September 2016

FOCUS
Department Stores FY2015: the sun still shining but storm clouds gathering
Department store sales are a bellwether for the spending patterns of two crucial market drivers in recent years: wealthy Japanese and tourists. Last year, both groups continued to support department stores, but most of the growth in spending was reserved for stores in just three cities. This widening gap in performance between cities was also found among stores themselves and by product category; while customers flocked to accessories and food floors, even in big city stores apparel sales continued a decline that began 20 years ago. The good news is that leading chains are in the midst of their most dynamic restructuring and overhaul of stores, floors, merchandising, and even store formats for 40 years. This is timely given the fall in spending among wealthy Japanese and tourists this year.

Adastria plans ¥100bn Muji style chain, targets ¥500bn group sales
Adastria has come through a few troubled years of low profits, a transition period as it worked to reduce its dependence on trading firms. With this aim partly achieved, it is now looking to reduce its focus on the apparel market. It will start with a major new chain with similar merchandising to Muji, mixing home, beauty and fashion, with forecast sales of ¥100 billion in the medium term. It has also begun opening home fashion stores under its other brands.

Editorial: Abe-gnomics: Retailers cut prices

Seven & I to close more Seibu stores, launches new collaborations
Seven & I is under pressure to rationalise its GMS and department store businesses following the shareholder putsch two months ago. It has just announced the closure of two more department stores, bringing the total to five in just 12 months, a loss of ¥200 billion in sales, and nine since 2010. Yet others are likely to close too. It is putting more effort into improving the content of remaining stores, launching its Karl Lagerfeld brand this month and installing concessions for online footwear to fashion mall Locondo.

FU: Uny and Familymart merger provides opportunities for both
Uny-Familymart Holdings became an official entity at the beginning of September. Brokered by Itochu, the motivation for the merger was two fold: 6,500 new stores for Familymart and survival for Uny. Familymart will likely see rapid benefits for its business, but Uny’s long-term viability is less assured. With the need to consolidate its flagging GMS and other businesses, the company remains in deep depression.

Where people spend the most on fashion online: Shikoku beats Osaka
Recent data from Zozotown reveals key regional hotspots where Zozotown purchases are much higher than expected, and where a lack of decent fashion retail suggests an opportunity.

IKEA Japan to double sales by 2020
IKEA Japan continues to move forward. It will expand from the current eight stores to 14 by 2020, doubling sales compared to 2014. In addition to new stores, in 2017 it will finally launch an e-commerce operation in Japan and in the meantime has set up a mail-order service for customers who live near one of the current stores.

Itochu and Baycrews agree tie up
Itochu will buy its way into more fashion retailing this month through a new joint venture with leading select shop to food retailer Baycrews. Plans call for a chain of stores mixing fashion, home and dining, and expansion both in Japan and overseas.

Conbinis go after supermarkets
Lawson and Familymart are looking for new acquisitions but with so few choice targets available, tie-ups with non-convenience store businesses are increasing, to not only increase overall volume, but also to provide a more diverse range of formats and merchandise. This is not only one of the few remaining avenues to overcome saturation in the sector, but also a way round the competition from Seven Eleven. A new era of hybrid conbinis has begun.

Valor: a new regional powerhouse
Valor acquired small supermarket chain Koseiya in Yamanashi Prefecture last month, and outlined plans to expand further north into the Kanto region. More M&A is likely to follow.

Jeansmate signs Outdoor Products
Jeansmate is a dour casual apparel chain and has seen sales fall from ¥25 billion to ¥9 billion in 15 years, leaving a trail of red ink. It is still a cash rich business though, and has just signed an exclusive franchise with Outdoor Products to expand stores in Japan, a good use for its better locations.

More Isetan small store experiments
Isetan-Mitsukoshi’s small format stores to date have so far been focused on the fashion and cosmetics market, but from this month it will launch a new chain of food stores, incorporating groceries, delicatessens and dining, an idea that looks ideal for busy stations. It will also open another airport store, more cosmetics stores, and a members-only club in Aoyama, as well as reposition its ageing Studio Alta building in Shinjuku.

Laox’s short-lived success
Laox made its first profit in 14 years in 2014 by catering almost exclusively to Chinese tourists, but it suddenly looks to have come unstuck, at least for now. After nearly doubling its store numbers in a single year, its narrow targeting is now letting it down.

IN BRIEF
Hankyu to close Sakai store
Seven Eleven to offer simultaneous translation, more duty-free
Don Quijote to launch new online store for tourists
Printemps becomes Marronier Gate, Nitori to double space
Perform enters Japan
Parco opens more small stores, WILL close Otsu store
Don Quijote: 27 years of growth
Aeon Retail takes fashion and sports chains to Tokyo
Rakuten joins the home deco boom
LaSalle Investment buys Kishiwada CanCan SC
TSI closes Vivienne Tam business
Daimaru-Matsuzakaya opens 4th outlet store in Jazzdream Nagashima
Imported brand market expands 7.6% in 2015 but to fall 8.5% in 2016
Uniqlo unveils Uniqlo U collection
Amazon sponsors Tokyo Fashion Week
Johnson & Johnson buys into Dr.Ci:Labo
H&M closes Monki stores
Qol acquires Niigata drugstore chain
Aeon Mall to open in Fukushima 2018
Isetan-Mitsukoshi to open new stores in Malaysia
Barneys New York to open in Roppongi this month

Retail Data: Department stores down 0.4%

Companies/Brands mentioned in this issue
ABC Mart
Adastria
Adidas
Aeon
Aeron
Amazon
Apita
Ark Real Estate
Asanoya
Atre
Bals
Barneys New York
Baycrews
BBVola
Blue Bottle Coffee
Celux
Christophe Lemaire
Chubu International Airport
Circle K Sunkus
City Shop
Colony 2139
Coronet
Daimaru Matsuzakaya
Diamond City Prou
Double Focus
Dr. Ci
Edward Green
Familymart
Farfetch
Farmshop
Fukuya
GU
H2O Retailing
Hankyu Hanshin
Heiwado
IKEA
Isetan
Isetan Mirror
Ito-Yokado
Itochu Shoji
Itochu Shokuhin
J Front
Jazzdream Nagashima
Jeansmate
Johnson & Johnson
Joix
Journal Standard
JR East
JR West
JS Foodies
JS Furniture
Karl Lagerfeld
Kasumi
Kintetsu
Kishiwada CanCan Bayside
Koseiya
Lalaport
Laox
LaSalle Investment Management
Lawson
Lawson-Three F
Locondo
Loveless
Luigi Borelli
Lumine
Mac House
Majica
Marronier Gate
Maruhiro
Marui
Matsuo International
Matsuya
Megasports
Ministop
Mitsubishi Shoji
Mitsukoshi
Monki
Mudilaf
Muji
Mysty Woman
Nagasakiya
Nike
Nitori
Okuwa
OPA
Outdoor Products
Pageboy
Pal Group
Palemo
Parco
Perform Group
Piago
Printemps Ginza
Psycho Bunny
Qol
Rakuten
Right On
Sagami
Sanmarino
Seibu
Seven Eleven
Shimamura
Sogo
Sporsium
Sports Authority
Start Today
Studio Alta
Sumisho Urban Development
Suzutan
Takashimaya
Tenmaya
Tokyu Hands
Trinity Arts
Triworks
TSI Holdings
Tsuruya
Uniqlo
United Arrows
Uny-Familymart
Vivienne Tam
Wego
Wired
Yogaworks
Zozotown