March 2015 News in Brief

Mar 15

Bals creates home fashion store for Ito-Yokado

Bon Bon Home, the first store jointly developed between FrancFranc operator Bals and new majority shareholder Seven & I Holdings opened at the end of February. The new store is in the Ito-Yokado Shin-Kiba store as a featured concession, covering 545 sqm and offering 3,000 SKUs in home fashion items, including everything from kitchenware through to some furniture. Prices range from ¥400-1,450 for a mug, through to ¥88,000-118,000 for a three seat sofa. This is the first new format store opened since Seven & I acquired its stake in Bals in 2012, but the company will now move quickly, aiming to open 20 stores by the end of April, all inside existing Ito-Yokado GMS outlets and almost all in Kanto. This is a major shift for the group’s GMS outlets, adding a new specialty store attraction to the general merchandise format, and a potential solution for tired apparel floors.

Seven & I acquires rest of Barney’s Japan, PLANS new store in Roppongi in 2016

Seven & I announced the absorption of Barney’s Japan last month. Seven & I acquired a stake in the business In December 2013 but will now acquire the majority stake held by Sumitomo Shoji. Barney’s Japan owns a license for the US retailer Barney’s New York, and has 11 stores in Japan – five main stores and six outlets, with sales of just under ¥20 billion in FY2013. Although Barney’s sells its own brand, 70% of product is imported, mostly from Europe. It is now set to bring more competition to Barney’s former owner, Isetan. Isetan will open a 1,000 sqm select shop in Roppongi next month, but Seven & I will open a new Barney’s New York store just across the road in September 2016. The store will open in a new office development on the street level. Barney’s New York will comprise just 1,900 sqm, smaller than most of its five store chain, but with a selected range targeting the wealthy segment living in the vicinity, as well as foreign tourists and business visitors. Seven & I plans to further expand the chain, including similarly small format stores in Osaka, Fukuoka, and other large cities.

Government introduces new ‘eco-points’ scheme for home reform

Five years after the last eco-points programme, designed to boost sales of consumer electronics, the Ministry of Land, Infrastructure and Tourism has announced a new scheme to encourage energy efficiency in homes, both for new builds and home refits. The new scheme launches 10 March. Consumers will be able to claim up to ¥450,000 in rebate points when fitting environmentally friendly upgrades to buildings. The points will be exchangeable for eco-friendly appliances, agricultural products and gift certificates. Solar panels, double-glazing and basic cavity insulation will all qualify for rebate points, as will homes built or upgraded with earthquake-resistant designs. Only construction contracts signed between 27 December 2014 and March 2016 will be eligible, but the scheme is expected to achieve a similar level of success as the first campaign, with the government setting aside ¥80.5 billion to pay for costs. Consumer electronics chains and manufacturers are both expected to benefit, but Yamada Denki, which has built a small subsidiary supplying environmentally friendly buildings and appliances, is particularly well placed to take advantage of the scheme. While many building firms can provide energy efficient buildings, Yamada has the most comprehensive service of any company in the new sector, and coupled with its position as the leading electronics retailer, is often the most easily accessible for average consumers.

Muji to open major store in Fukuoka, launches apparel recycling scheme

Mujirushi Ryohin will open a new large scale store in Fukuoka this month. The new store in Tenjindai will be the second largest Muji in Japan so far, slightly smaller than the 2,700 sqm store in Tokyo’s Yurakucho. It will have a heavy concentration on apparel, with the 1st, 3rd and 4th floors of the five storey building dedicated to clothing, including a full range of women’s, men’s and childrenswear. The location has a number of overseas brands nearby, and Muji is hoping to catch fashion shoppers in the area. A typical Muji carries 35-40% fashion, but apparel will account for more than 50% in the new store and it is targeting sales of 20,000 pieces a year. The store will also introduce a new clothing reform service under the brand, re-muji. The service will offer re-styling and repair services, including even re-dyeing older clothes, using a factory in Okayama. In addition, customers will be able to order a limited range of made to order shirts and other products supplied from local makers in Fukuoka Prefecture.

Large store applications continue strong

Despite the reduction in building projects from Aeon and Seven & I, ostensibly due to higher costs incurred through construction labour shortages, the government continues to complete 40-50 applications for new, large retail stores every month. For December, 47 new applications were completed, and among these were 18 applications for new supermarkets, with a further 13 for drugstores, combined making up well over half of the total. Again Kyushu based chain Cosmos Yakuhin continues to set the pace, with six store applications alone. There were seven large scale plans of 7,000 sqm or more, with the largest being Mitsui’s long discussed Expoland redevelopment in Suita just north of Osaka. The project – 61,000 sqm of land and 90,000 sqm of gross leasable space – is due to complete in October this year. On opening it will be the single largest shopping facility in Kansai by sales space.

Amazon JAPAN sales rise 12%

Amazon Japan’s sales rose 3.5% in dollar terms in FY2014 ending December to US$7.91 billion. However, at the same exchange rate to the year before, sales rose to ¥745 billion, around a 12% increase. It should be noted that Amazon Japan does not publish transaction values – these sales numbers are direct sales only combined with commissions from third-party merchants selling through its portal. Estimates suggest that transaction values last year hit around ¥1.2 trillion. Sales were boosted by the acquisition of new customers drawn in by the mix of fast, free delivery and competitive prices. At the same time, Amazon also expanded its product categories to include alcoholic beverages and secondhand cars. It also greatly increased the number of merchants selling through Amazon market place. Its beverages section now includes local promotions, the most recent of which is for Okinawan drinks, with more than 48 different SKUs among the more than 800 within the beverage store.

Dadway introduces discount childrenswear

Dadway, an importer of overseas children’s and babywear, is expanding its own brand discount lines. The dfesense brand (www.dfesense.jp) has proved a hit with fashion conscious parents, but the new ranges will offer prices around 60% lower than previous products as a new sub-brand under the D-Line name. From August, the A/W ranges will go on sale both at wholesale and in Dadway’s own stores at median prices around ¥3,000-4,000, with lines covering new borns through to 5 year olds. Dadway’s growing popularity is based on its use of ‘adult-like’ designs for children, including suits, shirts, dresses and cardigans. Sales are predominantly through department store childrenswear floors and Dadway stores, and have grown 1.5 times in the past year. The new lower priced, more casual ranges are expected to expand the brand’s appeal and maintain the company’s growth.

GMS CHAIN sales down 1.7% in January

GMS chain sales fell for the 10th straight month in January, down 1.7% on 2014. Total sales for Japan Chain Store Association members finished at ¥1.105 trillion, with GMS chains still struggling to recover from the tax hike last year – apparel and discretionary purchase sales have shifted away from chain stores and towards more specialty and upscale retailers. Apparel sales were down 10.5% on the year, while food sales were up 0.9% compared to 2014 – still lower than to be expected given the increase in prices. Food remains the only category performing well. To confirm this, sales for members of the Japan Supermarket Association were up 1.5% in January, the ninth straight month of increase. The best results were in Kanto, where supermarket sales increased 3.7%, while sales in Tohoku and Hokkaido fell 0.9% due to heavy snow.

Nails Inc trials pop-up stores in Japan

UK based Nails Inc opened pop-up stores in Seibu Ikebukuro and Opaque Marunouchi last month, through which the company began to evaluate the potential for a more permanent rollout. Nails Inc has a celebrity following overseas, with Victoria Beckham one of the brand’s endorsers, and even offers denim nail designs, both of which mean it is already well-known in Japan, with a strong following on social media. The Seibu Ikebukuro store opened until 3 March, with manicure services priced between ¥3,000-7,000. A typical Japanese nail-job takes around 1 hour, but Nails Inc is known for being much quicker, usually just 15 minutes. Other pop-up stores will be trialled in Daimaru Umeda and Sogo Yokohama during March.

Coop to unify branding

The Japan Cooperative Society Federation (JCSF) is to refresh its range of private brand items supplied to member Coops around the country. While not a major player in food and FMCG retail overall, Coop Kobe, Coop Sapporo and several others are leading food chains in their local areas, and Coops remain popular given some consumers’ belief in the social principles under which they operate. Larger Coops have their own PB ranges too, but all use the centralised supply from the JCSF. In June, it will renew 600 SKUs, with a plan to completely overall the 4,000 SKU range within three years. The brands will feature a new package design, unified across product categories and featuring the name Coop Label. In addition it will introduce a new premium line called Coop Quality, beginning with 20-30 new SKUs.

Walmart selling imported bras in 94 Seiyu stores

Walmart introduced its discount bra range in 94 of the 400 Seiyu stores last month. The bras come in various colours and four different styles, but sell for just ¥590 a piece. Since being launched in the US in 2012, Walmart has reportedly sold more than 20 million of the low price bras. For Japan, the range has adjusted sizes and fit.

Sanki signs Oscar de la Renta to target expanding wealth market

Sanki Shoji will start distribution of US designer brand Oscar de la Renta from this A/W season. It expects sales of a modest ¥400 million in the first year, concentrating on wholesale, rising to ¥1.5 billion within three years, with plans for three stores in Tokyo and Osaka in the second year. With the death of the eponymous designer last year, the brand has a new creative team spurring the signing by Sanki. Sanki Shoji is in the process of expanding its portfolio of brands aimed at the very wealthy in Japan, seeing the expansion of this segment as one of the key growth markets over the next few years. Prices for Oscar de la Renta will be around ¥150,000 to ¥700,000, with footwear starting at ¥200,000, although there will be some more accessible items starting at ¥80,000.

Musashi Kosugi to see more development

Musashi Kosugi is already emerging as one of the most popular new inner suburbs for young families and singles alike, and is being targeted by major developers for further construction. One of the biggest projects will be a new 44 floor tower to be completed by 2020, including a large open air SC and entertainment complex and over 520 homes. According to JapanConsuming’s Top 100 Consumer Zones report, Musashi Kosugi has the highest apparel spending per capita in the country.

Mixi buys fashion e-commerce venture

Mixi acquired fashion membership business Muse & Co last month for ¥1.7 billion. Muse is a flash-sale business, launched in just 2012, and which originally raised ¥350 million in funding through Infinity Venture Partners and other investors. Muse recently reported sales have begun to exceed ¥100 million per month, although sales for the year to March 2014 reached just ¥796 million, with an operating loss of ¥380 million. As well as flash sales, Muse puts a lot of emphasis on curated content in order to attract browsing readers using their smartphones on trains, in particular tying up with celebrities to get them to recommend favourite items. 80% of Muse’s traffic comes from smartphones with an estimated 500,000 users and 1,000 brands onsite. Mixi has its own e-commerce business but it lags behind the leaders, and it hopes to increase its expertise in the all important mobile channel through the acquisition.

Abundance and Sunrally to form capital tie-up

As reported in JC1501, there are signs of restructuring and growth in the Missus fashion market as apparel retailers and wholesalers begin to realise the potential for building significant new retail chains to meet the needs of today‘s over 40s women. In February two apparel firms, Abundance and Sunrally Group, announced a tie up with plans to develop new brands for the ‘Around 50’ market. Abundance was formed in 2010 by a former director of Onward Holdings and already has chains selling to women in their 20s such as 2% Tokyo and Cloud Nine Tokyo, as well as a new brand for women in their 50s called FiveO Tokyo. Abundance says that with one in two women now over 50, the opportunities for fashion retailers will be significant. The deal with Sunrally will give Abundance access to Sunrally‘s sourcing skills and financial resources. Sunrally had sales of ¥55 billion in FY2013, up from ¥50 billion four years previously.

Kate Spade Japan hits ¥13 billion

Kate Spade Japan saw sales reach ¥13 billion for the year ending December according to trade reports. In December alone, the Japanese arm of the US fashion firm enjoyed record sales for a single month. The brand’s performance was boosted by the opening of a flagship in April last year which lifted brand awareness, as did a major PR campaign for the A/W collection. There was particularly strong demand for bags and accessories. Since the Autumn, Kate Spade has been targeting a younger customer too, tying up with fashion magazines aimed at this segment.

Baby & Taylor launches in Japan

Parisian baby and childrenswear brand Baby & Taylor has just opened a Japanese online store. It has already tested the market through a pop up store in Isetan Shinjuku, and sees high demand from the expanding wealth class in Japan. Although founded in 1970, the brand came under new direction in 2012 from designer Valerie Toyomura. The brand focuses on upscale fabrics like cashmere and alpaca with prices to match; a cashmere dress for a 1-year old baby costs around ¥20,000 and some cardigans close to ¥30,000 – hopefully the little one won’t discard her lunch on it. The Japanese arm of the business is being managed by PR & marketing firm, Lydia, which works for brands such as Vacheron Constantin, Aveda, BMW and Krug.

Aeon opens new Cox concept aimed at couples

Aeon has opened a new concept for its Cox casual apparel subsidiary that aims to attract couples in their 20s and 30s. Based on Normcore, a New York based unisex brand, Aeon’s new store will be branded Vence Share Style, an extension of its existing Vence Exchange boutiques. The store will offer basic apparel along with accessories such as watches and interior goods. The first store will be 140 sqm and located in the Aeon Laketown SC in Koshigaya. Unlike Vence Exchange which is targeted at women, 50% of merchandise in the new store will be menswear. Prices for menswear will range from ¥1,900-29,000 with womenswear priced between ¥1,500-23,000. The majority of items will be unique to Aeon, but the store will also sell higher priced branded items, such as Citizen watches.

Gunze opens womens‘ lingerie online store

Gunze has opened a new online lingerie store targeting 20s to 30s women (www.gunze-store.jp). The store features the company‘s Tuche brand, and it hopes to raise the current 40% of sales coming from womenswear to nearer 50% by the end of 2015, as well as increase direct sales by 30% compared to last year. In addition to Tuche, the site also sells Sabrina stockings and Uchi Kore slippers and socks. Gunze has made some effort to add model shots to its site, although the layout and design remain basic compared to more advanced clothing sellers. Gunze also sells through Rakuten. Online sales were up 20% last year alone.

GMS apparel continues to decline

Sales at GMS chains for the first nine months of FY2014 showed continued tough trading on apparel floors. All the leading chains saw sales fall on a same store basis, with a much hoped for uplift following the introduction of new A/W collections proving elusive. Gross margins also fell, down to just 37.1% in the case of Aeon, pushing both Aeon Retail and Ito-Yokado into the red. Aeon Retail saw apparel sales fall 4.1% to ¥265 billion. Ito-Yokado was down 4.8% to ¥147 billion and Uny further behind, down 7.89% to ¥74 billion. These results were a disappointment after substantial investment in refurbishing apparel floors last Autumn, as well as the opening of new stores. The results led both Aeon and Seven & I to reorganise apparel departments yet again.

Autobacs opens in GMS

Autobacs Seven, the largest retailer of car accessories, has opened a service centre located inside a Ito-Yokado GMS in Shin-Urayasu, the first of its kind. Autobacs mostly operates out-of-town, roadside stores, but unlike normal Autobacs stores, the new centre only provides car servicing and repairs and not the usual wide range of accessories. As well as offering more convenient access to car repairs, the Autobacs concession provides Seven & I with a neat solution for the excess space in a number of its GMS outlets.

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