December 2016 Highlights

Dec 05

FOCUS: Three chains mop up convenience store sector
The convenience sector stands alone in terms of growth and innovation over the past 20 years. It is a format that suits Japan’s time-limited, urban consumer markets perfectly, but the leading companies have catered to this market with skill and dedication, making it the single most successful retail format in Japan, and one of the best in the world. FY2015 was yet another good year, with consolidation progressing even further, and lots of potential growth coming from their new role in e-commerce.

Shimamura plans 3,000 stores, leads in discount apparel
Shimamura has a unique place in Japanese apparel retailing. Since its founding in 1978, it has consistently provided the lowest priced apparel, undercutting GMS chains, supermarkets and fast fashion chains. It is positioned well below Uniqlo, and has a loyal following across Japan especially outside big cities. While competition is increasing, the pressures on home budgets mean it is more popular than ever, and Shimamura now wants to expand to 3,000 stores.

Editorial: Juxtaposing retail with online

Isetan-Mitsukoshi to overhaul regional stores with new model
Regional stores are a drag on department store profits, over-priced and dreary. So far the main solution has been to hand over large chunks of space to specialty tenants. Isetan-Mitsukoshi thinks there is an alternative: taking over as much as 70% of space from wholesalers and doing the buying itself – in a word becoming a retailer. This is good news for foreign brands.

Mango signs exclusive deal with Locondo for latest crack at Japan
Mango arrived in Japan in the late 1990s, but has never managed to break into the market effectively. A run of poor partners followed by direct operations, marred by little enthusiasm at head office, meant the Spanish brand was never going to scale sufficiently, and has shrunk to a tiny Japanese business. It will now give up direct operations and sign with Locondo.

Start Today sales jump 40%
Start Today has been very visible of late thanks to promotions of its Zozotown online mall on TV, train and print media. As a result, sales surged in the first half of the year, and transaction volumes are expected to reach nearly ¥200 billion for the full year, making it the biggest online fashion specialty mall by far.

Chat services key for brand and retail customer connection
Japanese shoppers still prefer to interact with brands through their physical stores, with telephone and websites the first options for support. The future, however, will be messaging apps like LINE.

E-commerce wars: transporters develop new specialisations
Japan has three major transport companies, all competing in the e-commerce delivery market, yet despite their size, they are still struggling to keep up with demand. Although Yamato leads by a wide margin at present, the labour-intensive nature of the business, and the difficulty of getting parcels to customers where and when they want them, mean that all three companies are beginning to cooperate in order to cope with volume.

Ginza Six attracts new luxury retail concepts and ideas
Ginza Six will launch in April, a true luxury emporium to replace the Matsuzakaya department store of old. Daimaru-Matsuzakaya will still be present, but through much smaller tenancies within. Its owner, J Front, will also bring its Plaza variety store chain to the building, but with a new concept targeting an older, more sophisticated customer.

Baroque Japan lists on TSE, looks to expand overseas again
Baroque Japan has become something of a dead end for investors seeking an entry into Japan’s fashion market. Once heralded as a promising new investment for Credit Agricole’s Asian arm, its stake was then sold to Chinese investors who looked forward to thousands of Baroque stores in China. Today there are just eight, but Baroque listed on the TSE last month with plans for overseas investment once again.

E-commerce growth spurs massive investment in logistics
Japan’s e-commerce market is growing rapidly, but support services to get products into the hands of customers are racing to keep pace. While parcel delivery firms are cooperating to cope (see Page 6), major domestic and international firms are pouring money into new logistics capacity.

Francfranc to get a face lift
Francfranc is one of Japan’s oldest home fashion chains. In 2014, Seven & I bought a large stake in the brands’ parent company Bals, and in the past two years, it concentrated on building a new homeware format for the retail conglomerate. With that idea now killed off, and other distractions also closed down, Bals is free to concentrate on Francfranc and will begin revamping its flagship stores.

Daiei makes come back with first store in Aeon Town
Daiei looked to be dead when Aeon acquired the GMS and supermarket chain early last year, even stating publicly that it would probably retire the brand entirely. It now looks to have changed its mind, and Daiei’s new look and positioning as an urban supermarket suggests potential for more upscale international food brands.

Custom order shirt and suit business grows as suit market contracts
With the men’s business wear market shrinking, more and more chains are turning to bespoke tailoring to add value and boost profits. Tokyo Shirts is the leading seller of bespoke shirts, and will introduce new store formats over coming months, while Aeon-owned TakaQ will enter the market next Spring.

Nitori takes over cities
Nitori’s latest department store tenancy opened in Shinjuku at the start of the month. It is the fourth department store Nitori around Tokyo so far, but by no means the last. Nitori also plans to expand into city centres around the country, including station buildings, and is shifting its ranges away from just furniture and bedding, and more towards home fashion.

Megasports expands sports fashion chain Corners, opens Yoga centre
Aeon is investing significantly in expanding its specialty chain businesses such as Cox, G-Foot and Megasports, not just within its own SCs, but also in competing retail facilities, and recently even on the street. Megasports in particular is expanding within central Tokyo, even in the most fashionable areas.

IN BRIEF
Household spending down for seven straight months, except home fashion
Marui continues shift away from fashion buildings
Komehyo to open used luxury emporium in Osaka
Urban Research launches outlet site
Japanese happy with life – except wages
Yahoo consumer sales jump 2.6 times
Beams pushes licensing, ties with Aoyama Shoji
Cosmetics market expands 3%, toiletries by 3.3%
Onward opens food store
Toys R Us opens small format stores
Isetan-Mitsukoshi invests in online budgeting service
Grandberry Mall to close
Kusuri no Aoki lists on TSE
Lumine to develop underpass at Shinjuku
Sanyo Shokai invests in Skinware
Ajinomoto acquires Blendy and Maxim brands
Tokyu brings UK cookie chain to Japan
Tax threshold for working spouse incomes to increase
October marks eighth month of deflation
Tourist numbers up 17%, exceed 2 million again
Skechers expands rapidly
JA acquires UK food firm

RETAIL DATA: Department store sales down 3.9% in October

COMPANIES/BRANDS IN THIS ISSUE
ABC Mart
Aeon
Ajinomoto
Amazon
Aoyama Shoji
Askul
Atre
Avity Style
AWA
Bals
Baroque Japan
Bayrcews
BCBG
Beams
Belle International
Biore
Blendy
Bon Bon Home
CDH Investments
Circle K Sunkus
Clarks
Closshi
Coco Store
Cox
Daiei
Daily Yamazaki
Daimaru Matsuzakaya
Doutor
Familymart-Uny
Fast Retailing
Fril
G-Foot
Ginza Six
Grandberry Mall
Hankyu
Heart-In
HMV
IKEA
Inditex
Isetan
Ito-Yokado
J-Front
J-League
JA
Jacobs Douwe Egberts
Japan Post
Japan Senses
Jones Lang Lasalle
JR East
JR West
Junkudo
Justsystems
Kao
Keihan Railway
Komehyo
Komeri
Konaka
Kuchu Yoga
Lawson Bank
LINE
Lohaco
Lucua
Lumine
Magaseek
Mango
Marui
Matsuya
Maxim
McDonald’s
Megasports
Meitetsu Department Store
Mercari
Merrell
Mery
Mitsukoshi
Mondelez International
Morles
Moussy
Muji
Natural Lawson
Neopost
Nestle
Newdays
Nike
Odakyu
Omni7
Onward Holdings
Orange Box
Otsuka Kagu
Outlet Peak
Packcity Japan
Parco
Poplar
Prologis
Punta Fa
Rakuten
Right On
Sagawa Kyubin
Saikaya
Sanyo Shokai
Save On
Seibu
Seicomart
Seijo Ishii
Seven Bank
Seven Gold
SG Lawson
Shirts Code
Sixieme Ginza
Skechers
Sogo
Starbucks
Start Today
Sumitomo Shoji
TakaQ
Takashimaya
Three F
Tobu
Tokyo Midtown
Tokyo Shirt
Tokyu Railways
Toys R Us
Transcosmos
Unilever
Uniqlo
Uny
Urban Research
Yahoo
Yamato Transport
Zara Home
Zozotown

Get a concise monthly update on Japanese Consumer Markets – and a FREE copy of our monthly report.