October 2019 Top Stories

Oct 06

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

Instagram

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


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