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Key stories in this month’s issue of JapanConsuming, the essential monthly analysis and data update on Japan’s retail & consumer markets:
Yahoo and Zozo: creating a digital conglomerate
The takeover of Zozo by Yahoo could be a win/win for both firms. Some worry about Zozo brand dilution but the potential benefits outweigh the negatives. Softbank and Yahoo’s databases should help Zozo expand and a private brand relaunch would have a much greater chance of success, both at home and abroad. For Yahoo, the deal means a leg up to its efforts to build an e-commerce platform to compete with Rakuten in the race to become the first digital conglomerate covering e-commerce, points, payments and mobile – a true e-commerce ecosystem.
FOCUS:
Fashion Retailing 2018-19: A stable market but tougher trading all round
The apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online channel. The large store formats suffered the worst but a number of major specialty chains also posted lower sales. In e-commerce, even Zozo suffered its lowest sales growth in several years. The reasons are clear: consumption of apparel fell again last year while other categories like home interiors, food and communications rose. At the same time, the leading specialty retailers face saturation in some product categories and territories. As a result, e-commerce share continues to grow as does that of the biggest firms – the top 10 apparel retailers saw their share increase 3 points in a year to 30%. However, retailers with fresh ideas and strong marketing to back them up continue to outperform, a reminder that the fashion market is perennially dynamic and adapts to new market realities.
Editorial: Conglomerations
Tourism: 34m expected this year
Japan’s tourist boom continues and the current Rugby World Cup and next year’s Tokyo Olympics should ensure there is no immediate downturn. The trouble is, spending is flat and, at department stores, footfall has declined significantly, and the recent political issues involving South Korean and Hong Kong visitors demonstrate just how unstable this supplemental market is.
Familymart installs first Amazon delivery lockers
A Familymart store installed the first set of Amazon Hub Locker delivery lockers in September. Amazon will roll out its new lockers to other Familymarts, supermarkets and some railway stations in Tokyo in the coming months. The growing level of competition between Amazon and Seven Eleven and, to some extent, Yamato Transport, should lead to a rapid roll out of lockers from multiple providers.
E-commerce sector increases retail share in 2018
As expected, e-commerce continues to grow strongly. Already close to 40% of all transactions take place through smartphones and continued growth of this one touchpoint will spur faster growth in the online channel as a whole. Penetration remains low in food but 2018 saw large jumps in EC share for media, office supplies and consumer electronics.
Belluna opens first stand alone store
While Nissen and Senshukai shrink further, Belluna stands out as one of the few direct marketing firms that is actually growing. This is partly thanks to its chain of physical stores.
Sanyo Shokai: 20 stores for Spanish brand Ecolaf by 2021
Sanyo Shokai continues to struggle with declining sales since losing the licence for Burberry four years ago. As well as investing in its own fashion labels, Sanyo is also looking for overseas brands to distribute. The latest is Ecolaf from Madrid.
Outdoor market jumps 7.5%, Workman aims for leadership
The outdoor market is one of the few really bright spots in the discretionary consumer economy. For the last five years, it has expanded quickly as consumers buy into the outdoor lifestyle both in the countryside and on the streets of Aoyama. While big names like The North Face continue to benefit, there is a new battle going on at the value end of the market and Workman, the former retailer of workwear, is determined to win it.
Denim retailers retreat further
Uniqlo and other big specialty chains now dominate the denim mass market. While the better brand names like Levi Strauss continue to thrive, the old denim-based casual apparel retailers like Mac House, Right On and Jeans Mate have suffered year-on-year declines. All are trying to fix this but the going is hard.
Wholesale modernisation could kill off indie retailing
Larger wholesalers continue to provide a high value service that massages relationships in the supply chain. The top companies had yet another good year in 2018, but there are clear signs that things are about to change – a lot. As these behemoth firms race to reduce over reliance on labour in the supply chain, the role of small wholesalers will disappear, which in turn will further decimate independent retailing.
Higher consumption tax slides smoothly into place
The consumption tax was raised from 8% to 10% at the beginning of October, five years after the government reluctantly raised it from 5% to 8%. This time around, the lower, 2 point increase, backed by experience gained in 2014 and a much more confident retail industry as a whole, should all contribute to a smoother transition for the majority. Many businesses are expecting a relatively short and shallow spending downturn in the weeks to come.
Suits and handbags: Konaka and Samantha Thavasa tie the knot
A roadside retailer of suits for older salarymen buying an erratic brand of fashion bags doesn’t sound like a recipe for success, but there is a glimmer of potential in the recent announcement of a tie up between Konaka and Samantha Thavasa.
Retail Data: Department stores up 2.3% in August
IN BRIEF
Baycrews aims for ¥300 billion
Forever 21 quits Japan
Eslite Spectrum opens in Coredo Moromachi SC
Muji aims for 100 US stores by 2025
Descente: 3-fold growth in China
Yamada Denki ties with Otsuka Kagu
Stripe helps regional department stores online
E-commerce platform Base confirms IPO
Aeon signs Yves Rocher
Locondo up 58%, launches own brand
Kintetsu and Mitsui: mall divestment
L’Oreal agrees partnership with @Cosme
Charmant opens Ginza flagship
Prices still rising, but rate slows
Tsutaya brings Taiwanese tea to Tokyo
Don Quijote opens in Hong Kong
Costco introduces premium membership option
Ain opens Ayura flagship store in Ginza 11
H&M to open online store for Cos, ties with LINERenown: Aquascutum and D’Urban sales to jump 50%
JR East to open Atre in Takeshiba Station in 2020
Itochu signs Ecko Unltd
@Cosme to open flagship store
Rakuten Superpoints promoted to restaurants
Aeon joins global initiative to reduce food waste
Companies and Brands in this Issue
Acme Furniture
Adastria
Aeon
Ain Pharmaciez
Ainz Tulpe
Alibaba
Alpen
Amazon
American Holic
American-style
Anta
Aoki
Aoyama Shoji
Aquascutum
Arnold Palmer Timeless
Askul
Atre
Ayura
Azul by Moussy
Bankan
Baroque Japan
Base
Baycrews
BBVola
Beams
Belluna
Boice
Burberry
Cabin
Carrefour
Casino
Cecil McBee
Chanel
Charmant
Chiyoda Group
Chori
Coach
Cocokara Fine
ComeBuyTea
Coredo Moromachi
@Cosme
Costco
Cox
Daiei
Descente
Don Quijote
Doshisha
Dyson
Ecko Unltd
Ecolaf
Edifice
Eggslut
Eiko Holding
Epoca
Eslite Spectrum
Eyethink Hirob
Familymart
Fast Retailing
Forever 21
Fuji Citio
Geera
Givenchy
Gurunavi
H2O Retailing
Hankyu
Happinet
Haruyama Shoji
Hermes
Honeys
IC Net
Iconix Brand Group
Idee
IKEA
Ito-Yokado
Itochu Fashion Systems
Itochu Shoji
Itochu Shokuhin
Izumi
Japan Imagination
Japan Post
Jeans Mate
Jo Malone
Journal Standard
JR East
JR Tokai Takashimaya
JS Furniture
Kato Sangyo
KDDI
Kokubu
Konaka
Lawson
Levi Strauss
LINE
Locondo
Loft
Lohaco
Louis Vuitton
Loveless
Mac House
Mackintosh London
Marui
Mash Holdings
Medipal Holdings
Mercari
Mitsubishi Shoji Fashion
Mitsubishi Shokuhin
Mitsui Real Estate
Mitsui Shokuhin
Moussy
Mujirushi Ryohin
Neopost
Nihon Shuppan
Nippon Access
Nishimatsuya Chain
Nissen
Nitori
NTT Data
NTT Docomo
Odakyu Railway
Oisix
L’Oreal
Otsuka Kagu
Otsuki Pearls
Outdoor Products
Pal Group
PayPay
Picard
Prada
Rakuten
Ranan
Renown
Right On
Rizap
Ryohin Keikaku
Sabon
Sagami Holdings
Samantha Thavasa
Sanyo Shokai
Sazaby League
Scroll
Selcy
Seven Eleven
Shaddy
Shimamura
Shiseido
Shopify
Sly
Snow Peak
Softbank
Stripe Department
Stripe International
Suzuken
T-Point
T-Site
Takashimaya
The North Face
Tokyo Base
Tokyu Hands
Tom Ford Beauty
Tsutaya
Tutuanna
Uniqlo
United Arrows
Uny
Urban Research
Village Vanguard
Walmart
Welcia Holdings
Workman
Yahoo Japan
Yamada Denki
Yamato Transport
Yodobashi Camera
Yoshinoya
Yves Rocher
Yves Saint Laurent
Z Holdings
Zoff
Zozo