March 2019 Top Stories

FOCUS THIS MONTH:
E-commerce: digital to influence 45% of all retail sales by 2025
E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical merchandise by 2023. However, recent research, which considers online sales in a store context, suggests that already in 2016-17, 35.3% of all retail sales were at least partly a result of online interactions through an omnichannel process. By 2024, total EC sales including omnichannel transactions are expected to hit 44.6% of all retail sales or approximately ¥76.4 trillion.

PPI confirms 100 Uny stores to switch to Donki-Uny branding
Pan Pacific International Holdings (Don Quijote) just opened its fourth store in South-East Asia, mixing Japanese restaurants and cafes with a Donki store and a range of Japanese specialty tenants. Back home, it is creating new small store formats while beginning the conversion of 100 Uny stores to mixed food and variety stores – the takeover means PPI is now Japan’s fourth biggest retailer, up from 15th just three years ago. These multiple ventures reflect the company’s flexibility, adapting to each local market’s needs, while its recent decision to close down its e-commerce business shows it understands where its strengths lie: in live store entertainment.

Editorial: Seamless, experiential retailing

Joor fashion marketplace coming to Japan this Autumn
Itochu is a major investor in US-based fashion and apparel marketplace Joor – regarded as the Amazon of the fashion wholesale business – and has now agreed to launch the service in Japan this Autumn. Joor is likely to be popular and will further extend Itochu’s influence in the fashion sector.

Onward sets sights on digital renaissance
Onward made a bold stand against price discounts in January when it announced plans to stop selling on Zozotown, but the timing was not ideal given it then confirmed sales for FY2018 would be lower than anticipated. With Zozo no longer a partner, Onward is investing in the growth of its own e-commerce business and has installed a new 50-person digital strategy group to make this happen.

Hankyu invests ¥1.75 billion in Hankyu Men’s Tokyo
Hankyu Hanshin has outperformed the department store sector in the last few years and continues to invest to lock in its dominance of the Osaka market. It is now about to unveil a major new update to its Tokyo store, creating a more luxury Men’s Emporium.

Uniqlo Japan’s most valuable retail brand
Interbrand’s annual valuation of top brands saw growing numbers of Japanese firms in retail and FMCG enter its global brand ranking. At home, online companies like Zozo and Mercari are also climbing the rankings.

Zozo loses its kingmaker
Zozo is going through the wars at the moment, despite continued growth in its core business. The problems are mostly self-inflicted and mostly stem from over-hasty decision making at the top. As a result of the latest mis-step, Zozo has lost a number of key merchants including Right On, Onward and, for consulting, United Arrows. Whilst this last move was expected, the timing could not have been worse. Although many firms will continue to sell through Zozo, the negative publicity has changed perceptions, with some now seeing Zozo’s future more as an outlet channel, reserving full price sales for their own online stores.

Customers afraid of delivery drivers
Deliveries that arrive when you’re out is one thing, but many Japanese worry about answering the door even when they are at home. Delivery lockers are becoming a common solution and more and more houses will install them in the next few years.

Isetan-Mitsukoshi unveils digitalstrategy
Two years ago, Isetan-Mitsukoshi attempted to reverse a strategy of shifting to small format retailing in an effort to avoid closing department stores, but last year realised culling stores was the only way to revive profit growth. Now it is diversifying again but, instead of small stores, it is planning a big investment into e-commerce with a projected ¥145 billion in sales from personal styling alone.

Convenience stores: shorter hours
Today almost all the 50,000 stores run by the big three convenience store chains operate 24-hours a day, but franchise owners everywhere are struggling to find enough staff. Last month, the owners’ union of the biggest chain, Seven Eleven, issued a demand that each store be allowed to set its own hours. This move has implications for a retail industry struggling with labour shortages and higher part-time wages.

Descente and Itochu: gloves off
Last month Descente rejected Itochu’s tender offer to take over the sportswear firm, saying it would fight for its independence. Itochu insists it is the answer to Descente’s weaknesses and has cancelled talks, instead bringing out its ally, Anta, to support its claim – together Anta and Itochu control nearly 40% of Descente.

Electronics set for major boost
Consumer electronics sales have struggled since 2014, with 2018 proving a rare respite from decline as sales remained flat. The consumption tax increase in October, along with some other factors, means the market is expected to grow this year, but it could be a while before that happens again.

Retail Data: City centre malls in the red

IN BRIEF
Look hopes for sales of ¥50 billion in 5 years
Parco Kumamoto and Utsunomiya to close
New Zealand toiletries brand Ethique launches
Ripndip opens in Harajuku
Sanyo Shokai expects profit this year – again
Yahoo e-commerce profit falls 30% as sales rise
Nitori to review China plans, considers M&A
Bio C’Bon gets family support
Locondo to acquire Mobakore from Senshukai
CPI up 0.8% in January
Zett signs Thule with Itochu
Senshukai books ¥4 billion loss, sharp drop in sales
Tokyo Midtown up 10%
Lanvin sales stable for Itochu and licensees
Right On expects loss this year
Aoki launches custom suit chain
Kirin: stronger booze
L’Oreal opens 3rd store for NYX
Muji Ginza to open in April
Chain stores down in January