Parco has a renewed sense of purpose, not to mention a decent budget, since being taken over by J Front Retailing. It will close its Chiba building, a good thing, and build a vast new tower in Shibuya. It will also open more Zerogate mini shop buildings in order to maximise its presence in key shopping districts, and has just acquired a stake in a web solutions business to build an e-commerce platform.
Parco will close its Chiba location at the end of November. Opened in 1976, the 40,000 sqm building was successful for many years, serving the prosperous Chiba market during its heady days of expansion as a commuter town. However, in recent years it has suffered from competition and a creaky interior, and has posted losses for several years – for the year ending February 2016 it will post an extraordinary loss of ¥1.9 billion, not surprising having posted sales of just ¥4.7 billion in FY2014. Given the need to rebuild. Along with the changing traffic flow around the building, Parco decided it would be better to close the site.
The closure is a positive move and reflects Parco’s renewed sense of purpose since the takeover by J Front. Instead of trying to patch up unworkable stores it is being decisive and investing funds where they can make the best return.
A case in point is the just announced plan to scrap the current Parco 3 building in Shibuya and replace it with a massive 65,000 sqm 20 story development. The new building will emphasise culture with shops and entertainment on lower floors, and offices above. Completion is expected in 2019.
At the same time, Parco is focusing on development of smaller buildings that typically house just one to three tenants. Called Zerogate, the first building was opened in 2011 and was the launchpad for Bershka, the second Inditex brand to come to Japan. Since then Parco has opened other Zerogates in Osaka, Hiroshima and Nagoya, all also largely tenanted by major foreign fashion chains. The next to open will be in Kyoto in Spring 2017. Located next to Daimaru Kyoto, the 5,500 sqm shopping building is again likely to house large international brands. Going forward, J Front says it plans to use the Zerogate brand to build up its presence in the key shopping areas of major cities.
At the same time Parco is looking to build a stronger online presence. Last month it made an investment of ¥400 million in Apparelweb (www.apparel-web.co.jp). The purpose of the deal is to help Parco develop and expand its non-store business both at home and abroad – Apparelweb is active in markets such as Singapore. Parco plans to build a more effective online platform to sell both its own brands and those of its tenants.
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