October 2015 News in Brief

Oct 07

Daimaru Matsuzakaya installs four Laox stores this Autumn

Daimaru Matsuzakaya has agreed with Chinese-owned Laox to open four concessions within its department store chain this Autumn. The small 100 sqm Laox in Daimaru Shinsaibashi moved to a 400 sqm space in the South Annex in September prior to the main building’s closure. The same day a 90 sqm Laox store opened in Daimaru Kobe, and two larger stores will be opened in Daimaru Kyoto and Fukuoka this month. Since being acquired by a Chinese operator, Laox has morphed into a general store for tourists and even stocks its own fashion brand. Two months ago, Onward Holdings also announced a tie up to create new apparel brands for Laox stores and for sale overseas. Daimaru says that after installing the first Laox in Shinsaibashi in March, it saw a significant jump in tourist traffic thanks to Laox’s aggressive marketing of its stores to Chinese tourists. Daimaru Matsuzakaya expects tourist sales to rise to ¥35 billion this year, up from ¥20 billion last year.

Nitori continues to grow sales and profits

Nitori had another strong 1H from March to August with net profits up 3% to ¥22.9 billion. Cost increases of 12%, notably in personnel and logistics, were offset by the end of extraordinary costs incurred over the past couple of years. The 1H2015 figure is already 53% of total forecast profit for the year. Sales were up 5% to ¥222.1 billion for the same period, with significant increases in total customer numbers thanks largely due to the new, smaller stores opening in central areas of cities. Nitori says sales of seasonal product were also particularly strong. In the unusually hot summer, the chain’s ’N-Cool’  range of cooling bedding items have sold like, well, cold cakes. Total store numbers, including the newer stores overseas, hit 394, up 21 on last year. Despite the positives, higher import costs pushed operating profits down by 2% to ¥36.7 billion compared to last year. The company said it expected the second half to remain strong with profitability up again. Forecasts for the year remain unchanged, with expectations of a 7% rise in sales to ¥445 billion, with operating profit up 7% to ¥71 billion, and net profit finishing at ¥43.6 billion, up 5%.

Aeon demands international safety standards from produce suppliers

As food retailers take ever greater control over supply, Aeon will require directly contracted farms to achieve international food safety certification by the end of next year. In the long run it will extend this requirement to all wholesale food suppliers. Only four of Aeon’s 19 directly contracted farming operations are still to achieve Global GAP (www.globalgap.org) certification, and Aeon will work with them through its Aeon Agri Sozo subsidiary to ensure they make the deadline. The certification is already being heralded in Aeon’s PR, aiming to use the initiative to build public awareness of food quality. Lawson Farm, run by the convenience store of the same name, and Seven Farm, a subsidiary of Ito-Yokado, have introduced similar initiatives, but both chose to only require certification from the domestic JGAP body rather than the stricter regulations required by the international Global GAP organisation.

Times 24 parking and car share coming to Familymart

Times 24 and Familymart have announced a tie-up to make better use of parking spaces outside Familymart shops, a venture the carpark operator wants to expand to other retailers in the near future. Around half of the convenience chain’s 14,000 stores have carparks suitable for commercial parking. Times 24 will supply its standard automated payment and car disabling machines, and the stores will be able to generate extra income in off-peak hours. Another part of the tie-up will see Times 24’s automated car-sharing business, Times Car Plus, also offered though Familymart. Registered Car Plus customers can simply locate an available car online, before popping round to a nearby Times 24 carpark to hop in and drive away, returning it to another Times 24 carpark when they’ve finished. Cars will now be made available at some Familymart stores, with first-time customers able to sign-up in store. The original Car Plus service launched in 2009 and already has 500,000 registered members who can pick-up one of the fleet of 12,616 cars from 7,064 locations. Car Plus claims annual sales of ¥14.7 billion and operating profits of ¥500 million. Just one more service ensuring conbini are at the heart of every community.

Japan the eighth best place for seniors

London based NGO Help the Aged International last month ranked Japan as the eighth best place in the world to be a senior citizen. In its third annual survey of some 96 countries, Japan was the only country in Asia to rank in the top 10, improving its position for the third year in a row. It came first in terms of medical services for the elderly, with the NGO praising Japan for preventative medicine, healthy foods and for encouraging older people to manage their health themselves. Switzerland, Norway and Sweden ranked highest in the world, with the USA coming ninth. The next highest country in Asia was Thailand at 34th.

QB House to open in supermarkets

QB House, the high service, low price hairdressing chain, will begin expansion into supermarkets from this year. Currently located mostly in station buildings, the chain aims to expand store numbers by 2.5 times over the next five years, with a target of 125 stores by 2020. It will increasingly target both seniors and women, the latter in its slightly more upscale stores. The 10 minute, ¥1,000 haircut provider continues to expand in Asia too.

Supermarket sales up 2% in August

Supermarket sales rose for the fifth straight month in August according to the Japan Chain Store Association. Same store sales for the JCSA’s members were up 2%, with apparel sales up by 3.9%. Food was up 2.7% overall, but produce sales jumped 6.9%. Food sales have been strong since March, and both apparel and household goods were up for the second straight month.

Lumine to expand overseas

In April Lumine created two new divisions tasked with preparing Lumine for new forms of business model at home and expansion overseas. Next March it will establish a subsidiary in Singapore – it has had an office there collecting information for nearly a year – and is preparing to construct a fashion shopping centre on the island within two years, as well as other South East Asian countries over the next five years. Lumine says its tenant mix of popular fashion chains, entertainment and dining is ideally suited to the fast growing younger markets of South East Asia, and a counterpoint to the contracting younger population at home. At the same time, Lumine has embarked on a plan to help promote Japanese crafts and industries to tourists through a project called Koko Lumine. It is creating corners within Lumine buildings as well as seasonal events to highlight both traditional and contemporary Japanese crafts, foods and design. When the new Shinjuku Station South Terminal building is opened next year, Lumine will open a concept store called Koko Lumine.

UK’s The Organic Pharmacy in Japan

London-based The Organic Pharmacy opened its first Japanese store last month in Tokyu Department Store in Shibuya. Located on the street level, the concession offers the brand’s trademark high end organic cosmetics which come with homeopathic ingredients and “pharmaceutical grade” herbs. Founded in 2002 by a pharmacist specialising in homeopathic treatments, The Organic Pharmacy now has distribution in 14 countries. Prices in Japan range from ¥5,800 to ¥37,000. The brand is being distributed here by cosmetics distributor Serendips, which also distributes US cosmetics brand Red Flower.

Isetan promotes kawaii culture

Isetan Shinjuku held a promotional event last month to market its range of school uniform inspired fashions. The event is one example of the store’s increasing emphasis on store promotions to tourists – it sees a growing market for ‘Kawaii Culture’ among tourists. To promote the styles, it created a special section within Isetan Girl offering uniform fashions from brands like Paul & Joe Sister, Honey Bunch Mutual, Girly Rose, and Pink House Chelsea. The event included modelling by group Nogizaka 46.

Itochu signs Santoni

Itochu Shoji signed Italian luxury footwear brand Santoni last month. The exclusive distribution will be handled on a day to day basis by Itochu affiliate Regal, which has already begun promotion of Spring/Summer 2016 collections. Prices of ¥90,000-¥150,000 are expected. Although wholesale to department stores and select shops will comprise the bulk of sales, some retail stores will be opened, including a small flagship next year. Sales of ¥3 billion are expected within five years.

XZ claims 270,000 online closets, raises ¥140m funding

Online fashion social network XZ claims it now has more than 270,000 registered ‘closets’ on its smartphone app, as well as 55,000 styling tips. XZ is an app that helps users come up with new ways of coordinating the clothes they have, while also providing opportunities to fashion brands to promote their merchandise. By uploading their wardrobe, users can then see a list of styling ideas for the clothes they own. For marketers this offers great access to user fashions, as well as a useful way to get insight on current fashion trends and the way Japanese use their clothes. With some users registering as many as 600 items, the data potential is significant. XZ recently raised ¥140 million in new funding, and is using this to launch a web browser version of the site this month, as well as deeper connections between styling tips and user data, tips about colours and updates on fashion trends.

Non-store sales up 5% in FY2014

The Japan Direct Marketing Association’s (JADMA) latest annual survey suggests non-store merchandise sales rose 4.9% in FY2014 to ¥5.15 trillion. Despite representing the non-store market for the past three decades, JADMA’s survey doesn’t accurately reflect the growth in non-catalogue sales and its estimates are traditionally low, omitting online sales of some malls and retailers. Last year’s increase compares to average annual growth in the last ten years of 7.3%. Sales for JADMA members alone rose 2.3% to ¥3.5 trillion. Expansion of the leading malls like Rakuten, Amazon and Zozotown has helped, as has the greater participation in online sales by retailers. Retailers are now seeing much greater benefits to their physical stores from online stores and marketing, thanks to new online to offline marketing and early examples of click & collect, designed to bring online shoppers into stores.

Select Food: Baycrews opens Farmshop franchise in Japan

The leading select shops and fashion specialty retailers have all been piling into the lucrative business of premium ‘food select shops’ in the last three years as one way to diversify out of dependence on their core market. Baycrews has a range of cafes and restaurants already, but earlier this year it signed a deal with Farmshop, a Californian restaurant/food retailer with stores in Santa Monica and San Francisco. Baycrews opened the first Japanese store in Takashimaya Tamagawa last month. The 350 sqm space offers just the kind of international food shopping affluent Japanese love; lots of designer packaged foods like chocolate, dried fruits, oils and jams from artisan sources at premium prices, and the store design of dark wood furniture and polished concrete floors emphasises the upscale merchandise and attention to detail. This is just the third store globally, and includes a large cafe/restaurant. Baycrews is also selling store branded merchandise such as tableware and bags. This is Baycrews’ 13th brand.

Isetan deepens customer service with artificial intelligence 

In September Isetan Shinjuku began promoting a smartphone app developed to help customers easily find just what they are looking for in stores. The app, called Sensy, was launched last year by Colourful Board (see JC 1412), and features a database of fashion merchandise from some 2,500 brands, both Japanese and international. Sensy asks users to Like or Dislike a selection of items it displays and the built-in artificial intelligence (AI) will learn their fashion preferences. Since the list of items has been tagged into styles, the AI can then offer users other items with the same tag. The more the user inputs and the bigger the database grows, the better Sensy gets at predicting the right choice. At Isetan, Sensy is being used to help customers find items that meet their style more quickly. They can either use the app on their own phone or via tablets located in the store. Longer term Isetan hopes to link these fashion preferences to its store card, and thus make it possible for store staff to better know their customers. Isetan is also considering linking Sensy to digital signage through Apple’s iBeacon technology, which will track customers as they wander round the store and guide them based on their particular interests and tastes.

Beams signs New York’s Pilgrim Surf+Supply

This month Beams will open the first Japanese store for Pilgrim Surf+Supply, a select shop from Brooklyn, New York. True to its name, Pilgrim Surf is dedicated to surf fashions and gear, with an emphasis on the kind of authentic brands preferred by devotees of the sport, such as Bantu and streetwear brands like Unis, Norse Projects and Baron Wells. Beams is taking the brand and applying its usual formula of international brands surrounded by a store branded collection developed by Beams itself in conjunction with Pilgrim Surf’s owner – the US stores will also stock the Japanese collection. Beams has been selling Pilgrim Surf through its stores since 2013, and on the back of strong sales and a liking for the team, signed a deal last Spring, promptly opening pop-up stores to test the brand in Shibuya and Kobe. More stores will be added gradually, with a second due in Osaka next Spring.

Jun and Nike collaborate on sports fashion store Nergy

Leading apparel firm Jun opened a new sports store last month in collaboration with Nike. Called Nergy, the sleek feminine store in Shibuya targets the ‘Athleisure’ market – the growing trend, especially in the US, of wearing sports fashions day to day, both for work and home. Jun says Nergy is part of its mission to contribute to a healthier society and it has set up a new division recently called ‘Social Style’ to promote healthier living through fashion. As well as fashion Nergy sells lifestyle goods, cosmetics and some health foods – there is a corner for Three, the natural cosmetics brand. 50% of the merchandise is Nike, and 40% store branded, with the remainder coming from other international brands. Nike+Tokyo Studio provides workout training in the basement. A second store will open in Expocity Osaka next month.

Tokyu plans new select shop in Ginza

Tokyu Department Store will follow its rivals into the select shop business, planning to launch its own fashion select shop in J Front’s Ginza 5-Chome project next year. Tokyu has been diversifying beyond department stores in recent years, starting with ShinQs in Shibuya in 2012, its Tokyu Foodshow food stores in SCs, and last year opened the first stores for its new accessories chain Mikke, but this will be its first select shop, and echoes Isetan-Mitsukoshi’s Salone brand which opened in April in Tokyo Midtown. Like Salone, Tokyu’s select shop will be high end, offering a sharply edited collection of apparel pieces and accessories in the huge 2,000 sqm store, and mixing Japanese and international labels.

Marui City becomes Modi

Marui will rebrand its Marui City store in Shibuya next month. Called Modi, the new name reflects a major update to the building, turning it into a fully fledged shopping centre, part of group wide plans to turn all its buildings into SC operations through 2018. Marui is also experimenting with a reduction in merchandise in favour of services and experiences and Modi will be one of the first to get the new treatment. This will mean more tenants devoted to music, culture, dining, travel and other forms of entertainment. Given the large number of tourists in the area, Japanese culture will also be represented. The Modi name will be used in other buildings too; going forward Marui Group will scrap Marui City and have just the two brands, Marui and Modi.

JR East to add new SC at Yokohama station

More shopping facilities will come to the busy Yokohama station in 2018-2020 with the redevelopment of the west side of the station by JR East. The 100,000 sqm development will be built in two parts with the first section due in 2018 and will include a 26 story tower. Lumine will open in one part of the SC.

Imported brand market up 10.3% in 2014

Yano Research’s latest estimate of the value of the market for imported fashion brands suggests growth of 10.3% to ¥2.199 trillion in 2014. Clothing and apparel accessories accounted for ¥1.28 trillion of this. This was for January to December 2014, which included the higher sales prior to the consumption tax hike in April. Imported brand sales were strongly supported by resilience in affluent consumer segments as well as tourist sales. By category, the biggest growth was estimated to come from watches, up 24%, followed by bags & accessories, up 23%, and jewellery up 14%. Womenswear growth was measured at 11%, menswear 7% and shoes 9%. Yano expects sales of ¥2.319 trillion, up 5.4%, for 2015.

Odakyu updates Shinjuku Flags

Odakyu swapped out some tenants in Shinjuku Flags last month, largely to the benefit of Sazaby League. Sazaby opened four stores in the Shinjuku station building: Barefoot Dreams, a US apparel brand, Soaptopia, a body care brand also from the US, Flying Tiger and Afternoon Tea Gift & Living. Sazaby also updated its Nojess and Camper stores in the building.

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