May 2016 Highlights

May 08

FOCUS
Expenditure 2011-2015: Trouble ahead as consumption falls on the back of wage stagnation
Retailers made hay in the last couple of years, especially those at the premium end of the sector, as did those overseas brands and retailers who met demand for treats even from households on tighter budgets. Unfortunately, the party seems to be over for most, with consumption falling, bluechip companies setting the trend of reducing real wages, and price cuts pushing Japan back into deflation. The good news is that demand for the unique, the unusual, great design and top quality continues to grow thanks to polarisation, benefiting overseas brands and retailers.

Isetan-Mitsukoshi ties with CCC on lifestyle retail
Isetan-Mitsukoshi continues its efforts to link with any and all partners to reach parts of the consumer market its department stores cannot. Last month it tied with Culture Convenience Club, the operator of the Tsutaya chain, to create a joint venture business that will encompass marketing and even new retail concepts.

Editorial: Great retail, problem consumers

Start Today surges 32% in FY2015
Start Today has proved its mettle, maturing from a somewhat bumptious upstart into a resilient and innovative e-commerce operator that can compete, partly through clever tie-ups, in the face of tough rivalry from businesses many times its size. Zozotown is also broadening its reach, gradually introducing more mass market fashion labels.

Yamazaki Bread and Meiji Foods dump foreign partners
Just as foreign fashion brands have been breaking off joint venture agreements with Japanese partners since the 1990s, two similar partnerships in food have now been dissolved. In most cases, Japanese partners in fashion had little response to losing their licensing and distribution deals (see Page 6 for example), but in food, things are likely to be very different indeed. Have the foreign firms miscalculated?

Apparel firms suffer again
Japan’s listed wholesale-based apparel firms posted further falls in sales in FY2015 and continued to suffer in 1Q16 with Sanyo alone down 36.4%, but its blushes were saved partly by sales falls at Onward, TSI and, likely, World. Their problems look set to continue although the good news is that two decades of self-delusion has given way to some hard thinking.

Amazon ends unlimited free shipping
Amazon caused a retail industry heart attack when it announced free shipping on all orders back in 2010. Its u-turn will come as a relief, although free orders above a certain minimum will remain the default expectation among consumers.

All change at Seven & I
Toshifumi Suzuki resigned as chairman of Seven & I Holdings last month. Although Suzuki is 83, his resignation was still unexpected and the background to the resignation, along with the ramifications for the Seven & I board, mean it is a bigger deal than it appears. The company has now decided on its next top man, Ryuichi Isaka, and analysts are expecting him to lead a major shift in strategy.

Good year for footwear retailers
ABC Mart continues to pull away from its competitors with another strong year, both at home and overseas. Its efforts to diversify into new segments, particularly fashion shoes for women, offer new opportunities for foreign brands and suppliers. Meanwhile, even Chiyoda is finally improving, and even working more closely with international brands. Aeon’s G-Foot continues to struggle to find its place, but is making rapid progress on private brands.

Shimamura and Adastria see spike in profits
Shimamura and Adastria, two leading apparel chains, posted significant improvements in profitability in FY2015, despite pressures on import prices due to a weak Yen. Profits were boosted by expansion of higher margin private brands, cost cutting, higher sales, and closure of loss-making stores.

Imported alcohol market surges
Imports of major international alcohol brands increased strongly again in 2015, with particularly high growth for Scottish whisky and certain types of beer. Japanese firms have been active in acquiring international brands over recent years, and companies like Suntory and Asahi are now expanding import volumes as a result.

IN BRIEF
Uniqlo lowers prices
Toys ‘R’ Us opens first Babies ‘R’ Us flagship
Parco Shibuya to close in August, Parco 2 to open in Sendai
Apparel bankruptcies up 6.5%
Odakyu to open small format store in Shinjuku
Bag market expands 1.8%
Yahoo consumer sales jump 2.5 times
Lawson and Three F finalise tie-up
Matsuya up 13.8% in FY2015
Familymart ties with Japan Post
Mori plans four new towers in Toranomon
DCM Holdings to absorb Keiyo
Seven & I introduces ‘By Loft’ brand
Mitsubishi Estate to rebuild Hawks Town mall
Pet market up 1.3%
Takashimaya: 30% of managers to be women by 2021
Nishitetsu opens Reganet Cute store in Fukuoka
Life to open ‘healthy’ supermarket concept
Shueisha invests in own brands
Lawson confirms record consolidated profit
Tiffany expands Sogo Omiya store
Uny: more improvements ahead of merger
Used clothing store pops up in Isetan and Mitsukoshi
Biggest Paul Smith store opens in Roppongi

Retail Data: Department stores down in March, even in Tokyo

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