January 2019 Top Stories

FOCUS
Shopping Centres 2017-18: sales rise as mall development slows sharply
The shopping centre market expanded in FY2017, increasing sales by 2.3%, despite jittery consumers. More investment in upgrading malls, the boost from inbound tourists, and higher food prices, all helped. The average growth among the top 100 was slightly more, up 2.6%. 2017 was the year of the outlet mall,  the source of most of the growth among top shopping centres. While sales rose in FY2017-18, investment has fallen sharply in recent years, and 2018 saw the lowest number of new malls in years, and the number will continue to fall. Depopulation, lower sales densities, retailers’ reluctance to open more stores, and the high cost of construction are all giving developers cold feet, as is the quandary of e-commerce competition.

Decathlon to open first full store in Japan this Spring
Decathlon is a category killer sans pareil and will finally open its first store here in March. Domestic big sports retailers like Xebio will be gearing up to compete in some categories, but competition will come from a more unlikely source: the uniforms to outdoor apparel retailer Workman. Decathlon may need to expand rapidly if it is to gain sufficient share to stop Workman emerging with a clear lead in the same market.

Editorial: Thanks for 20 years

Onward quits Zozo
Zozo has been hit from all sides recently, with a major sell off by investors disturbed by Zozo’s execution of its private brand launch and the resulting impact on the company’s reputation among merchants and consumers alike. Last month it launched a new campaign which, on the surface, was all about helping customers give back to society, but which drew an immediate negative response from some merchants. One of these, Onward Holdings, withdrew all its brands from sale on Zozo. This is a damaging dent in Zozo’s reputation.

Arcs, Valor and Retail Partners form nationwide supermarket alliance
The supermarket sector is the most fragmented and uncompetitive, a situation encouraged by major suppliers and not ideal for consumers. Despite some effort from the likes of Aeon, consolidation has failed to materialise beyond a few in-group mergers. That may be about to change following last month’s precedent-setting alliance between three major supermarkets, carving up the country into three regional fiefdoms.

TPP: profit and loss for Japan
The Trans-Pacific Partnership trade deal came into effect in late December, immediately cutting import tariffs across much of Southeast Asia. Despite some claims that this will help consumers, the cuts are most likely to add to the bottom line of Japan’s powerful trading firms rather than reduce retail prices. At the same time, Japan’s farmers are both concerned about the likely increase in imports, while some of the more exclusive producers are hoping to take advantage of the opportunity to export.

Mitsubishi to sell off stake in Aeon
Mitsubishi has finally given up its hope of convincing Aeon to merge Ministop with Lawson and is selling its stake in the largest retail group. Although reports suggest there will be no change to the supply relationship between the two companies, it is hard to see how Aeon will maintain progress in the convenience store sector without Mitsubishi’s help.

Mash and Jun to start premium online lifestyle mall in October
There used to be little competition in the online fashion/lifestyle category, with Zozo the only large dedicated mall. In 2018, Softbank and Stripe International launched an upscale answer to Zozo, and now Mash Holdings – a successful fashion to cosmetics retailer – and Jun have formed a joint venture to create a new premium mall.

A flat fashion market
Fashion industry managers are less optimistic about the outlook for 2019 compared to a year ago according to a recent survey, weighed down with worries about depopulation, global trade, and changing consumer sentiment. More optimistically, many are investing in e-commerce as well as preparing to expand overseas.

Savings rates soar in 2018
Average monthly savings rates and total savings stocks have long been high in Japan, but savings rates broke all records in 2018. This was the result of higher incomes for many households, but anxiety about the future, coupled with a lack of incentive to spend, meant the money stayed in the bank. At the same time, some firms at both the luxury and discount ends of the market report a record year, demonstrating that there’s still room for inventive marketing to unlock those wallets.

Itochu confirms intent to deepen hold over Descente
Itochu continues a battle of words and equity as it attempts to gain more control over sports firm Descente. So far Descente has brought in Wacoal as a white knight and made a splash in the business media about its recent success, but Itochu insists that Descente needs Itochu’s management, particularly to build a stronger business in China and other overseas markets.

Organic foods growing in popularity
After something of a false start back in the 1990s, organic fresh food is now moving out of a limited niche and into the mainstream.

Muji really is no name in China
Muji is popular in China, but trademark conflicts, easy replication, as well as new emulator brands, tiall mean the no brand brand is not assured of continued success in the market.

Retail data: Food sales down 2% but convenience stores up

IN BRIEF
Donki announces six new, double-branded stores for Uny
Welcia acquires two drugstore chains
Komehyo opens purchasing store in SC
Shimamura profit falls 41%, chairman resigns
Gladd changes name following merger with Gilt
World unveils shopping solution for men who don’t like to shop
Toys R Us hanging on in Japan
Highest population fall on record in 2018
Daiwa Lease opens new SCs
Nitori reaches 500 stores
Petit Bateau to hold online design contest
Takashimaya: biggest department store food hall at Yokohama branch
Mitsui breaks ground on 60 tenant SC/Bulgari Hotel at Tokyo Station
Aeon invests in European online sports firm
Stripe’s fashion rental service hits 12,000 subscribers
Triumph opens premium store for older women
United Arrows collaborates globally on new brand
Boglioli moves from Itochu to Misaki Shoji
KDDI ties with flash sale site Luxa
ABC Mart opens 15th premium store in Harajuku
Mercari hitting secondhand stores by attracting older customers
Lawson adds real time inventory system and self-checkouts

Brands and Retailers mentioned in this Issue: