boule à Neige, will concentrate on fashion jewellery and related accessories. Both have been designed for the 25-35 womens market and for location in station buildings and station SCs. World has been encouraged to develop more non-apparel formats by the success of its One’s Terrace chain, where same store sales have been rising about 7% a month since May. One’s Terrace originally sold fabric, but four years ago was converted into a lifestyle accessories store for SCs and is now a 76 store chain. This year World plans to quickly expand the chain with a stronger focus on fashion and station buildings with a target of 100 stores through 2016. As well as fashion accessories, One’s Terrace sells kitchen goods, household and interior items, stationery and fabric for interiors, with around 6,000 SKUs in total. Most stores are around 250 sqm, but there are also some 180 sqm stores in stations and 600 sqm stores in SCs selling furniture and other larger household goods. Gifts account for around 30% of sales.

Cross Plus sales fall 7.8%

A sign of the struggle facing GMS retailers in their apparel departments is the poor sales of one of their leading suppliers, Cross Plus. Sales fell 7.8% in 1H2014 to ¥32.7 billion, producing an operating loss of ¥1.8 billion. Wholesale sales to GMS stores slowed as did sales at its subsidiary Vent International. The good news was that its SPA division, which creates corners for department stores, did well on the back of recovered apparel sales at department stores.

Ageless fashion for mothers and daughters

Hakuhodo recently surveyed 3,708 men and women aged 40-60, asking who they liked to spend time with. Both men and women ranked spouses first and children second, but while more than a fifth of women enjoyed spending time with kids, the same was true for only 7.3% of men – worryingly, men in their 40s actually preferred to shop with their own parents. Women enjoy shopping time with daughters, and the older they get, the more this is true, with 27.7% of women in their 60s shopping with daughters compared to 13.9% of women in their 40s. For daughters, spending time with mum is about relaxing and togetherness, while for mothers, daughters advise on the latest fashion trends and didn’t make them worry about how much they spent. Many new malls and even department stores have adjusted their positioning to attract more women aged 40 to 60, but the clearly successful ones have taken care to include offers for women in their 20s and 30s too. Chains are increasingly offering ranges for this so-called ‘ageless fashion’ trend. There are even a number of chains that are including girls clothes too so that grand-daughters can take part as well.

JR East renovates Mitaka Station SC

JR East continues its programme of overhauling key stations in the Kanto region, boosting revenues from shopping and entertainment by making each station a local community hub. The latest is Mitaka Station in western Tokyo which has been rebuilt complete with a new SC. The SC area has been rebranded to Atre Vie from Dila with 46 new tenants and will open this month.

Bic introduces free wifi for tourists

Bic Camera, the number two consumer electronics chain, introduced free in-store wifi for tourists and new tax free sales services at the beginning of the month. Tourist shoppers will be able to use unlimited wifi for free in Bic stores even without making a purchase as Bic hopes to attract more overseas shoppers and get them to stay longer. To use the service, shoppers will need to visit one of Bic’s tax free support counters for an ID and password but will then have access to some 50,000 base stations run by NTT West Japan, with Bic footing the bill from NTT. Bic is advertising the new service in hotels and will rollout to Kojima, Sofmap and other group stores in the near future. The company says it has seen a large increase in tourist shoppers looking for gifts. It has expanded its range of Japanese made whisky by 70%, and increased its stock of sake by more than five times. Kojima, which Bic acquired two years ago, has introduced tax-free counters at 35 of its stores for the first time. The Japan Tourist Bureau says that between April-June this year the average tourist spent some ¥143,942 per visit, an increase of 5.7% on 2013. As reported last month, Aeon expanded its tax-free counters to 300 stores and Ito-Yokado has introduced similar counters in most of its chain for the first time.

Seiyu announces price guarantee for veggies

Late in September Seiyu announced price matching guarantees on fresh produce, similar to the ones it already offers on non-food and packaged food products. This is an unprecedented move in Japan where fresh products, including meat and fish, vary hugely in price between supermarket chains and often change day to day. Customers will need to show evidence through newspaper flyers that similar products are being sold more cheaply elsewhere and Seiyu will match the price. Competing supermarkets reported they were unimpressed by the news, expecting any impact to be limited to a few outspoken customers willing to make an issue of it. What these companies don’t understand is Seiyu’s determination to offer EDLP (Every Day Low Price), guaranteeing lower prices regardless of when a customer visits. Given that few Japanese consumers expect this kind of consistent, low pricing and are used to having to switch chains week by week to find the best current deals, Seiyu’s initiative is another step in changing mindsets rather than a major attack on competitors.

Four stores for Charles & Keith this Autumn

Onward Holdings will open four stores for Charles & Keith, the Singapore footwear and bag retailer it signed a franchise with in Spring 2013. Three of the four will open in Aeon malls including Aeon Kyoto Katsuragawa in October and Aeon Okayama in December. The four new stores will bring the total to 12. Onward says it will accelerate expansion of the chain from 2015.

Summit pulls out of online retail

Sumitomo will shut down the netsuper online store established for its Summit supermarket chain next month. It is the first time one of the major players has reversed a move into selling online, but as competition heats up with so many largely undifferentiated players, it is unlikely to be the last. Orders have been too few at Summit Online to justify the high cost distribution required – customers have come to expect short-lead times and competitive prices when ordering online. Unlike Seven & I and Aeon, Sumitomo chose to centralise distribution rather than pick in stores near to customers’ homes, requiring a whole new layer of logistics. Despite attracting 300,000 member registrations, the business finished last year with a ¥1 billion loss. Analysts suggest a successful netsuper needs to make more than 5 deliveries per hour in order to be profitable and that most are making a loss. Reportedly, Seiyu and parts of the Coop network are the only food retailers currently making a profit from online sales.

Seven Eleven to revamp takeaway coffee offer

A year and a half since introducing ready to pour coffee machines throughout its chain, Seven Eleven will implement a refresh of the product line this month. The ‘counter coffee’ selling from as little as ¥100 a cup for the basic product has proven massively popular, and caused something of a backlash against coffee brands like Starbucks, perhaps galvanising Sazaby League to sell its stake. The chain sold more than 600 million cups in the first year alone and a further 340 million in H12014. The other major convenience store chains have, naturally, introduced their own versions as a result, so Seven Eleven is keen to stay ahead of the game. It will introduce new types of coffee bean to improve flavour and change its roasting techniques.  Prices will stay fixed. The company says it fully expects sales of the product to continue to grow strongly. Last month, Lawson introduced a new, lower priced line of instant coffees to match Seven Eleven and added teas as well. Familymart has added lattes and cocoa – and even ‘cocoa lattes’ – to its lines and introduced new ranges of desserts sold alongside the coffees.

Import brand market up 20%

Yano Research claims the import brand market – overseas brands of apparel and accessories – expanded 20.3% last year to ¥1.17 trillion. Growth came from the increasing consumption by affluent consumers with increasing spending by tourists too. Yano expects an 8.4% increase in 2014.

Household financial assets rise as cautious consumers save

Despite the mixed messages from an enthusiastically bullish government backed up by slavering export manufacturers on the one hand, and wage starved and tax pressed consumers on the other, the latest statistics show that the average household is now richer than it has ever been before. For the April to June quarter, total financial assets for all households (including the large sums held by senior citizens) came in at ¥1,645 trillion, the highest on record and 2.7% higher than in 2013. The volume of high risk assets rose to ¥82 trillion, and government bond holdings rose 4.5% to ¥1,013 trillion, again both all time highs. Higher savings does not signify a booming economy however; wealthier households have benefited from the strong stock market, and the weak Yen has helped some with overseas investments, but more than half the figure is made up of savings as even average households, worried about the future, conserve their income. Further stockpiling of savings could well damage the government’s plan to encourage more spending.

Muji to enter India

Muji has announced it will open in India in 2015, the first Japanese retailer to enter the country. Muji will establish a joint venture with a local retailer (currently unnamed), as required under current Indian regulations, and the first store is slated for either Delhi or Mumbai. Muji will take a 51% stake in the joint venture and handle merchandising and store layout, leaving the local player to manage HR and distribution. Both Aeon and Fast Retailing are also confirmed to be actively researching the market – Uniqlo already operates in Bangladesh in a joint venture with Grameen. As of February, Muji operated 225 stores overseas in 20 different countries, with overseas sales accounting for 21% of total turnover. It plans to expand this to 33% of a forecast ¥300 billion in consolidated sales by 2017.

Osaka underground shopping corridor closes in Umeda

The 220 metre long underground shopping corridor at Umeda Station in Osaka closed at the end of last month, with just a few shops staying open until later in October pending orders to close from the city government. The shopping corridor had operated in JR Osaka’s underground passages since 1939 and was a popular haunt of salarymen for a quiet coffee during the day, a beer on the way home, and the odd book and packet of cigarettes. Manji Shoten, a renowned secondhand bookshop has closed its doors after some 50 years, removing the iconic 80 metre long book cases and 10,000 volumes still in stock. Osaka’s commuters will need to find a different route to avoid the elements, and those reluctant salarymen might just have to head home a little earlier.

Direct mail market hits ¥5.8 trillion

The Japan Direct Marketing Association (JADMA) estimates that the non-store retail market reached ¥5.8 trillion in 2013. This was an 8.3% increase, up from the 6.3% increase in 2012 and making it the fastest single growth rate of any retail channel. Since 2003, JADMA says average growth for non-store has been 7.7%, and last year marks the 15th straight year of growth. Its sample based survey is the main industry-related statistic, but it far understates the extent of e-commerce growth with so many companies falling outside its membership and survey. Other recent reports from Nomura suggest that in total, e-commerce could already be closer to ¥20 trillion by the end of the year.

Coffee price hike pending

UCC, Japan’s dominant supplier of coffee with a market share of more than 16% in regular coffee and 5% in instant, but much higher in terms of its control of coffee imports, has announced a 25% price increase in supermarket coffee prices to be implemented in November. UCC says the increase will affect 70 different varieties of coffee and while it is partly due to a poor harvest in Brazil, UCC mainly blames the low Yen. It already increased prices of the much prized Blue Mountain coffee variety last month due to shortages and expects sales to cease temporarily as stocks run out. Both Nestle and Key Coffee will also increase their own prices, but by only around 6%.

As-me Estelle opens online jewellery store

Leading jewellery retailer As-me Estelle opened a jewellery e-commerce store last month.  Designed like an online mall, Estelle Jewel Garden (www.jewelgarden.jp) sells all of As-me Estelle’s brands and merges its online stores, Lapule jewel Garden and Bloom. 900 types of ring are on offer with prices of ¥5,000 to ¥200,000, but around 3,000 ring designs will be available in the future.

Aeon to acquire Red Cabbage

Aeon has announced it will acquire iconic regional supermarket chain, Red Cabbage this month. Red Cabbage operates 41 stores from a base in Yamaguchi Prefecture, spreading down to the northern prefectures of Kyushu. Sales to July 2013 stood at ¥30.7 billion, making it one of the largest operators in the area. Aeon will acquire 86.7% of outstanding stock and make Red Cabbage a wholly owned subsidiary at a cost of around ¥1 billion. The move is being seen as further strengthening Aeon’s regional operations, as well as the latest example of a smaller regional chain choosing a new, nationwide parent rather than be forced into submission by increased competition.

Seven & I joins with Fancl for new PB

Seven & I will begin sale of a cosmetics private brand line developed jointly with Fancl. The new skincare range will go on sale nationwide in both Seven Eleven convenience stores and Sogo Seibu department stores in November. It is the first cosmetics to appear in Seven & I’s expanding range of PBs. The product targets women aged 20-40 and uses natural ingredients to ensure skin compatibility, as well as drawing on Fancl’s use of vitamin E and the currently trending Argan Oil.