February 2015 News in Brief

Feb 15

Private brands now accepted by most consumers

A recent Kurashi How survey demonstrates that private brands (PBs) are indeed becoming mainstream. Of a 597 sample of married women aged 20-70, 65% said they bought convenience store brands regularly or sometimes, with 53% buying more than they did a year ago. The most popular lines were confectionary, bought by 53.4%, although women in their 20s preferred the chilled desserts. Respondents said they bought more PBs than manufacturer brands for milk, confectionary, bread, tofu, frozen food and, overwhelmingly toilet paper. In contrast, manufacturer brands were preferred for washing detergents and soy sauce. More than 90% said they knew Aeon‘s Topvalu ranges, and 86% Seven Premium from Seven & I, but while just over half actually purchased Topvalu, only a third bought Seven Premium. PBs were chosen primarily for their lower prices (76%). Between 15% and 18% bought because of familiarity, unique product types, wide ranges, reliability, with quality one of the least important choice factors, even for premium PBs such as Seven Gold.

Desigual expanding fast

Spanish fashion retailer Desigual is expanding rapidly in Japan. As well as continuing to open more stores, it is now expanding wholesale sales to specialty chains and investing in its online store in order to boost brand awareness. Desigual‘s Japanese arm INTS was established in 2011, but started cautiously, setting up just three stores in the early years. Today it has 19 stores, with eight stores opening last year alone, and wholesale sales to 200 doors. Retail sales account for 60% of turnover. Going forward, INTS plans to open five to 10 stores a year in fashion buildings and SCs and these will include the recently launched home fashion collection.

American Eagle forecasts sales of ¥21 billion BY 2018

Aoyama Shoji, which runs the American Eagle franchise in Japan, says it expects sales of the US brand to reach ¥21 billion through 2017, producing operating profit of ¥1 billion. Sales for FY2013 rose to ¥6.1 billion and were expected to hit just under ¥10 billion for FY2014, and then ¥14 billion this year. The first phase of expansion was all about cementing its position in Tokyo and Osaka, but from last year Aoyama started a TV spot campaign to raise brand awareness in the regions while rolling out stores to these areas. In 2014 Aoyama opened 14 stores but plans 28 this year, 38 in 2016 and 48 in 2017.

Sogo Seibu introduces regional private brands

Sogo Seibu continues to expand its own private brands. In March it will launch a new brand of womenswear developed with teams from, and for sale at, regional stores, offering what it hopes is a more sophisticated line to meet the aspirations of women in the regions. The collection will have prices of around ¥30,000 for coats and ¥10,000 for knitwear with 40 styles of apparel and 10 for accessories and will draw on local manufacturing in some cases.

Daimaru Matsuzakaya to launch PREMIUM ONLINE store

Daimaru Matsuzakaya will launch a new website selling top end merchandise this month. The site will specialise in overseas brands, jewellery and artwork, with an average price of several million Yen – it will list items selling at up to ¥10 million, and many will be unavailable at its stores. The site will only open to its VIP sales list (gaisho in Japanese), and, because of the prices, payment will be handled offline. Customers interested in particular items will be contacted individually by the chain‘s gaisho sales staff, and a product demonstration will be arranged either in store or, for some, at the customer‘s home. All group stores will offer the service, with a trial already operating through eight stores. In order to login to the site, customers need a special serial number issued by gaisho staff. The new initiative comes as all major department stores report good high end sales, with gaisho accounts making something of a come back.

Supermarket sales fall 0.6% in 2014, convenience stores down 0.8%

The Japan Chain Store Association (JCSA) says same store sales at its members fell 0.6% in 2014 to ¥13.207 trillion, the 18th straight year of decline. Apparel sales fared the worst, down 5.4%, with household goods down 0.4% and food down 0.1%. Sales declined in each quarter and, following a 9.4% increase in March, have fallen every month since with December sales down 1.8%. The JCSA noted satisfaction with the government‘s decision to postpone a second tax-hike, and said it expected performance at many members to improve in the next financial year. Similarly the Japan Franchise Chain Association said the top 10 convenience store chains saw same store sales down 0.8% for the calendar year, with sales of magazines particularly weak due to increased consumption of digital media on smartphones. The leading three chains opened a net 2,479 new stores in 2014 for a final total of 51,814.

ABC Mart opens high end store in Ginza

Footwear sector leader ABC Mart has refitted its Ginza flagship store to convert it into a new, high end format using the Premier Stage moniker. The new format will appear in other high profile locations across the country, even department stores and premium SCs. ABC Mart already has around 10 Premier Stage stores, but the Ginza store is the first flagship, with a more exclusive store fit and new high end lines of footwear such as White‘s Boots, a US brand acquired by ABC Mart last year. White‘s Boots sell at prices upwards of ¥100,000 a pair, and prices at the Ginza store overall are 30% or so higher than average compared to other ABC Mart stores. The store features a special sales corner for Adidas and has similar corners for other major footwear and sneaker brands. ABC Mart is still seen primarily as a discount retailer, and the new store is designed to position Premier Stage as a suitable tenant for top end department stores.

H2O Retailing expects excellent year

Despite the tax hike, H2O Retailing is forecasting excellent results thanks to sales to tourists and improved group profitability following consolidation. For FY2014 to March, H2O expects group operating profit to jump 15.5% to ¥20 billion. Interim operating profit for 1H2014 was 34.6% higher than forecast at ¥5.85 billion. Sales in the first quarter were down, but have come back strongly since July. The merger with Izumiya also came online in the middle of last year and has helped contribute to group performance. While the department store sector saw sales decline slightly, Hankyu Umeda rose 7.9% in December, and Hankyu Men’s Yurakucho was up 65.6% in the first half, again largely due to popularity with tourists. H2O is working with a government fund to promote Cool Japan in Asia and will open a new store in China in 2018.

Aeon runs Australian fair to celebrate trade deal

Aeon ran an exclusive Australian beef and wine fair across 1,200 stores in its Aeon, Daiei and Maxvalu chains in January to mark the reduction in import duties from Australia. Import duties on Australian beef will be reduced gradually over the next two decades. The current rate of 38.5% will be reduced to 19.5% on frozen beef over an 18 year period, and to 23.5% on chilled beef over 15 years. The initial cut to 30.5% is to be implemented at the end of March, but beef imported from Aeon’s directly run Tasmanian farms was sold at 30% off for several days in January helping to get the news across to customers. Wine duty will also be abolished over the next seven years. Aeon reports the promotion was a major success with beef and wine sales both up 1.5 times compared to January 2014.

Matsumotokiyoshi: 80 duty free stores

Leading drugstore chain, Matsumotokiyoshi, will have 80 stores offering duty-free services to tourist customers by 19 February, the date of the Chinese New Year. This is double the number at the start of 2015, with up to 50 more planned for later in the Spring. As previously reported, other than accepting Chinese credit cards, Matsukiyo only began offering tourist services late in 2014. The chain, like others in the sector, is seeing strong sales of Japanese branded cosmetics, toiletries, and even nappies. Currently, Chinese tourists make up the bulk of its duty-free shoppers, but the industry as a whole is hoping for a further influx of tourists from Vietnam and Taiwan in coming months.

Mitsui to open outlet mall in Toyama

Mitsui Real Estate will open a new outlet mall in Oyabe in Toyama Prefecture in July, its 13th outlet mall so far. The new Mitsui Outlet Park Hokuriku Oyabe mall will feature 129 tenants across 26,000 sqm. Given the provincial nature of the Japan Sea region, Mitsui expects the mall to draw from a large catchment and be popular with domestic tourists that visit the area. It will include seven stores not opened in an outlet mall before, as well as some local stores, but most tenants will be major fashion, accessories and sports brands.

Isetan-Mitsukoshi aiming for ¥100-300 billion overseas

Isetan-Mitsukoshi is aiming to expand sales overseas, although progress is unlikely to be quick. The group currently earns around ¥80 billion in sales outside Japan with stores in countries like Singapore and China. CEO Hiroshi Onishi said recently he expected this to expand to ¥100 billion by 2030, suggesting the group has few plans to expand stores internationally. At the same time, Onishi said that sales of ¥200-¥300 billion outside Japan were possible with a proper, international e-commerce model in place. He also reconfirmed the group‘s ambitions for private brands, noting that the group‘s own ranges currently make up 16-17% of sales, but will rise to 20-25% in the near future.

Watch market expands 20%

Yano Research estimates that the Japanese watch market grew 20% in 2013 to ¥695 billion, the fourth straight year of expansion. Growth came from both the rush to buy luxury goods before the tax hike as well as the more sustained increase in spending by wealthier Japanese thanks to improved levels of income and asset values. Department store watch & jewellery sales rose strongly in FY2013 reflecting this demand. This market is expected to remain reasonably strong through 2015/16 giving international watch brands a welcome boost, despite the weakened Yen forcing Japan retail prices higher.

Cross Company expands cosmetics brand

Cross Company will expand merchandise ranges at its emerging cosmetics chain, Scent of Varo, which currently has three stores. The brand will add three new lines including haircare products. Cross Company already sells hand care and body care products, featuring mostly natural ingredients. The range offers four fragrances (¥3,800 for 380ml), shampoos and conditioners, Lipcare (¥1,200 for 4.5g) and room and clothing fresheners (¥1,900 for 100ml). As well the eponymous chain the brand is also sold through Cross Company’s gift accessories chain, Maison de Fleur.

Meiji to increase dairy prices by 6%

Leading dairy producer and wholesaler Meiji has confirmed that from April it will be increasing prices on 11 SKUs of milk by 2-5% and on 43 SKUs of yogurt and dairy drinks by 2-6%. This is Meiji‘s first price hike on milk since October 2013, and it hasn‘t increased prices on its other lines since March 2009. Meiji says higher prices of imported raw ingredients, plus increased energy costs, are forcing its hand.

Kahma becomes DCM Kahma

Home centre chain Kahma has changed its name to DCM Kahma. While average punters may not see the point, the move signifies the strengthening of the DCM brand, which covers three chains: Homac in Hokkaido and northern Japan, Kahma in central Japan, and Daiki in Shikoku. The group has begun selling private brand items under the DCM label and will continue to unify branding across the group.

Seven & I introduces latest dual brand beer with Sapporo

Seven & I‘s dual-branded products are appearing thick and fast with a second dual-branded beer developed with Sapporo Breweries going on sale in January. The new beer apparently uses 100% German aromatic hops for ‘a unique taste‘. It is aimed at the growing demand for high end beers, and is the first convenience store branded premium, specialty beer.

Wacoal to launch new chain, acquires San-ai division

Wacoal will open the first store for a new retail chain in April. Located in Lucua 1100, it will be called A Day Wacoal The Store and will sell a range of Wacoal brands aimed at young women. Wacoal plans to expand the chain to 25 stores within three years, producing sales of ¥2 billion. It includes the new Aveuje brand, targeting 30s women, with lacy but simple underwear at price points of around ¥4,500 for a bra. Other brands will include Studio Five, Salute and Wacoal as well as the lower priced brand Body Conscious. In other news, Wacoal acquired the swimwear and underwear business of San-ai last month. The division had sales of ¥5.5 billion last year and includes 23 stores. San-ai‘s swimwear brand San-ai Rakuen has a high brand awareness but has suffered from lack of investment due to San-ai‘s declining fortunes, and the reluctance of its parent, Ricoh, to invest. The underwear business is largely comprised of the Northerly chain of stores which targets 18-24 year olds.

Brilliance+ raises more funds to expand online diamond sales

Queue, the company behind Brilliance+, raised new funding last month on the back of solid sales growth for its online diamond store. Brilliance+ was founded in 2008 and sells engagement and wedding rings online. One of its attractions is that it lets customers create their own unique rings from over 7,000 types of diamonds and 2,000 ring designs, a total of 3 million possible combinations. Wedding rings too can be customised by width, material, and finish. One of the hurdles in selling expensive jewellery online is customer trust as well as a desire to see the jewels. To fix these issues Queue set up showrooms in Ginza and Yokohama. The biggest draw of Brilliance+ is that by cutting out middlemen and avoiding the need to carry large stocks of inventory – one of the most costly aspects of running a jewellery business – it has been able to slash retail prices, claiming it can offer the same quality as retail chains but at up to 50% less, at the same time as offering huge choice.

Rakuten Ties with Japan Post FOR DELIVERY LOCKERS

Following the experiment in Osaka reported in JC1406, Rakuten has tied with Japan Post to offer delivery lockers. As with a similar deal between Amazon and Lawson, Rakuten customers will be able to pick up their orders from lockers at a post office convenient to them as long as they choose Japan Post as the shipper. Once the purchase has been deposited in a locker, Rakuten sends out an email to the customer with a locker password. At the start 50 post offices will have lockers but this will be expanded across the country later. Japan Post already has lockers for its Yupack service and will make these available to Rakuten customers too. Rakuten believes the service will be popular with customers wanting to pick up orders at a time of their choosing, as well as those who don‘t want to give out their address online.

Tokyu to open Cube Plaza Harajuku in March

Tokyu‘s latest urban SC will open 27 March. Called Cube Plaza, the 16 tenant SC is located between Omotesando and Shibuya on Meiji Dori. Tenants in the 2,500 sqm SC will mostly be cafes and restaurants, as well as a large store for Sense of Place by Urban Research – the first flagship in Tokyo for the fast expanding chain and its largest store to date.

Rakuten and Yahoo vie for Japan‘s best website

Rakuten took the top rank from Yahoo Japan as the country’s ‘best‘ website in Nikkei‘s A/W web brand survey carried out between 8-20 October last year. The survey asked 36,369 respondents to judge sites on six scores, including ease of use (amazingly Rakuten still came top) and access frequency. With Amazon Japan 3rd , at least for this very large sample, shopping sites dominate, with Google remaining 4th. Youtube jumped to 5th, pushing price comparison site kakaku.com down to 6th. Suntory was the highest ranked ‘traditional‘ company at 7th, with all leading drinks manufacturers among the top 25. This is followed by Wikipedia 8th, and then Yamato and Cookpad, the latter, like Rakuten, another of Japan‘s major success stories online. Some retailers make it into the top 50 ranking, including Nitori (27th), Lawson (28th), Muji (32nd), Seven Eleven (37th), Familymart (44th) and Tokyu Hands (49th). Others, notably major online sellers like Yodobashi, Bic Camera and Ito-Yokado are all strangely absent. Equally, a ranking that doesn‘t include any Start Today site may not be truly representative, huge sample or not.

Uniqlo to launch in Canada

Uniqlo will open its first stores in Canada in Autumn 2016. Both will be in Toronto, in the Yorkdale and Eaton SCs. As of January this year, Uniqlo was operating in 16 countries with a total of 1,500 stores. In the Autumn this year Uniqlo will also open its first store in Belgium.

Tokyu refreshes Tama Plaza Terrace

Tama Plaza Terrace is one of Tokyu‘s most successful SCs, and in a bid to keep growing, it unveiled a raft of new tenants last month. Among the 16 new tenants were Dean & Deluca, Spick & Span, Chersage, and Uniqlo. 14 other tenants refurbished their stores.

Hankyu Umeda launches Valentines Day Chocolate campaign

Hankyu Umeda is offering 150 brands of chocolate from all around the world, featuring 1,500 varieties, in this year’s Valentine promotion. The average price is about ¥2,000 and sales of ¥1.4 billion are expected from this one store alone.

Get a concise monthly update on Japanese Consumer Markets – and a FREE copy of our monthly report.