May 2018 Top Stories

May 05

Key stories in this month’s issue of JapanConsuming, the essential monthly analysis and data update on Japan’s retail & consumer markets:

Consumption Trends in 2017: more shopping but a lot of saving too
Real expenditure levels are now 3% below the peak reached in 2009. This is despite a sharp rise in the cost of fresh food and some other essentials, emphasising just how much households have been cutting back on non-essentials, notably clothing which is down nearly 12% in five years. Home fashion remains the only strong performing category over the past five years, up nearly 2%, and another 3.5% in 2017. While incomes are rising slightly now, working households are not spending this but putting more income into savings instead. At the same time, income sources are changing and becoming less stable, further encouraging savings. Even though Abe is finally convincing companies to raise wages, if this propensity to save continues, the impact on expenditure may be less than he hopes.

Izumi and Seven & I join forces to beat Aeon
Seven & I and Izumi are so worried about Aeon that they have decided to join forces. Seven & I is the number two conglomerate, while Izumi ranks 15th, although it is the leading mass market chain in Chugoku and Kyushu and the third largest GMS chain overall. The deal will not see a merger or even a share swap – at least immediately, but it might be just a matter of time. For now, they will create joint operations, aiming to expand each other’s geographical reach and, they hope, block Aeon’s expansion. a merger down the road looks likely

Editorial: A better deal in food?

Locondo ties with Magaseek, targets ¥30 billion turnover
Locondo has made clear that it needs tie ups and acquisitions to build scale given the tough competition in online fashion retailing from bigger players. It recently tied with Laox and then last month agreed terms with Magaseek. The latter is owned by NTT Docomo which may see the deal as an opportunity to revitalise its e-commerce fortunes by buying Locondo outright.

Parco: less fashion in updated SCs
Parco calls itself a fashion building operator, but its buildings will soon stock much less fashion, with space being turned over to other types of tenant. The difficult trading in the past few years for many apparel retailers has also led developers to try and identify potential successes through short-term pop up store sections – an ideal platform for new overseas entrants finding it hard to convince a developer to give them a tenancy.

Amazon Fresh spurs expansion in online food options
Amazon Fresh is now a year old, and to mark its anniversary Amazon added new links to recipe apps and continues to expand its market coverage. The launch of Amazon Fresh came sooner than most competitors expected, and it has left domestic rivals scrambling to catch-up. Even with so much  activity, Amazon still remains largely unchallenged.

Felissimo: surviving in a digital age
Japanese catalogue-based direct marketers are struggling against the onslaught from Amazon and other e-commerce leaders, but that doesn’t mean bankruptcy is inevitable. Felissimo, a mid-size fashion catalogue business, has seen sales decline significantly but is hopeful it can develop a profitable niche role by mixing online sales with traditional customer service – and some M&A to build more scale.

Itochu takes control of Familymart Uny Holdings
Itochu is to expand its stake in FU Holdings, taking a majority share. The move sets the stage for Japan’s second largest food wholesale operation to own a major share in food retailing, building an end-to-end food chain that is unmatched by rivals.

Fashion retailers continue push into e-commerce
Fashion retailers may want to preserve footfall in their stores, but most are also trying harder to increase e-commerce sales, especially at their own online stores. With as much as 60% of online sales initiated by blog posts by shop staff, they are optimistic about omnichannel retailing and the benefits that store infrastructure brings to online sales.

Ginza Six: ¥60 billion in year one
J Front Retailing had hoped its first luxury mall would provide a new direction for the department store to fashion building group, and judging from its first year sales at least, this hope looks to have been fulfilled.

Muji introduces a new, high-end supermarket ideal for malls
The largest Muji store in the world opened in late March and the new concept is impressive on any measure. The next iteration of the Cafe&Meal format is also Muji’s first supermarket. If successful, it could well become the first food format to emulate CCC’s successful T-Site, and given the premium positioning, a new sales outlet for overseas brands.

Fast Retailing targets 18% of sales from online in 2022, posts bumper results
Fast Retailing had a great first half of 2018, especially in overseas markets, and CEO Tadashi Yanai has set a realistic target for 2022. This doesn’t happen often, but realistic at least means the retailer is likely to achieve it. The latest target emphasises the need to grow e-commerce, both at home and abroad.

IN BRIEF
Nissen scraps catalogues for digital only future, sales to collapse by half
Active users of LINE shopping exceed 10 million a month
Shop-list launches updated site with Softbank AI recommendation engine
Mitsui brakes ground on 45 storey tower at Tokyo station – Bulgari Hotel to take top floors
OPA to open at Hachioji Station this Autumn
Itochu sells Java Group
Lalaport Tokyo Bay hits record sales
Tourist spending jumps 17% in 1Q2018
Mercari vendors can now ship through Seven-Eleven
Watts acquires Real, Daiso changes management
World acquires two used clothing businesses
Nomura Real Estate plans first NSC
Takashimaya makes regional stores work
Sanyo Shokai buys luxury online solutions business
Mori sees better returns from Tokyo SCs
Japan’s population down for 7th straight year
Rizap continues fashion acquisition spree
Adastria gets into the underwear business
Mixed supermarket and chain store results for March
Isetan-Mitsukoshi records ¥1 billion loss

Retail Data: Department store sales up a fraction in March

Brands & Companies mentioned in this Issue
ABC Mart
Adastria
Aeon
Aeon Mall
Akachan Honpo
Alpen
Amazon
Amu Plaza Hakata
Baycrews
Bayflow
Beams
ges
Bottega Veneta
Bulgari
Carrefour
Circle K Sunkus
Comptoir des Cotonniers
Cookpad
Costco
Crooz
Daiso
Delish Kitchen
DeNA Travel
Deqwas Vision
Dinos
Don Quijote
Dyson
Electrolux
Endeavour United
Familymart Uny Holdings
Fashion Co Lab
Fashionwalker
Fast Retailing
Felissimo
Five Lab
Forus
Fril
GEMS
Ginza Six
GU
Hankyu Nishinomiya Gardens
Heat Tech
Hello Baby Salon
Helmut Lang
HEP Five
Herschel Supply Company
Inditex
Instagram
Isetan-Mitsukoshi
Ito-Yokado
Itochu Shoji
Itochu Shokuhin
IY Fresh
J Front Retailing
Java Group
Jeansmate
Jil Sander
Jimos
KDDI
Komeri
La Bagagerie
Laforet
Lalaport
Laox
Lawson
LINE
Locondo
Loft
Lohaco
Lucua
Magaseek
Mango
Marimekko
Marui
Mercari
Mitsui
Mori
Nakasan
Nissen
Nitori
Nomura Real Estate
NTT Docomo
Oaklawn Marketing
Oisix
Olbis
Onward Holdings
OPA
Pal Group
Palemo
Parco
Phoenix Capital
Queens Isetan
Radishboya
Ragtag
Rakuma
Rakuten
Recruit Sumai Company
Rizap
Roppongi Hills
Ruby Groupe
Russia
Ryohin Keikaku
Sanyo Shokai
Sazaby League
Scigineer
Seibu
Seijo Ishii
Seiyu
Seven Eleven
Shaddy
Shop-list
ShopChannel
Softbank
Sokai Drug
Start Today
Studio Clip
Sumitomo Real Estate
Sustina
T-Site
Takanashi Milk
Takashimaya
Tesco
Tin Pan Alley
Tokyo Metro
Tomas Maier
Tsudanuma
Twitter
Uniqlo
United Arrows
Uny
Venus Fort
Vivre
Wacoal
Walmart Seiyu
Watts
Wellbe Field
World
Wowma
Yamato Transport
Yonago
Zozotown

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