January 2015 News in Brief

Jan 15

Muy Mucho launches in Japan

Lifestyle goods distributor Emporio opened the first Japanese store for Spanish lifestyle and interiors chain Muy Mucho in November in Aoyama. Emporio has a license for the Barcelona-based chain and will merchandise a mix of imports and Japan-developed product, and given the quality and level of design of its own product at the new store, could well become a net exporter to the Spanish chain too. The second 300 sqm store will open in the Ikspiari SC in February. Around 2,000 SKUs are displayed with product refresh every two weeks. Emporio plans 20 stores within three years.

Tomorrowland signs Canadian lifestyle brand

Tomorrowland has signed a distribution deal with Canadian brand Want Les Essentiels de la Vie. The Montreal-based leather accessories brand was founded in 2006 by Mark Wiltzer and Byron and Dexter Peart and after a patchy few years, has become a sought after brand in exclusive boutiques around the world such as Bergdorf Goodman and Colette. Best known for its gadget bags and cases, Want Les Essentiels emphasises utilitarian design and luxury materials, i.e. luxury without the logos. Tomorrowland will start distribution from this Spring and will also have responsibility for distribution in the rest of Asia from this Autumn. It will open a stand alone store in Aoyama next Spring. As well as its chain of select shops, Tomorrowland is a distributor for a number of leading international brands while operating single stores for others – for example the Dries Van Noten store in Aoyama. It currently distributes James Perse and Souleiado here, and from last year, it began exclusive distribution of Jean Paul Knott, the Belgian designer. Tomorrowland also operates a store for French fashion house Isabel Marant under a franchise agreement.

Daiei name to disappear by 2018

Aeon has confirmed that the Daiei name will disappear by 2018. Daiei was delisted from the TSE in December, its financial results now masked within the amorphous mass of brands and subsidiaries that make up Aeon Retail. Although nowadays it’s not unusual for retail brands to be decommissioned, the erasure of a store name that defined Japanese retailing between 1960 and 2000 is still a significant decision – and the pace of extirpation will be rapid. With a new high end Daiei concept store opening in Ichikawa, Chiba Prefecture only in November last year, Aeon’s desire to see the name gone will leave some feeling somewhat bewildered.

Aeon to build more large scale SCs 

Aeon will open another of its massive regional malls next Autumn in Tokoname in Aichi. The 200,000 sqm SC will be located next to the coast, on land owned by Aichi for Chubu Centrair airport. It will be next to Tokoname Station on the Meitetsu Airport line as well as a major highway interchange and will have 70,000 sqm of retail space housing 200 tenants. Aeon will also open a 130,000 sqm mall in Sakai, a city to the south of Osaka, in 2016. The SC will have space for 2,600 cars for those coming off Highway 26, but will also serve three nearby stations, including Shichido Station from which there will be direct access. This is the latest example of Aeon’s new focus on large format station malls. Like other station malls Aeon is building, the Sakai SC will have a strong community focus, aiming to become a hub for daily needs including services such as medical clinics and after school programmes.

A shop window for overseas jewellery designers

E-commerce has proven a boon for young Japanese fashion entrepreneurs, as well as providing new opportunities for up and coming overseas designers to reach Japanese consumers.  While the high cost of retail stores in both rents and capital investment has been a hindrance to many aspiring retailers in the past, e-commerce has led to a plethora of new ideas. One such is a new jewellery online store that specialises in showcasing little known overseas designers. As is also increasingly characteristic of new online ventures in Japan, and reflective of the global outlook of younger entrepreneurs, the site targets both Japanese and overseas consumers. Launched in November last year, Kotoko promotes designers such as Maya Magal, Rachel Entwhistle, Auden, Brooke Gregson and Mathilde Danglade. Prices range from around ¥10,000 to ¥600,000. Kotoko was set up by a 25 year old female entrepreneur schooled at the London College of Fashion and a few years working at Burberry and Harrods.

Zennisshoku to open supermarkets in depressed towns

Major supermarket food supplier and buying group, Zennisshoku or Z-Chain, has new plans to tie with local town authorities to open small stores in areas where major chains see no market. The supplier, which currently includes some 1,800 member stores, plans tiny 30-40 sqm food outlets in towns and villages deemed unviable by major chains, mostly due to low population densities. The stores will stock fresh produce, drinks and packaged groceries with around 1,000 SKUs per store. The first example opened in south Shimane Prefecture in October in the city of Unnan. Despite covering 550 sqm km in this largely mountainous area, the city is home to just 39,000 people, down by 13% since 2005 alone. The store operates 9am to 6pm, Monday to Saturday and is subsidised by the local authority.

Askul sees major growth in 1H2014, Lohaco adds Body Shop and Seijo Ishii

Leading online and catalogue retailer Askul saw sales surge 10.7% in 1H2014 to ¥131.9 billion, with operating profit also up 11.6% to ¥1.6 billion. Profits were helped by further consolidation of logistics, with a new dry goods DC opening in Tokyo. Askul’s core B2B business is office supplies, a market in which it enjoys a commanding share. Sales rose 7% to ¥123 billion, accounting for 94% of Askul group operations. Again the improvement in logistics efficiency contributed to a 28.9% increase in operating profit to ¥3.6 billion. At the same time, Askul’s B2C business, called Lohaco, continues to struggle, making a ¥1.7 billion loss, even though sales increased by 2.1 times to ¥8.9 billion following a quadruple increase in FY2013. Repeat customers increased from 150,000 to 1 million in the first six months, and Askul is now expanding the service as a web portal, accepting third party brands such as supermarket chain Seijo Ishii, wine specialty chain Enoteca, and cosmetics brand The Body Shop among 35 online tenants. Askul is forecasting total annual sales of ¥277 billion to May, up 9.3% on last year, with operating profit up 52% to ¥6.5 billion.

Shibuya 109 in Hong Kong

When sales are plummeting at home, expansion overseas is a dubious option, but Tokyu-owned Shibuya 109 feels it needs to try. With sales at its flagship SC falling dramatically in recent years, down 9.1% last year yet again,Tokyu Malls Development will open the first overseas 109 in Hong Kong next Autumn. Shibuya 109 overseas will be a store, a 750 sqm space selling a selected range of best-selling brands from the Japanese SCs. Tokyu hopes to exploit the popularity of Japanese fashions and culture in Asia, and plans further stores in Hong Kong and then mainland China longer term.

Isetan Shinjuku updates baby & maternity floor

Quite possibly the most luxurious nappy changing area in the world opened last month in Isetan Shinjuku. Part of the new Baby & Maternity floor, the nappy changing booths are clad in leather while an adjacent and very spacious room is divided into private breast feeding booths. Isetan has also installed a baby feeding room with rows of high chairs and a baby restroom. The department store’s new space comes complete with marble floors and bronze fitted store furniture designed to look like large baby cots. A custom order desk handles orders of personalised stationery, uniforms and other clothes, as well as custom shoes while the shopping tills are at desk height with chairs for pregnant women and mothers carrying babies. As with other new sales floors, new complementary services have also been introduced such as a study programme for young children called Cocoku, and a seminar room has been installed to offer pre-natal advisory services. Maternity wear has been sourced from Europe and the US. At the same time, a new toy store for children up to six years has been unveiled next door, selling top end toys from around the world with an emphasis on education and physical development, including a Science & Culture area. In March a new space devoted to children’s fashions will open, completing the refurbishment of children’s and maternity sales areas.

Futako Tamagawa Rise to add annex in Spring

Tokyu will add a new extension to its successful Futako Tamagawa SC, Rise in April. Called Terrace Market, the SC will include Zara Home as well as another Spanish brand, new to Japan, called Mallorca, a deli, cafe and bar from Madrid. Another first for Tokyo at least will be DIY Factory, a unique DIY store from Osaka that mixes workshops for adults and children alongside merchandise and fully equipped workspaces which can be rented. A total of 18 tenants will be housed within the open air space adjacent to a large tower housing a cineplex, fitness club and hotel as well as offices.

Uniqlo to open in Antwerp

In line with Fast Retailing’s plan to have at least one Uniqlo store in all major cities in Europe, it announced the opening of a store in Antwerp in Autumn 2015. As of November  2014 Uniqlo had 23 stores in Europe, in the UK, France, Russia and Germany. Fast Retailing is also believed to be scouting locations in Barcelona after losing out to Desigual for a site next to Apple in the city’s main square Plaza Catalunya.

Look opens Vera Bradley Japanese flagship

Vera Bradley has only just completed a joint venture agreement with Look, but already the Japanese distributor has opened a flagship store for the US brand. The store opened in November in Daikanyama, a compact 211 sqm space selling the full line including the limited edition series of tote bags, Vera Bradley Style, based on archive designs. Look plans a string of Vera Bradley stores in both stand alone locations and shopping buildings.

Mitsubishi Estate confirms new Nagoya landmark with Isetan as anchor

Mitsubishi Estate will complete its major Nagoya development near Nagoya station in March 2016. Included will be a 70 tenant SC as well as a 20,000 sqm services area, dubbed ’Lifestyle & Services’, that will include clinics, health spas and showrooms. The headline tenant will be Isetan which will open a 3,000 sqm select shop.

Toiletry market up 1.2%

According to research firm Yano, the market for toiletries expanded 1.2% to ¥1.735 trillion last year, the first rise in two years. The market had been in decline, but new private brands are helping boost sales. Supermarket and drugstore designed lines are more carefully targeted, according to Yano, filling gaps in the market for senior consumers and others. Some lines, notably adult sanitary items, face masks, and personal hygiene products such as hand sanitisers have all added to the growth in demand. This hygiene related section of the market was up 2.6% last year to ¥686 billion, with home care, including various aromatics, also growing, up 0.8% to ¥339.8 billion. Oral care and dental products increased 2.1% to ¥157 billion. Detergents and fabric softeners were flat at around ¥326.4 billion, with face and hair care products down 0.8% to ¥225.7 billion. Yano predicts a 0.2% increase this year to ¥1.7393 trillion, representing a real contraction when tax and general price increases are considered.

Uniqlo sues journalists for articles on work practices

Uniqlo has been actively using the courts to sue journalists critical of some of its work practices. Reports of employee abuse have emerged from within Uniqlo stores for many years, something not necessarily unique to Uniqlo. These vary from reports of senior managers verbally and even physically abusing junior store staff, to the more common claims  of unpaid overtime and overly long work hours – retailers often classify office staff as shop staff as a way to force unpaid overtime on weekends. Using the courts to try to silence such criticisms is, however, both relatively new and so far not necessarily successful. Cases where abuse has been confirmed as fact have emerged, leading courts to throw out some law suits. Even so, with the government recently making it illegal to even ask questions about areas it deems secret or embarrassing, journalists fear that there is something of a more general trend occurring. Some legal experts expect such moves by major Japanese companies to increase.

Sogo Seibu sells local lucky bags

Sogo Seibu introduced a new take on the traditional end of year lucky bags (fuku-bukuro) in December. The department store sold bags featuring products idiosyncratic to each of its 24 branches from across Japan’s diverse regions. The full range of bags were also made available through its e.depato online store between 26 December and 4 January. The bags contained items from a range of 950 SKUs chosen for regional flavours and variety, and selling for between ¥3,240 and ¥18,000 per bag. The Asahikawa store, for example, offered dried foods from Hokkaido in 50 limited edition bags for ¥18,000 a piece. The Hiroshima store provided a similar limited range at ¥8,460 featuring Hiroshima sourced oysters along with various sauces to enjoy them with – including curry flavour of course.

Isetan-Mitsukoshi introduces commission-based pay

Isetan-Mitsukoshi will instigate a commission-based pay system for permanent employees from this Spring. Some of the chain’s best shop assistants already command sales of ¥100 million or more a year, but even these elite few generally earn less than ¥10 million a year.  From this Spring, the top sales assistants will be able to earn incomes similar to those of top executives. In the current climate, many retailers are actually reducing wages for store assistants, so the move is seen as setting a precedent that other high end retailers will likely have to emulate if they want to keep their best people. The new system will affect just a few dozen very top end assistants in the first year, but be rolled out more generally from 2016. Commissions will also be weighted by product category.

Amu Plaza Oita to open this Spring with 183 tenants

Following the success of Amu Plaza Hakata, JR Kyushu will open a 183 tenant SC at Oita Station this Spring. The 36,000 sqm SC is likely to shake up local retailing and prove a serious problem for department stores in particular. 62 stores will be apparel tenants and another 37 selling shoes, accessories and cosmetics among the 224 tenants. As well as Toho Cinemas, large tenants will include Tokyu Hands and Kinokuniya.

JR East expands online

JR East launched a new online store in November called Net de Ekinaka, an e-commerce operation that will sell merchandise from tenants at its in-station SCs. Customers will be able to order for home delivery or for pick up from a nearby station store. Included in the site are tenants from its Ecute SCs, as well as Gransta Tokyo Station and other station areas. The product focus is on gifts including confectionery and cakes.

Kusuri no Aoki raises operating profit 25% in 1H

Kusuri no Aoki, the drugstore chain that has been one of the fastest growing in the sector over the past four years, has set another record with operating profit up 25% in 1H2014 (June to November). Sales jumped 16.3% to ¥64.8 billion. Aoki has refitted 15 stores since June and has enjoyed increased same store sales every month since July. Profits could have been higher, but sales expenses rose 14.5%. For the year, Aoki is forecasting operating profits up 15.8% to ¥6.8 billion, a huge improvement on its original forecast of a 7.9% fall. Sales are expected to remain strong, with a forecast of a 16.2% increase for the year to ¥133 billion.

Japan Post IPO announced

Japan Post will list its financial subsidiaries on the Tokyo Stock Exchange in September. The two financial arms of the post office group, Yucho Bank and Kanpo Life Insurance, will both be listed in an IPO estimated to be worth around ¥7 trillion – a value similar to the 1998 NTT  Docomo offering. The move comes 10 years after the Koizumi government first announced that it planned to privatise the post office operation, the biggest repository of personal savings in the country, some ¥14 trillion. The government is the sole owner of shares in Japan Post which owns the two financial subsidiaries. Around 50% of stock in both companies is expected to be offered publicly.

Benetton closes Omotesando Store

Benetton closed its iconic flagship store on Omotesando in central Tokyo in late December. The three storey, 1,000 sqm store was the first Benetton Mega Store, opening in 2000 in an effort to rebuild the brand’s flagging performance in the Japanese market. With other mega stores already closed in Shinjuku, Kobe, Umeda, Shinsaibashi, Kyoto, Nagoya, Sapporo and Fukuoka, the one surviving location, at least for now, is an incongruous site in Kumamoto in Kyushu. The brand now plans to concentrate on its 42 stores in malls and outlet centres. Benetton has already moved its office, and will seek tenders to redevelop the Omotesando site in coming months.

Albis acquires JA stores in Fukui

Regional supermarkets continue to consolidate with Toyama based chain and food wholesaler Albis last month acquiring three A-Coop stores in Fukui from the JA agricultural cooperative operation. The stores had sales of ¥3.7 billion a year in FY2013, with operating profit of ¥18 million. Albis is a significant player in the Hokuriku region, operating in Toyama (34 stores), Ishikawa (19 stores) and now in Fukui. It plans further acquisitions.