September 2015 News in Brief

Sep 14

IKEA to build chain of satellite stores

IKEA Japan is set to expand through small format satellite stores – a major departure for the big-box retailer, which has traditionally seen its store investments as the key to marketing its brand and its large product range. A typical store is more than 20,000 sqm, even in Japan, and carries around 9,500 SKUs. The new stores will be just 1,500 sqm and also act as ordering centres for a future online store. IKEA has used a similar strategy in Canada. The first small format store will open in Kumamoto in Kyushu in October. Most of the display space will be taken up with room settings, with larger furniture items available for order from the 30,000 sqm IKEA store in Fukuoka or from IKEA’s main logistics centre in Nagoya. Only around 100 SKUs of smaller ‘market place’ items will be available for sale in store, along with a selection of Swedish foods and a small cafe. IKEA now has eight large-scale stores in Japan with a ninth due to open in March 2016 in Nagoya – IKEA’s Osaka store gets a reported 9% of shoppers from the Chubu Region, showing how much the area is crying out for a store of its own. IKEA remains on track to have 14 large stores by 2020 but it is likely that a larger chain of satellite locations will also be opened as its main competitor Nitori has begun to do.

Familymart to pull out of USA

In an attempt to clean up its own house prior to the merger with Uny, Familymart announced late last month that it would pull out of its small venture in the USA. International expansion is a key part of its overall strategy, and it opened eight convenience stores in Los Angeles in 2004, operating under the premium format, Famima. The stores attracted a lot of fans in the busy office locations where they were opened, particularly because of the handy Japanese style meal solutions, but the venture was not given enough backing to grow to a viable size. Famima USA never managed to breakeven and will be closed down by Spring 2016. Familymart says it will now concentrate exclusively on Asian markets.

Counterworks to become Airbnb for shops

Japanese start up, Counterworks, has come up with a simple way to maximise the use of vacant shop space through an online marketplace called Shopcounter ( Shopcounter makes it easy for property owners to attract pop-up stores and for potential tenants to complete the rental contract online including payment, essentially an Airbnb service for shop owners and tenants. There has been a significant increase in demand for pop-up stores from physical retailers and brands, and particularly from e-commerce businesses looking to promote their online stores through temporary physical locations. The surge in craft and indie designer e-commerce platforms like Etsy and Creema also means more vendors of handcrafted goods now want to promote their wares through physical stores. At the same time there has been a marked increase in empty shop locations as retailing increasingly converges around stations, SCs and other hubs. Shopcounter makes it simple to search for locations by area, size and type, and even interior design, with prices per day clearly set out. Users can easily contact owners and, having established terms, then fix the contract period online. Counterworks says it hopes to have 300 stores registered within Tokyo alone by the end of the year.

Hankyu Mens gets face lift

Hankyu Mens in Osaka will unveil refurbished floors in early September following an update to around 40% of sales space. This is the first major update to the 16,000 sqm store since opening in 2008, at the time the first dedicated, large scale men’s emporium in Japan. Since then, however, Hankyu has moved away from pure fashion to emphasise quality and craft, targeting men in their 40s to 60s with a taste for the best fabrics and an appreciation for both tradition and the latest gadgets. The major refurbishment takes this further, aiming to meet the needs of high net worth individuals. New concessions include Burberry, Christian Louboutin, expanded space for Etro and Loro Piana, as well as a corner dedicated to up and coming Japanese brands. Hankyu hopes the refurbishment will increase sales by 10% to ¥29 billion. At the beginning of September Hankyu also completed an update to 20% of Hankyu Mens Tokyo and hopes for a 10% boost to sales to ¥15 billion.

Softbank launches Netflix in Japan

Netflix finally entered Japan this month in partnership with Softbank – another significant coup for Softbank, which has outfoxed larger companies in the past with similar joint venture deals with overseas companies. Netflix reportedly aims to be available globally by 2016 and already has 65.6 million subscribers across 50 countries. In addition to mobile phones, Softbank is a major provider of broadband services. Netflix subscriptions will be available through Softbank stores, and the US firm says it aims to have as many as 10 million subscribers in Japan alone. A new smartphone app will also launch in October. Prices will range from ¥650 to ¥1,450 a month. Netflix also has a partnership with Fuji Media to produce original content for Japan, the first market it has entered in Asia so far. Here it joins Hulu, NTT Docomo’s dTV and SoftBank’s Uula service – Softbank will continue to operate Uula in parallel. Amazon immediately announced a price reduction on its own streaming service to just ¥325 a month for the full service, making it far and away the cheapest option in Japan at present.

Sogo Seibu extends private brand programme

Sogo Seibu continues to adjust the merchandise mix at its regional department stores in collaboration with other companies in the Seven & I group. From the Spring it began rolling out a new sub-brand for its flagship private brand Limited Edition called Limited Edition Area Mode. What is new about the brand is the emphasis on supply from regional manufacturers and using this provenance in the marketing, part of Seven & I’s ‘Made in Japan’ programme designed to appeal to over 50s consumers. After the trials this Spring, which Sogo Seibu says saw a strong response because of this regional sourcing focus, it will now rollout the brand to all 14 of its regional stores and increase the number of participating manufacturers in an expanded collection. The department store group is also receiving support from METI’s SME support scheme.

Sanyo converts Ginza Burberry to Sanyo Tower

Sanyo Shokai is busy converting most of the Burberry corners and concessions within department stores to its new licensed brand Mackintosh London, but the solution for its biggest stand alone store is to convert it into a Sanyo emporium. What was Burberry Ginza has changed its name to Sanyo Ginza Tower. Burberry has been replaced by Mackintosh London and the former Burberry Blue and Black Label brands have been re-named Blue Label Crestbridge and Black Label Crestbridge. On the top floors Sanyo has installed a Paul Stuart store – it is working closely with Mitsui to expand the Paul Stuart brand alongside Mackintosh London to replace some of the sales lost from the departure of Burberry. The 1,500 sqm building also has a floor dedicated to Sanyo Essentials.

Fast Retailing opens first J Brand boutique

The first store globally for US brand J Brand opened last month in the newly renovated Seibu Shibuya. Acquired by Fast Retailing in 2012, J Brand is a LA-based premium denim brand established in 2005, but since the takeover J Brand has expanded beyond denim to include a range of premium casual apparel, and increased distribution globally to some 2,000 stores. In order to build the brand’s presence in Japan, Fast Retailing is investing in prominent store locations of which Seibu Shibuya is the first, following the opening of corners in Hankyu Umeda and Seibu Ikebukuro in the last year. The 50 sqm store includes the full line of merchandise.

Uniqlo online to deliver through Seven Eleven

Fast Retailing and Seven & I have announced a business tie-up to deliver Uniqlo online orders through Seven Eleven stores. The move is part of Seven & I’s original plan as an omnichannel platform to compete with the likes of Amazon Marketplace and Rakuten, offering a slick fulfilment service through Seven Eleven. It is, however, the first example of Seven & I accepting orders from outside its own network, and Uniqlo’s agreement will spur many others to joint Seven & I’s platform. The key aim is to expand awareness of its online business by working with the highest profile apparel brand in the country. For Uniqlo, access to 18,000 delivery points nationwide is a clear bonus.

Mori to close Laforet Niigata

It won’t be missed by many but Mori will be closing the Niigata branch of Laforet in January 2016. Opened in 1993 as the anchor tenant of a shopping building called Next21, sales peaked in 1995 at ¥6.5 billion. With the decline in the kind of young women’s fashions Laforet specialised in and the shift of traffic to the new railway station and other SCs, sales contracted sharply. Since 2007 the SC has been making a loss, and in 2011 space was reduced from five floors to four. Sales last year fell to ¥1.4 billion. Next21 itself is expected to be redeveloped.

Don Quijote up 11.7% in FY2014

Discount variety store Don Quijote continues to expand at a rapid clip, posting sales of ¥684 billion for FY2014 ending June, an increase of 11.7%, producing an operating profit of ¥39.1 billion, up 14%. During the year it opened 33 stores and closed six as well as expanding and relocating four others, leaving a net 306 stores at home and abroad. As well as the new stores, Don Quijote said efforts to further differentiate from the competition and meet customer needs with new ranges and price points helped boost sales. For FY2015, Don Quijote expects sales of ¥730 billion, but with operating profit flat.

Matsuya to open new annex in Ginza with Agnes B flagship

Matsuya will open a new annex to its thriving department store at the end of September. Located on Marronier Dori, the six floor annex will house a flagship store for Agnes B, including the sports line Sport B, and interiors under the label La Maison sur L’eau. As well as Agnes B, the annex will include specialty stores relocated from the main department store, as well as services such as school uniforms and a photo studio. Matsuya expects the annex to add ¥1.2 billion to Matsuya Ginza’s turnover. Matsuya’s sales jumped 34% in August on the back of a refurbished menswear floor and tourist sales.

Japan Post to open Kitte SC with Marui’s first Kyushu store

Japan Post will open another Kitte branded SC in 2017. Located in Hakata in Kyushu, the 65,000 sqm SC will be attached to Hakata station. Marui will be the anchor tenant, its first store in Kyushu, and the SC will also offer a medical centre, wedding hall and other services alongside other tenants. This is the third Kitte SC, following the launch at Tokyo station in 2013, and the announcement of a smaller Kitte in Nagoya slated for 2016 with 40 tenants.

LINE Mall ties with Yamato

LINE Mall has linked with Yamato Transport to make it easy for users to ship product. As recently reported, Yamato has just introduced a new end to end solution for e-commerce sites, offering payment and fulfilment services, and making it possible for even small merchants to deliver the same day or the next, competing with Amazon’s industry leading service. LINE vendors will not only be able to offer buyers rapid and cheap shipping, but also send shipments to be stored in Yamato lockers.

Cross Company moves into ice-cream parlours

Diversifying beyond apparel into food is increasingly common among fashion retailers, a trend started by Beams, United Arrows and copied recently by Urban Research. The latest to enter the food market is Earth, Music & Ecology operator Cross Company. It launched a natural ice cream chain called Block and opened three pop-up stores in the Kanto area last month to market the brand. Emphasising natural ingredients and low sugar, Block sells ice cream bars in 45 flavours.

Kuipo signs deal for Lacoste bags

Bag manufacturer and retailer Kuipo has signed a license for Lacoste, giving it the rights to manufacture and sell Lacoste bags and accessories in Japan. Sales will start from this A/W season. The deal has been made with the French global licensee for bags and small accessories. To launch the line, Kuipo will open pop up stores from this month, and from S/S2016 expand distribution.

Uniqlo trialling four-day work week

As widely reported, Uniqlo has announced trials of a four-day work week for around 20% of its work force outside Tokyo. Store employees will be given the option of working just four, 10-hour days, which will include weekends, but then receive three consecutive days off during the week. The company says it may introduce the system nationwide and at its HQ if it proves successful. The brand has developed something of a reputation as a very difficult place to work, suiting just a particular type of person, while other firms, including convenience store chains and even competing apparel chains, often offer far better conditions. Books have been written on the problem, and Fast Retailing has been subject to several lawsuits citing alleged employee abuse. These issues are, however, less significant than the fact that good casual labour is increasingly hard to find, especially in the regions, and retailers are all competing for the same, shrinking pool. Even so, the brand’s US CEO was caught indirectly criticising his Japanese counterparts, noting that, when employees are happy, they stay.

Isetan-Mitsukoshi to redevelop Kokubunji station site

Isetan-Mitsukoshi’s property arm will redevelop a parcel of land at the north exit of Kokubunji station with completion slated for 2018. As well as a 36 story residential block, the project will include a large retail and entertainment space, which will house some Isetan-Mitsukoshi retail brands such as Alta, MI Plaza, Queen’s Isetan and an Isetan boutique.

Yamada Denki tying with department stores

Yamada Denki has established ties with several major department stores to supply high end consumer electronics (CE). Yamada has been creatively diversifying its sales channels for some time, leveraging its leading position in CE wholesale supply by recruiting around 4,000 mom & pop stores to a franchise network called Cosmos Berry’s. The latest deals with department stores are a further extension of the same idea. Some of the bigger department stores still sell appliances and are already significant distribution points for brands like Nespresso and De Longhi, but compared to 20 years ago, CE merchandise has mostly disappeared from sales floors. Yamada will work with Kintetsu, Meitetsu and Marui Imai at the start as well as a number of other railway and regional stores to supply top end products that will be sold primarily through VIP customer (gaisho) accounts. Yamada expects sales through department stores to reach ¥1 billion in the short term alone – CE sales at department stores in 2014 were 20% of their peak in 1980 at just ¥18.4 billion.

More SE Asian expansion for convenience stores

Major convenience store chains continue to expand in SE Asia. This year alone Familymart will increase store numbers in both Thailand and the Philippines by around 20%, while Ministop is set to expand in Vietnam. The move is being driven both by market saturation at home, and by the support of Sogo Shosha. Familymart will open 100 new stores in Thailand and 74 in the Philippines, with 39 in Vietnam and 14 in Indonesia. Ministop is looking to open 200 new stores in Vietnam and, although affiliated with Mitsubishi Shoji for supply, has signed a new deal with Sojitsu which has existing food wholesale operations in the country. By March 2015, Ministop operated 2,500 stores outside Japan, more than at home, with 2,000 of these in South Korea and the Philippines. It now plans to aim for first mover advantage not only in Vietnam, but also in neighbouring markets in Cambodia and possibly Laos too. Seven Eleven plans to open its first store in Vietnam in 2017 and aims to have as many as 1,000 stores in the country by 2025. Lawson, meanwhile, is expanding into the Philippines with a target of 500 stores by 2020. More importantly, Lawson is looking to acquire in order to catch up with rivals, with rumours already of a potential deal in Thailand.

Uniqlo to expand tie-up with Disney designs

Uniqlo began sales of Disney character soft toys at the end of last month and will have the products available across the chain by late Autumn. The brand has featured Disney designs on its clothing since 2009, and will introduce new designs of premium light down jackets and fleeces featuring Disney designs at around ¥5,990, but this is the first time it has sold toys. Some stores will be outfitted with a Disney sales corner, with a whole floor being dedicated to the promotion in the Shanghai flagship store. Uniqlo will also open its first store in Disney Resort Florida, USA next year.

Isetan-Mitsukoshi to sell secondhand jewellery

Isetan-Mitsukoshi will launch a new intermediary service for senior customers looking to offload their unwanted, high-end jewellery. The service will organise and manage sales of secondhand pieces worth ¥1 million or more, targeting older consumers that no longer see any need for these pricy bangles. Pricing will be set by an independent secondhand goods specialist, Suwa Boeki, and sellers will be given display space in certain Isetan and Mitsukoshi stores, with the department store taking a percentage from the final sales price.

Tourism breaks all records

From January to July this year, inbound visitor numbers reached an unprecedented 11.05 million, 47% higher than even last year’s record number – July alone saw a 51% year on year increase to a new monthly record of nearly 2 million visitors.