July-August 2015 News in Brief

Jul 14

Tomorrowland buys Restir

Leading fashion retailer Tomorrowland has acquired select shop firm Restir Holdings. Established in 1987, Restir originally began as a select shop called Le Ciel Bleu, now a chain of 20 stores. During the high end select shop boom in the late 2000s it opened a luxury select shop in Ginza under the name Restir. The Ginza store is now closed, but it later opened one other Restir store in Tokyo Midtown and three others under the name Restir 211, selling more casual upscale fashions, gadgets and accessories. Restir had sales of ¥4.5 billion in FY2014. With the Tomorrowland chain itself pretty much at saturation – group sales hit ¥42.7 billion in FY2014 – it is expected that Tomorrowland will use Restir to build a large new fashion forward select shop chain to complement its existing business. More stores for both Restir and Restir 221 are planned, and more importantly, a new store branded range of apparel and accessories using Tomorrowland’s planning and design skills and contracted factories. Tomorrowland management also sees major potential for the Restir brand overseas – it will open its first Tomorrowland overseas in New York this Autumn.

Isetan-Mitsukoshi: gifts for your Facebook friends

Isetan-Mitsukoshi has launched a new ‘social gift’ business, allowing people to send gifts to friends in their social networks, even if they don’t know the friend’s address. The new service is offered through a unique smartphone app developed with Trenders, targeting women in their 20s. Users download the app, choose from 600 SKUs from the Isetan-Mitsukoshi catalogue and keyed to particular gift occasions such as birthdays, anniversaries, marriage and so on, and then a price plan of ¥3,000, ¥5,000 or ¥10,000 per gift-set. Three suggestions are then sent to the gift recipient through email, Facebook or other SNS, with the recipient choosing one of them. The recipient then sends their address to Isetan-Mitsukoshi, meaning the original sender doesn’t need to know. Social gift giving has been growing in recent years, with convenience stores and coffee chains offering vouchers under ¥1,000 for people to send to others on social networks. Isetan-Mitsukoshi believes it has spotted an opportunity for higher end gift giving, and this is backed by interest in Trenders’ online gift magazine (http://anny.gift) which aims to curate gift ideas with a female audience in mind. The company says it expects to get around 2,000 orders a month.

Yamada closes 11 more stores IN JUNE

Yamada Denki closed a further 11 stores at the end of June, bringing the total number of closures this financial year to around 60. The 11 are small, suburban Yamada Techland stores, suffering from declining footfall, although several were opened quite recently. So far this year Yamada has closed almost 10% of its chain already. Over coming months more closures are expected, while some other stores will be converted to outlet-type stores or into more specialist functions such as mobile phone or duty-free shops. Yamada still plans to add 15 new stores by March 2016, about half the number opened last year. The chain, along with main rivals Bic, K’s and Edion, has suffered monthly double-digit sales declines since April 2014. Yamada will continue to open new flagships in order to maintain some growth and to appease investors, including one at Tokyo Station. Meanwhile, Edion is planning 10 new stores this year, with three closures, while Yodobashi Camera is set to take over the former Matsuzakaya store at Nagoya Station.

Private consumption driving retailer optimism

While wage stagnation continues to be a problem, there is a trickle of optimistic economic news coming out of Japan. For the economy as a whole, a higher than expected 3.9% annualised growth rate in 1Q2015 was announced in June, with the rise largely thanks to increased investment among manufacturers. This has been backed by an increase in consumption expenditure – exactly what the government has been hoping to see for the past 36 months. Exports are expected to lag again for the rest of the year, but many, and not least PM Abe, hope that consumers might actually drive the economy forward. At the same time, some analysts are predicting a sharp decline later in the year and a return to price deflation. If private consumption fails to keep pace, annual growth is expected to drop to just 0.5%. Retailers are, however, hopeful, with industry sentiment surveys reporting the highest optimism in the sector since March 2014. Meanwhile, the Reuters Tanken sentiment index was up for both manufacturers and the service sector, the latter rising to a record high in May, again mostly due to optimism among retailers.

IKEA launches system kitchens designed for Japan

IKEA began promoting a new line of system kitchens in June, aiming to build further business in the home refit industry. The new line is the result of extended market research into kitchens and kitchen use in Japan, with the resulting Metod line amalgamated from literally thousands of options available to IKEA throughout its global supply system. Metod was launched with a special exhibition of the kitchens in Harajuku, with handouts of IKEA products and vouchers to all visitors. System kitchens are a standard part of IKEA’s range but a particular headache because of their complexity, the myriad of small parts required, and the need for third-party installation. This makes the business a complex one in any country, but IKEA’s track record since arriving in 2006 suggests the new kitchens are likely to be a popular choice, all the more so given the poor cost performance of standard kitchen units in Japan.

Chain stores up 5.7%, supermarkets up 7.3%

Members of the Japan Chain Stores Association (JCSA) saw sales jump 5.7% in May, mostly as a rebound from low sales following last year’s tax hike. The larger number of holidays and warmer weather during the month also helped sales along. Fresh food sales rose by 6.3%, with apparel also up 6.2% and household goods up 5.6%. This is the second month of growth, but the JCSA is less optimistic for June, as competition in non-food strengthens and customers find more interesting options in specialty formats. Meanwhile, member chains in the Japan Supermarket Association (JSA) increased sales by 7.3% in the same month – a much more impressive result given that sales were also up 1.9% in May last year. Same store sales jumped 5.2% in 2015. Strong sales were recorded in every region and for all chain sizes, with fresh food again doing particularly well – vegetable sales jumped 10.3% alone.

Burberry ends licenses in Japan, expands stores

Burberry officially ended its main Japanese license with Sanyo Shokai last month. Burberry had originally renewed its license through 2020 but negotiated an early cancellation as part of plans to expand its direct operations in Japan. Burberry says its existing directly run stores and merchandise in Japan are selling very strongly, with same store sales up 30% last year. It recently opened its fifth Japanese flagship in Shinsaibashi in Osaka and relocated and expanded its Omotesando store. As well as three new department store concessions, it now has 18 directly run stores in Japan. It also recently partnered with LINE to broadcast its latest fashion show from London. Going forward it plans to open five to ten stores in 2016 including a new stand alone store in Shinjuku, as well as opening around 10 childrenswear concessions in department stores. Shiseido has also just begun distributing Burberry make up and fragrances under an exclusive import deal through its subsidiary Beaute Prestige International.

Coop online sales surge 14% in 2014

According to the Japan Cooperative Society Federation (JCSF), online sales from its member societies jumped 14% in 2014 to ¥240.7 billion. While this is easily the largest online food operation in the country when taken alone, the figure is an amalgamation of the online sales of various coops across the country. Nevertheless, the JCSF estimates that total online food sales in Japan last year reached ¥1.7 trillion, around 15% of total e-commerce for the year, which gives the coops a 14% share of the market. Japan’s coops remain a considerable marketing resource for brands; in total, they claim 11.3 million members, with 3.4 million using the various online services. Among these, JCSF itself manages a centralised registration system called e-Friends which five of the major coops use. Last year, members of e-Friends ordered ¥103 billion worth of product online, 11% more than the previous year. In addition to sales, e-Friends provides members with options to post customer reviews, product search and information such as recipes and cooking advice.

Seibu Shibuya to be rebuilt from 2020

Seven & I will refurbish parts of Seibu Shibuya from August, the first update in eight years, but this will be just a temporary fix prior to a major rebuilding from 2020. As part of its plans to return to its roots as a centre for design and art, Seibu Shibuya will work with a number of local and international artists on the refurbishment. Part of the update this Autumn will be a new Seibu managed sales floor targeting 30s women, offering fashions from respected designers like Oki Sato.

Takashimaya digitises loyalty card applications

Venerable department store chain Takashimaya has moved its loyalty and credit card application process from paper to digital media, allowing customers to sign-up through tablet computers. The new system includes handwriting recognition software and requires applicants to use a specially developed pen to complete the form. In the past applications required more than a week to enter into the chain’s systems and to check, but the new digitised applications reduce lead time to just one day – still perhaps one day longer than ideal. Takashimaya introduced the tablets into its flagship Nihonbashi store last month, but plans to offer it across the entire chain during this year. The new system is proprietary and was developed by Fujitsu.

Arcs to absorb Belle Plus and Jois

Arcs, the Hokkaido based supermarket group that has begun a southerly expansion through a series of acquisitions in northern Honshu, announced it will make two of its most recent acquisitions full subsidiaries from March 2016. Medium sized regional chains Jois and Belle Plus were acquired in 2012 and 2014 respectively, both through equity swap deals and both in Iwate Prefecture. The combined 69 stores in the two chains give Arcs a 40% market share in the prefecture by store numbers alone.  Hokkaido East Ralse (Doto Ralse), another company acquired by Arcs way back in 1995, will be merged fully into the group next year too. After the mergers, Arcs Group will still operate eight separate supermarket subsidiaries.

Aeon, Japan Post, Apple developing new senior shopping service

Aeon and Japan Post, in conjunction with IBM Japan and Apple, are developing a new tablet based service aimed at senior consumers. The new service will launch later this year, providing not only shopping information with direct links into Aeon’s online store, but also a range of information and other digital content aimed specifically at helping older consumers. The service is believed to have been conceived as a support service primarily for consumers in the regions where shopping facilities are often lacking. Aeon hopes to enlist local companies of all kinds to help build further content over coming years.

Crocs offers limited edition designer sandals

Crocs Japan is offering new, limited edition lines of sandals designed by US fashion icon and stylist Patricia Field of The Devil Wears Prada fame. The new women’s ranges come in three styles and go on sale this month through Crocs’ directly run stores and its online store. The Classic line is a standard Crocs shoe with the special design, retailing at ¥5,900, while a flat design sells at ¥6,900 and a sandal type for ¥4,900. Sizes are limited to 20-25 cm.

JT sells vending to Suntory

JT has confirmed the sale of its vending machine operations to Suntory. JT held talks with Coca-Cola Japan but chose its domestic rival. It originally moved into drinks in 1988 as one of a number of offshoots from its tobacco monopoly in Japan – another being investment in cancer research. JT, like the JR companies and NTT, is a semi-privatised corporation with the government still owning more than a third. It remains heavily supported by regulators. JT Beverages acquired vending operator Unimat in 1998, and by 2013 had sales of ¥184.5 billion – including sales of other brands. More than 50% of JT’s drinks sales still come from vending, while rivals have switched to the higher volume, lower cost, and more competitive channel of convenience stores. Suntory will pay around ¥150 billion for the 265,000 vending machines and the well-known Roots coffee and Momo no Tenzensui mineral water brands, but most analysts expect Suntory to close down a large proportion of the vending channel and may even retire some of the JT brands. Around 230 employees will transfer to Suntory.

DUTY free store planned for Mitsukoshi Fukuoka

Isetan-Mitsukoshi will shortly open a duty free store within Mitsukoshi Fukuoka under a joint agreement with Nishitetsu and Fukuoka Airport. Like the upcoming duty free store in Mitsukoshi Ginza, the Fukuoka store will not only be free of consumption tax but also customs duties and other import taxes on products like tobacco and alcohol. Customers will have to show their passport or ticket, and will only be able to get hold of their purchases from pick up points beyond passport control at either the airport or port. This means both foreigners and Japanese living overseas will be able to take advantage of the lower prices. The 1,300 sqm store will be located on the ninth floor of Mitsukoshi Fukuoka and will be managed by a joint venture company called Fukuoka Duty Free, 60% owned by Fukuoka Airport Building, 30% by Nishitetsu and 10% by Isetan-Mitsukoshi. Luxury brands will predominate and include fashion, jewellery, watches, foods and electronics. First year sales of ¥3 billion are expected, producing sales densities of just under ¥200,000 per sqm per month.

Salewa launches directly in Japan, ex-distributor signs Jack Wolfskin instead

German outdoor brand Salewa established a Japanese subsidiary last October and officially launched last month, presenting its Spring/Summer 2016 collection to climbing and hiking related retailers and wholesalers. It hopes to sell to 50 retailers in the first season and next year plans to open its first stores. Salewa currently sells to more than 30 countries, and has 170 stores, 300 concessions and sales of ¥20 billion. Until 2014 Salewa was sold through climbing goods distributor Caravan but in order to improve brand awareness and increase its own store network, Salewa decided to create its own subsidiary. Caravan itself has replaced it with another German brand, Jack Wolfskin. Caravan used to distribute Jack Wolfskin until six years ago, and at one point achieved sales of ¥2 billion. Caravan opened three Jack Wolfskin store in April and May and will wholesale the brand to 100 retail accounts this year. It expects sales of ¥500 million in year one and ¥700 million in year two. Overall Caravan expects sales of ¥3 billion in FY2015, up 10% on the year before.

Daiei opens first ‘Food Style Store’

The first Daiei Food Style Store opened in Akabane late June, replacing the existing Daiei Akabane store. This is the first in a planned new format for Daiei and the first since Aeon acquired the company last year, although the format has been trialled in Daiei Ichikawa Carlton Plaza since November 2014. The new store features a redesigned supermarket food floor at ground level, with both fresh foods and deli areas based on state of the art practices. The second-floor introduces Botanical Shop, a new upscale food services area, including a juice bar, and ranges of super foods, allergen-free products, organic vegetables and macrobiotics. The third floor is given over to apparel and lifestyle ranges. Between September and March next year, 88 Daiei stores in Hokkaido, Kyushu, Nagoya and a few other locations will transfer over to the Aeon brand. Food orientated stores such as the new one in Akabane are now expected to keep their current branding for a bit longer.

United Arrows sells furniture with Nomura

Another month, another brand extension for United Arrows. This month it is a line of furniture produced in conjunction with Nomura Real Estate, and aimed at the growing home fashion market. Dubbed Proud with United Arrows in reference to one of Nomura’s upscale building brands, the collection will be sold in Proud show houses and United Arrows Harajuku. United Arrows originally teamed up with Nomura in 2012 to lend its brand to some property developments.

LaSalle buys Sapporo SC

LaSalle Investment Management acquired Norbesa, a shopping centre in Sapporo, last month. The 21,000 sqm SC houses 35 tenants and is located in the centre of Sapporo near Odori Park, with some of the highest footfall in Sapporo in the streets nearby. The SC is known for its pop culture tenancies such as anime, game-related stores and even Cosplay shops. Although Hokkaido is seeing significant depopulation, a few key cities, including Sapporo, are pulling in migrants from smaller cities as well as benefiting from tourism. Sapporo alone is seeing tourist traffic increase rapidly each year, with foreign tourists up 57% since 2011 and Japanese up 6.2%.

Footwear market increases 1% to ¥1.4 trillion

Yano Research estimates the footwear market rose 0.9% to ¥1.39 trillion in FY2014 after expanding 1.6% in 2013. Much of the growth came from greatly increased sales of imported brands thanks to the buoyancy of spending among the affluent and tourists. There was also growth in running shoes, with sports shoes increasing 5.1% overall and accounting for close to half the market at ¥578 billion, and sales of fashion sneakers were also strong. Men’s business shoe sales fell 1.3% and women’s fashion shoes by 3%.

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