November 2016 Highlights

Nov 10

FOCUS:
Shopping Centres 2015-16: Top SCs surge nearly 7% on upgrades and tourism
After sales growth of 4% in both FY2013 and 2014, the top 100 shopping centres posted their best year since 1995 last year, growing combined sales 7.1%. The top selling SCs fared better than the sector as a whole, but even then total SC sales officially rose 4.5% despite the fall off in spending in the second half of the year. The downturn in apparel and other non-essentials was offset by major investment in upgrading and expanding SCs, spurred on by intense competition in key cities. Outlet malls benefitted from the surge in tourism – and even though tourist spending on full price luxuries fell away in 2H2015, spending at outlet malls continued. The ongoing investment shows just how confident developers are that proactive management and relentless marketing can overcome weak domestic demand, even if this is only by taking away business from nearby competitors.

H2O to take over three Sogo Seibu stores in Kansai
Seven & I Holdings has done something radical. It has tied with H2O Retailing in one of the biggest retail alignments ever seen. As well as a share swap, H2O will take over three Sogo Seibu stores in Kansai. Just as radical is a plan to start taking the ‘general merchandise’ out of its Ito-Yokado division, turning stores into supermarkets with tenants, effectively admitting the GMS format is redundant in many locations. Seven & I also announced a major rethink of its fledgling omnichannel business which may become less mall and more cloud.

Editorial: Replacing the new with the old

Tourist spending falls 2.9% over summer, down 17% per capita
Tourist numbers to Japan continue to soar, but spending has fallen, mostly because the Yen has strengthened. At first it was just department stores that suffered, and indeed these have seen a massive drop in sales of high end brands, but many retailers are feeling the pinch to some extent. The good news is that tourist numbers are set to climb further, and already this year alone Chinese visitor volume was equivalent to 4% of the Japanese population.

Consumers readily switch when e-commerce goes wrong
Japan’s appetite for online retailing continues to grow rapidly, but consumers are just as concerned with quality of service online as they are in physical stores. A recent survey shows that delivery problems are the main source of dissatisfaction.

Ginza Six: the first luxury emporium
Shopping centres account for 22% of Japanese retailing (see Page 12) but almost zero percent of the luxury market. This is about to change with the opening next April of Japan’s first true luxury shopping building in the heart of Ginza. Ginza Six, which includes LVMH as one of its developers, will have the highest percentage of luxury brands of any shopping centre in Japan, and according to J Front’s chairman will redefine how luxury is sold and catalyse changes to department stores.

Onward: fewer stores, more online
Onward will put a break on store expansion from next year, shifting investment to online stores instead. The move comes amidst a shake out among major apparel groups, with competitors like World and TSI Holdings shedding up to 1,000 stores, and others like Sanyo Shokai bleeding sales by as much as 35% this year.

KDDI acquires DeNA and au shopping malls
Mobile e-commerce competition is intense, but so far the mobile communications giants NTT Docomo and KDDI have enjoyed limited returns from all the transactions going through their networks. Like Docomo, KDDI is trying to change this and will now buy in volume through a new deal with DeNA, and use this as the base for further expansion through M&A. NTT Docomo too says it is investing further and expects sales to reach ¥100 billion in the near future.

Bidding war for kimonos
Something seems to happen when Japan’s most traditional businesses come up for sale, creating a whiff of dodgy dealing and corporate shenanigans that is hard to shake off. Before Uny was acquired by Familymart in September it put a ‘For Sale’ sign on its 55% stake in kimono retailer Sagami, but seemed to have already agreed the buyer and the sale price with a company funded by Uny and Sagami’s main shareholder. Other bidders are not happy.

Fast Retailing lowers targets, at least for now
For years Fast Retailing’s chairman Tadashi Yanai has used ambitious targets as a call to arms, rallying the troops to ever greater efforts and commitment to the company cause. His most triumphalist target was made in 2008 when he said Fast Retailing would hit sales of ¥5 trillion in 2020 at a time when group sales were just ¥586 billion. He has now lowered this, but still says ¥5 trillion is achievable down the line, and has just issued a new target for GU, although this time without setting a date.

Yamada Denki aims for ¥1.8 trillion
Yamada Denki continues to move forward despite stagnation in the consumer electronics sector. It is not only the largest player in the market, but increasingly it looks to be the only chain willing to take on new ideas. Most important is its expansion of private brand ranges electronics, which will have a major impact both on CE retailing and Japan’s beleaguered manufacturers. At the same time, the growth of online CE purchases continues to be a significant threat.

Luxury goes online
Isetan-Mitsukoshi had a full launch for its new luxury online store last month, which is separately branded and distinct from its main department store site. The site parallels its physical store strategy of small boutiques. With the launch, all of the Big 4 department stores now have online ventures separate from their main department store sites.

More banking from CVS stores
Banking and financial services mean large profits for convenience store chains. Seven Eleven and Aeon have run their own banks for some time, but Lawson is about to launch one in the next couple of years, and Familymart is forging links with Yucho Bank.

IN BRIEF
Picard to open in Aoyama
Ito-Yokado to cut four key brands this year
Senjo acquires Fuji Mart
Japan drops to 111th in gender equality rankings
Givenchy opens first Kyushu store
ABC Mart up 24% as sports shoe market expands 6.5%
Laox sales 40% below target
Stripe buys into French brand Maison Kitsune
Aeon issues soccer club WAON loyalty cards
Patagonia Provisions selling in Japan
Matsuya sales fall 8% in first half
Seven & I changes to Seven Premium ranges
Part-time hourly wages hit ¥1,000 for first time
Women’s Underwear market drops 2%
Konaka opens bespoke suit chain
NTT Docomo launches drone delivery service
Cocokara fine adds inventory to website
Keio Chofu to get Bic Camera, Aeon Cinema
Tokyu to open new commercial towers in Shibuya in 2017, 2018

Retail Data: Department Store sales fall 5% in September

Companies/Brands in this Issue
ABC Mart
About
Aeon
Aesop
AG2
Amazon
Aoyama Shoji
Ario
Aspirant
Astraet
Bals
Baycrews
Best Denki
Bic Camera
Burberry
CCC
Celine
Chanel
Cocokara Fine
Cocoon City
Connaissligne
Cosmos Berry
Daimaru Matsuzakaya
Damiani
DeNA
Desigual
Dior
E. Castel
E-Salon
Emporio Armani
Epoca
Epsilon
Familymart
Fast Retailing
Fendi
Fuji Mart
G-Foot
Ginza Six
Givenchy
Gucci
H2O Retailing
Hankyu Hanshin
Hankyu Oasis
Heart-In
Hermes
Isabel Marant Etoile
Isetan Salone
Isetan-Mitsukoshi
Ito-Yokado
Iwataya Department Store
Izumiya
J Front Retailing
J-League
Japan Post
JDA Software
Jimmy Choo
JR East
JR Kyushu
JR Nagoya Takashimaya
JR Tokai
JR West
Kansai Supermarket
KDDI
Keio
Kenzo
Kitte
Konaka
L Real Estate
Lalaport
Laox
LaSalle Investment Management
Lawson
Lazona Kawasaki
LINE
Loewe
Loveless Guilt Prime
Lucua
Lumine
Lumine Est
LVMH
Mackintosh London
Mackintosh Philosophy
Magaseek
Maison Kitsune
Maison Martin Margiela
Malera Gifu
Mark IS
Matsuya
Meissen
MI Plaza
Mitsubishi Estate
Mitsubishi Estate-Simon
Mitsubishi Shoji
Mitsubishi UFJ
Mitsui Real Estate
Mitsukoshi Ginza
Muji
Narita Airport
New Horizon Capital
Nitori
Noren Noren
NTT Docomo
Oaklawn Marketing
OK Super
Omni7
Onward
Parco
Patagonia
Picard
Radishboya
Rakuten
S-Point
Sagami
Sagawa
Saint Laurent
Sanyo Shokai
Seibu
Sept Premieres
Seven Eleven
Shimamura
Shiseido
Sogo Seibu
Soph
Stripe International
Sumitomo Shoji
Suntory
T-Site
Tag Heuer
Techland
The Conran Shop
The Diamond
Tokyo Metro
Tokyo Midtown
Tokyu Corp
Trip Bazaar
TSI Holdings
Tsutaya
Uniqlo
United Veggies
Universal Language Measure
Uny
Urban Research
Valentino
Van Cleef & Arpels
Vogue Japan
Wacoal
Walmart
WAON
Yahoo
Yamada Denki
Yamaya
Yaoko
Yucho Bank
Zozotown

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