Seven & I targets growing home fashion market with Bon Bon Home

Seven & I now owns two brands serving the home market, Loft and Bals, and it also sells a plethora of household products through Ito-Yokado. It is now forming synergies between these disparate businesses. The first result is a new specialty chain called Bon Bon Home, designed specifically to exploit the growing demand for home fashion. The new concept also looks like being the first major step in changing how the Ito-Yokado GMS chain is managed, shifting from a general merchandise model to mini-SC with food at the core.

Seven & I unveiled a new brand last month with the cheerful name of Bon Bon Home. It is destined to become a home fashion chain, selling everything that decorates a home, from tableware to bedlinen, as well as furniture, fabrics and lampshades. The cheerful, well laid out stores are a radical departure from the dreary piles of beige futons and cream curtains that typically grace most GMS’s home departments.

Bon Bon Home has been built from scratch by Bals, the operator of the FrancFranc chain recently acquired by Seven & I. Bals, along with Loft, Akachan Honpo and others, was acquired for its fit within the Seven & I brand stable, as well as for its expertise in areas that the group otherwise lacked. Seven & I was cognisant of the growth in home fashion and the role this boom could play in restoring the fortunes of GMS chains. Accordingly, more than a year ago it asked Bals to begin designing a new chain to replace home areas of Ito-Yokado stores.

GMS chains like Ito-Yokado are ideally placed to sell home fashions given their locations and customers. Yet to date there has been little innovation. While growth in the home fashion market is still picking up, Bon Bon Home looks perfectly placed to take advantage as a first mover.

The first Bon Bon Home store opened in Ito-Yokado Kiba in Edogawa-ku, in the household sales floor. It offers around 3,000 SKUs in its 500 sqm corner – this compares with 6,000 SKUs at a typical FrancFranc store – with prices set at a reasonable ¥400-¥1,450 for mugs, ¥1,700-¥2,400 for towels, ¥88,000 for a 3-seat sofa and ¥1,000-¥3,000 for cushion covers. The design scheme is ‘natural taste’, a home equivalent of fashion chains like Lowry’s Farm, i.e. a neutral, pastel colour palette and basic designs with a twist, all with a vague reference to a ‘Californian lifestyle’ – ironic given the core target is families living in very un-Californian 70-90 sqm apartments in the suburbs.

Seven & I is clearly optimistic about the new chain. It will roll out 20 stores within Ito-Yokado locations in the next few weeks and by 2017 will have a 100 store chain with sales in excess of ¥20 billion, covering two-thirds of the Ito-Yokado chain. It will also experiment with sales of Bon Bon Home accessories in Seven Eleven in Takeshita Dori in Harajuku this Spring – longer term some of the stationery and home accessories items may be sold across the convenience store chain nationally, as well as via the omnichannel.

Bon Bon Home also helps to further elucidate Seven & I’s strategy for its recently acquired chains. Apart from Bon Bon Home, Seven & I has also been expanding the Akachan Honpo and Loft brands within its SCs and Ito-Yokado, and has recently even added mini Seibu stores as GMS concessions.

It is clear that Seven & I itself is well aware of the demise of the GMS format, but rather than closing what are otherwise strong locations, it is slowly converting Ito-Yokado into mini SCs, anchored by a reduced GMS store centred on food. This will include new apparel brands backed by famous names like Jean Paul Gaultier (see Page 5), with apparel floors increasingly shifting to an SPA specialty model.

The potential of this strategy is well expressed at the Kiba store itself. Its food area is the biggest in the chain and pulls in 10,000 shoppers a day. Adding in compelling specialty zones like Bon Bon Home should do wonders for sales densities.

All this makes sense from both a store marketing perspective as well as in terms of supply chain efficiencies and capacity. To put together a store like Bon Bon Home on its own would have been an impossible task for Ito-Yokado, even with the help of partners like Mitsui. To compete in the home fashion market today, a depth of expertise in product planning and sourcing is a prerequisite (see Otsuka Kagu as a striking contrast, Page 9). Bals has its own network of 330 overseas suppliers and the teams to manage them, making it much better placed to build a new chain to house within Ito-Yokado.

That being said, this is not Seven & I’s first effort to build a home fashion chain with an acquired partner. It first launched a six store chain called Tanosia in 2010, developed by Loft but run as an Ito-Yokado business. After a few years of operation all the stores were closed and converted to Loft. This time, all Bon Bon Home stores will be operated on a franchise basis from Bals with the latter firmly in control of merchandising and staff training. There is a much bigger difference too; while Loft is a pure retailer, buying in from myriad suppliers, Bals is a vertically integrated retail business with years of product development experience that should allow it to adapt to the specific needs of Ito-Yokado.