May 2019 Top Stories

May 05

FOCUS:
Consumption Trends Review: higher wages good for value retail, luxury and, hopefully, the future
Wages and salaries finally began to rise in 2017, and consumption expenditure picked up in 2018 but, at the same time, consumer confidence began to dip as households became increasingly wary about the appearance of long threatened price inflation. When prices did begin to rise in mid- to late-2018, and with a second consumption tax hike due in later 2019, households at all income levels began to put their newly increased incomes into savings rather than into retailer’s cash registers. As a result, Japanese households have plenty of money to spend when the enticement is right, especially when retailers offer originality, variety and value.

Zozo: No More Thank Yous and less profit too
Zozo is in crisis mode – taking flack from merchants, suppliers, customers and investors. Last month the online mall announced the end of its disastrous Zozoarigato scheme only four months after launch, a major retreat on the Zozo private brand, and even a dose of humility in its reaction to merchants’ anger. This may not be enough to tackle the headwinds coming its way.

Editorial: Tapping into the savings mountain

Mercari GMVs surge 45.3%
The biggest CtoC platform had another storming first half year to December. It is expanding its network with new acquisitions, and continually adding new technology to attract more, and more diverse, customers.

Workman: 68 Workman Plus stores in 2020
Workman is intent on taking on Decathlon in the domestic market and created the Workman Plus chain to do this last September. It has already opened 14 stores since then and will expand to 68 by this time next year. Stores converted from the Workman brand have increased sales as much as 45%, adding fuel to Workman’s enthusiasm for its new consumer business.

Ito-Yokado: yet more losses
Seven & I’s main GMS chain, Ito-Yokado, announced its fifth loss in five years last month, down another ¥1 billion compared to last year. The chain was always positioned above the middle market and remains relatively expensive and consumers now have far more, and often cheaper, choices. The chain has been floundering for years, but performance is now only getting worse. Mores stores will need to close.

Matsukiyo and Cocokara Fine tie to shake up drugstore sector
Two of the country’s largest mass market drugstore operators announced talks about a new tie-up last month. If it happens, Matsumotokiyoshi and Cocokara Fine will jointly run a drugstore operation more than a third larger than any current rival. In this fast developing sector, such a move will not be taken lying down by rivals and could well stimulate a rush of similar tie-ups over the next year.

Stripe launches new fast-growth chain, focuses on ethics
Stripe’s relentless growth over the 10 years to 2015 came to an abrupt halt as its core chain, Earth, Music & Ecology plateaued. Since then, Stripe has launched a plethora of new projects with mixed success. One of its best is American Holic, which has grown to 100 stores in just two years and the fashion retailer has now launched a new chain which it hopes to expand as quickly, in time for a planned IPO in late 2020.

Household numbers down 5% by 2040, a quarter over 75 years
The number of households in Japan is set to peak in the next few years, then begin to fall, with even larger proportions of older households and single households. The rate of change continues to increase from forecast to forecast, and the likely consequences for Japanese society, including consumer services of all kinds, will be profound.

J-Front shifts to hybrid store model in new buildings
J-Front Retailing plans to turn over a large chunk of its Daimaru Shinsaibashi store to tenants after it reopens this coming Autumn. It will also install Parco to manage the neighbouring annex building, which will reopen in 2021. Together the two buildings aim to target a much broader set of customers than a standard department store. Where warranted, J-Front also plans new, standalone shopping buildings with local appeal. The first of these opened in Kyoto last month.

Adastria sales flat but profit surges
Adastria spent the last year consolidating rather than expanding, concentrating instead on scrapping loss-making stores and fine-tuning supply chains and digital operations, with a very positive impact on profitability. While it only expects to grow fractionally this year, the fashion retailer claims it has reached a turning point and will start growing faster again from 2021 thanks to more flexible merchandising models and new brands.

Government forces CVS rethink
24-7 operation in convenience stores is suddenly a big issue. With even the government backing change, the big three convenience stores operators have no choice but to revise their franchise contracts. The labour shortage crisis will impact all parts of the distribution system in the next five years and become a major issue for all non-Japanese consumer goods businesses too, however they are structured here.

Tokyo Base on track again?
Until recently, Tokyo Base was growing by 40-50% a year, but hit a wall in 2018. The fashion chain, which focuses entirely on Japanese brands and sources, believes it has fixed the problems in its core chain and online brands and will regain its previous momentum.

Retail Data: Department Store Sales up in March – just

IN BRIEF
Gap to close Harajuku store
Itochu signs Brooks sports shoes
Bell & Ross buys Japanese distributor
Tiffany unveils stunning concept store
Samantha Thavasa founder resigns
Parco revenues fall but 29% increase due this year, Gucci and Loewe in Parco Shibuya
Nitori to accelerate expansion at home
Itochu invests in Milleporte online flash sale site
Tokyu Malls sales surge 45%
Levi Strauss to open new flagship in Harajuku, ties with Beams
Locondo GMVs up 48% but posts a loss
Loft launches cosmetics specialty chain
Fashion and interiors lead SC rollout
JINS up at home and abroad
Mash launches underwear brand
Renown: ¥3.9 billion loss
Sumitomo to open second Terrace Mall SC
2nd Street buys Ookura
More people switching jobs
Life opens new small store format, Miniel
Kusuri no Aoki opens new stores near Tokyo
Shibuya 109 unveils new branding

Companies and Brands in this Issue

Achilles

Adastria

Aegis

Aeon

Ahkah

Ain Pharamaciez

Amazon

American Holic

Anrealage

Aratana

B4F

Baycrews

BBF

Beams

Beisia

Belluna

BINO Todoin

Brooks Brothers

Buyma

Cartune

Chacott

Circle K Sunkus

Cocokara Fine

Cosme Kitchen

Cosme Loft

Craft Standard Boutique

Decathlon

Doctor Air

Don Quijote

DSquared

Ecostore

Egoist

Estnation

Familymart

FieldCore

Find-Out

Fray ID

Gap

Geo Holdings

Goldman Sachs

GU

Gucci

Hankyu

Honeys

Ito-Yokado

Itochu Shoji

Itoi Textiles

J-Front Retailing

Japan Imagination

Japan Post

JINS

KDDI

Koe

Kohnan

Komehyo

Komeri

Kusuri no Aoki

Lalaport

Laox

Lawson

Le Baigneur

Levi Strauss

Life Corp

LINE

Loewe

Lofcos

Loft

Lowry’s Farm

Lumine Est

Magaseek

Marc Jacobs

Martin Margiela

Mash Holdings

Matsumotokiyoshi

Matsuya

Mercari

Merpay

Miki House

Milleporte

Miniel

Ministop

N. Hollywood

Nihon Chozai

Nina Ricci

Nitori

NTT Docomo

Onward

Ookura

Pal Group

Parco

Parmigiani Fleurier

Qol

Rakuma

Rakuten

Renown

Rhizome

Right On

Samantha Thavasa

Sazaby League

Senteur Et Beaute

Seven Eleven

Shaddy

Shake Shack

Snidel

Softbank

Stripe International

Studious

Stylife

Sugi

Sumitomo Shoji

Sundrug

Tag Heuer

Takashimaya

Three F

Tiffany

TMD

Tokyo Base

Tokyu Malls Development

Tokyu Plaza

Tsuruha

Tutuanna

Underson Underson

Uniqlo

United Arrows

United Tokyo

Uny

Vendome Aoyama

Welcia

Workman

Wowma

Yahoo

Yogibo

Zozo

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