December 2014 News in Brief

Dec 15

Spain’s Uno de 50 in Japan

Spanish fashion jewellery brand Uno de 50 (Cinquenta) will open its first Japanese flagship store this month in Omotesando Hills. The store will be operated by Dmet Label (dmet.co.jp), an e-commerce business which has the rights to the brand in Japan. Founded in 1996 in Madrid, by a collective art association, Uno de 50 now has 100 stores overseas and another 180 doors selling its bold and distinctive designs. Made entirely in Madrid, the fashion art jewellery will retail for between ¥20,000 to ¥150,000. Around 600 SKUs will be on offer within the store.

Tourists reach record numbers

Visitors to Japan reached a record high in October. A total of 1.27 million foreigners came to Japan, an increase of 37% year on year, and higher even than the peak in July this year. Since January Japan has received more than 11 million visitors, again higher than the record set last year of 10.3 million. Although October is not normally the busiest tourist season, the cheap Yen, trade shows, visits from large cruise ships and a boost in charter flights all helped raise traffic. For the full year, 13 million visitors are forecast.

Spain’s Munich shoe brand in Japan

Barcelona-based footwear brand Munich has signed a distribution deal with Nishida Tsusho with sales starting from next Spring. Munich was founded in 1939 as a sports trainer business, but was restructured in 2000 as a fashion footwear brand, since when it has expanded rapidly in its native country. Shoes are manufactured in Spain and Italy. Sales globally reached 900,000 pairs last year. Prices points in Japan will range from ¥15,000 to ¥20,000.

Department Stores hoping for premium Christmas

In a recent Macromill survey of 1,000 consumers aged 20-50, premium beer was crowned most popular gift for the end of year season, with brands such as Suntory’s The Premium Malt’s scoring highly with 78% saying it’s a gift they’d like to send – and no doubt to receive too. The survey overall noted a preference for premium brands, with beer the most popular overall. Fresh and smoked salmon, high end ham – a perennial favourite – imported German sausage and corned beef also scored highly. Major department store outlets such as Isetan Shinjuku are carrying expanded ranges of premium items for the gift season precisely inline with what Macromill confirmed.

Itochu signs Derek Lam and Cacherel

Itochu Shoji has signed an exclusive distribution deal for the womenswear and footwear lines of US fashion brand Derek Lam and its second line Derek Lam 10 Crosby. Itochu’s new affiliate Toray Diplomode will handle day to day distribution from A/W 2015. Select shops will be the main target with sales of ¥1.5 billion forecast within three years. Derek Lam, a former womenswear creative director at Tod’s, has flagship stores in New York for both brands. Last month Itochu also signed a deal with French brand Cacherel for apparel and accessories with subsidiary Coronet as distributor. The Nîmes-based brand is seeing something of a revival at the moment with a flagship store planned for Paris next year. Within Japan, Coronet will sell to select shops and open corners in department stores, hoping for sales of ¥1.2 billion within three years. Cacherel used to be sold under a master license to Itochu subsidiary Itochu Fashion System with imports handled by Sanei International (now part of TSI Holdings) in a deal signed in 2003. Before that it was sold through Sanki Shoji.

Red Mango FROZEN YOGURT launches in Japan

South Korean frozen yoghurt firm Red Mango opened its first Japanese store last month. Operated under a franchise by house cleaning firm Hasekou, the first store opened in Setagaya. Red Mango has more than 400 stores worldwide, including 275 in the US where it claims the largest market share. Hasekou sees a major opportunity to build a nationwide chain, promoting frozen yoghurt as a healthy alternative to ice cream and donuts. It forecasts a chain of 200 franchised stores in Japan by 2020.

Aeon begins exclusive sales of Picard

In late November Aeon began sales of Picard, the largest frozen food brand in France. The launch began with nine stores in Aeon and Daiei, with corners carrying 35 SKUs from the Picard range. Picard has been voted France’s most popular food brand for the past four years running, and already has 1,000 frozen food stores in Europe, stretching across France, Italy, Belgium and Sweden. Products have been chosen both for their uniqueness and for likely popularity with Japanese consumers, and the range is set to be expanded to around 50 SKUs depending on initial results. Products are made in Europe and shipped under careful temperature control to Japan. Aeon expects mini pies and foie gras (the latter selling at ¥2,000) to be particularly popular.

Senior consumer targeting expanding rapidly

Not surprisingly, more and more brands are targeting senior consumers. In the past few months, Seven & I has announced a number of new lines in its Seven Premium range designed specifically to attract older consumers, particularly traditional foods such as niku-jaga (literally meat & potatoes). Package sizes have been reduced for couples and singles needing just small portions and products are being made available at both supermarkets and convenience stores. Meanwhile, Shiseido has also announced new skincare and make-up lines targeting older consumers, all due to go on sale in January. Its latest sales campaign was launched on the company’s Watashi Plus website in November. A recent government white paper has highlighted the growth in the market, with 31.9 million people aged 65 or above in 2013 – almost half of these over 75 already. The proportion over 65 will grow to more than 30% by 2025.

H2O expands cosmetics chain to men

Like other department stores, H2O Retailing has its own specialty cosmetics chain. Operated by subsidiary, FG Joy, Fruit Gathering is found in stations and within H2O’s properties. Last month it expanded the chain to include men, with a dedicated men’s corner opening within its store in Ecute Shinagawa. Clad in a masculine look of brick and black & white floor tiles, the 16 sqm corner focuses on overseas brands of cosmetics, bath & body lines and hair accessories such as Clinique for Men and Three – as well as a large collection of the ubiquitous men’s hanky. The 200 sqm Fruit Gathering Shinagawa store was first launched in 2013 and achieved sales of ¥400 million in the first year with average prices of ¥4,000. Like similar women’s stores such as Isetan Mirror & Make, the format is semi-self service offering counselling on some products. Fruit Gathering now has 10 stores across Japan with plans for around 30 within the next three years. All future larger stores will include men’s corners.

Grand Tree Musashi Kosugi opens to 120,000 first day visitors

Seven & I’s new 37,000 sqm SC Grand Tree Musashi Kosugi is vital to the retailer’s future plans. According to JapanConsuming’s Top 100 Consumer Markets report, it is located in the city with the highest apparel sales in Japan, and so the launch of stand alone stores for its own private label fashion brands will be well tested. Seven & I has also used the SC to launch other retail chains. These include a new upmarket supermarket called Grand Tree Marche operated by Ito-Yokado, which includes a huge deli area, as well as Home & Works, a new specialty format that offers home and interior items from Ito-Yokado in a fresh format. Its other stores within the SC include Loft, apparel brand Galloria, outdoor store Goodday Park, and Seibu Sogo, a small format store offering best selling items from the department store chain. The Grand Tree brand is likely to be rolled out to compete with other fashion heavy SCs such as Lalaport, Mark IS and Tokyu Plaza. Seven & I claims a queue of 7,000 at the opening and 120,000 visitors in the first day, mostly locals from the prosperous suburb itself – the 5 km catchment comprises around 500,000 people, including the new residents of the tower blocks adjacent to the SC. 160 tenants are either new or new to Japan. The SC also includes a large outside play area, and a party space that can be rented.

Daiei ratifies Aeon takeover

Daiei was Japan’s leading retailer from 1972 until 2000, but late November saw what is likely to be its final shareholder general meeting. The 680 shareholders in attendance in the company’s original hometown of Kobe – it’s HQ long ago moved to Tokyo, but shareholder meetings were still held there – could do no more than look on as Aeon’s absorption of Daiei as a wholly owned subsidiary was ratified and scheduled to be finalised in January 2015. Daiei will be delisted from the TSE on 26 December.

Muji to introduce self-scanning

Mujirushi Ryohin will introduce self-scanning checkouts at some stores in Tokyo. This is an unusual move for a non-food retailer, but the popular brand reports long queues at some stores, notably those popular with tourists. The first checkout, using an NCR system, will be installed in the Yurakucho store in January. The self-checkout will not accept cash, requiring customers to pay either by credit-card or by e-wallet.

Japan falls into recession, second tax hike postponed

With Japan’s economy falling into recession last month, the government chickened out of a second consumption tax increase originally scheduled for October 2015. Instead the increase from 8% to 10% has been postponed to April 2017, maybe. The initially forecast tax income increase of ¥14 trillion will now fall well short, even more so if a brake isn’t applied to the current economic decline. The ¥2.8 trillion already allocated to the health system from the first increase will reach only around half that figure. Naturally, opposition politicians have immediately jumped on the postponement as a disaster in the making. The current LDP government had avoided the issue of an increase in indirect taxes for more than a decade before the first secure opposition government since the war made the decision for them – only to be unceremoniously booted out of power for its pains at the next election. PM Abe’s decision to postpone led to a snap election being called, professedly to gain electorate approval for the postponement, but mainly to take advantage of opposition parties’ ongoing fragmentation. Policy makers are suggesting lower prices on imported drugs to help alleviate healthcare costs in the short-term, but domestic experts have been scathing, saying that health costs are rising so quickly that even a 10% consumption tax would still fall well short of necessary funds needed to cover those costs today, not in 10 years.

Sagawa launches large scale logistics services

Major delivery company Sagawa Kyubin has launched its own logistics services. The aim is to provide third-party logistics both to large retailers and multiple medium sized retailers out of single, large logistics platforms. One of its first clients is Mitsubishi Jisho Simon, which will use the service to provide logistics for its nine Premium Outlet SCs. In the past, each store in a Premium Outlet SC organised its own deliveries, meaning 100 to 200 stores scrambling to get delivery trucks lined up, unloaded and products sorted every morning before start of trade – both chaotic and wasteful. Instead Sagawa will combine all deliveries for all stores at the same SC from a single distribution centre. Sagawa will initially use its existing 480 depots to launch the service although new DCs are in development. Competitors like Yamato already have systems that amalgamate orders from a single office tower to ease parcel delivery, and Nittsu will also launch a similar service aimed at SME manufacturers.

Nihonbashi renaissance plans continue around Takashimaya

Mitsui continues its plans to rebuild the entire Nihonbashi area as a modern work, play and residential neighbourhood. Its latest project will be new tower blocks adjacent to Takashimaya on one side, linking to the work already done on the other side of Nihonbashi bridge near Mitsukoshi, and other towers closer to Tokyo Station. In all 2.6 hectares will be redeveloped through 2018. Takashimaya itself will be refurbished complete with a 6,000 sqm roof garden and terrace spanning the entire roof overlooked by two vast towers. Within these will be a shopping centre. Both the department store and SC will be managed by Toshin Kaihatsu which will attempt to replicate the success of a similar mixed department store/SC arrangement in Futako Tamagawa.

Keidanren: winter bonuses to rise 5.7%

Keidanren’s survey of end of year bonuses was announced in early November, suggesting that on average it would be a great year for many workers, with bonuses up 5.78% compared to 2013, to an average of ¥893,538. This is the first time the annual increase has exceeded 5% for two consecutive years since the end of the bubble economy in 1989-90. All nine industrial sectors surveyed confirmed bonuses were set to increase, although not surprisingly given the government’s desperation to drive income growth, the public sector will see the highest increase of all, up a huge 14.82%. Automobile and electronics manufacturing will increase bonuses by 6.65% and 7.18% respectively, although raw material suppliers in food, paper and non-ferrous metals will raise bonuses by just 1% or so. If the survey results hold true, these raises should stand PM Abe in good stead in his snap election, especially as predictions suggest only his own supporters are likely to vote.

Japan’s Etsy launches mobile app

Creema is a market place for a myriad of handmade items, and similar to the successful US sites, Etsy and Fab. Creema has become a useful way for small designers and producers to market their product, with 650,000 items on sale and a claimed 2 million monthly visitors. As well as the product displayed online, Creema allows consumers to contact with designers to order custom-made items. It recently raised ¥100 million from KDDI Open Innovation Fund, and immediately put the money to use developing a mobile app which launched last month. This allows both customers to purchase, and sellers to upload product details, from phones. As well as Creema, Etsy itself is active in Japan, as is Pinkoi, a Taiwanese venture, along with another domestic site, Tetote Market, which spun off from Cyberagent recently.

Biggest Stradivarius store in world opens in Osaka

Inditex opened the biggest store in the world for its Stradivarius brand last month in Shinsaibashi, Osaka. Located in Shinsaibashi Shotengai, the 1,400 sqm store stocks 45,000 items. It is the chain’s 900th store worldwide and to celebrate the Spanish firm has clearly gone to town, creating a glittering flagship complete with winged staircase. As is usual for the brand, new merchandise is stocked twice a week and merchandise plans refreshed. This month a further store will be opened in Pieri SC in Moriyama, Shiga, the eighth store in Japan. Inditex now has stores for Zara, Bershka, Zara Home and Stradivarius in Japan. Yet to open here are Massimo Dutti, Pull & Bear, Oysho and Uterque.

Seria jumps 10.5%

Seria continues to lead the 100 Yen shop sector in growth terms. Sales rose 10.5% in 1H2014 to ¥57.5 billion, with operating profit rising 10.1% to ¥4.8 billion. As well as new stores, Seria continues to upgrade locations to its popular Colour the Days fascia, which offers a higher grade of merchandise in bright interiors but still at ¥100. A new POS system has helped with sales analysis, making it easier to forecast, plan and reduce inventory. Seria opened 58 stores in the first half but closed 21, ending the half with 1,132 directly operated stores and 78 franchised shops. Sales of ¥119.5 billion for the full year are forecast.

Keikyu unveils new men’s floor

Keikyu Department Store relaunched its menswear floor last month, with a modern contemporary look aimed at pulling in more men in their 30s and 40s, lowering the average age from the over 50s. To do this Keikyu is going after the geek fashion market with a range of highly specialised men’s atelier firms from within Japan – with heavy emphasis on the provenance. These include shirtmaker Hitoyoshi from Kumamoto, which claims to offer ‘¥30,000 quality shirts for ¥10,000’, and Superior Labor, an apparel brand from Okayama (www.superiorlabor.jp). Also on sale is the Japanese-Scottish brand of leather accessories, Glenroyal, and German umbrella brand Knirps among 10 other distinctive labels. Keikyu’s sales have soared in recent months.

L.L. Bean opens in Aeon Laketown

L.L. Bean’s Japanese branch opened a store within Aeon Laketown’s Kaze building late last month, the second in Saitama Prefecture. This brings the total number of Japanese stores to 19. The 360 sqm Laketown store includes the full range of apparel and accessories, including the expanded range of Japanese sizes, as well as a corner for the more premium L.L.Bean Signature collection. A new feature of the store is a multi-channel space complete with sofas where customers can sit and browse the full collection of product online and place orders.

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. METI’s annual figures put e-commerce sales in FY2013 at ¥11.2 trillion, up 17% on the year before, but other recent reports from Nomura suggest that online sales could already reach close to ¥20 trillion by the end of the year.

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