November 2019 Issue
The Online Fashion Wars: Rakuten takes on Z&Zozo
Z Holdings’ (Yahoo Japan) decision to accept Yusaku Maezawa’s proposal to buy his stake in Zozo has caused major ructions in the fashion industry and e-commerce. While Amazon continues to carve its own path and is building significant share, Rakuten was quick to respond to the threat of a powerful new competitor in “Z&Zozo”, with plans to build a ¥1 trillion fashion business in the next few years.
Editorial: Cutting weakness, focusing on wins
E-commerce causes deflation?
A recent report from the Bank of Japan suggests e-commerce is causing yet more deflation due to lower prices, increased competition, and retail stores keeping prices down to compete. Wages for part-time workers are increasing, pulling more people into the casual labour market, but salaries are only rising at a slow rate – not enough to spark inflation.
Z launches PayPay Mall
Z Holdings (Yahoo Japan) has unveiled its new hope to catch up with Amazon and Rakuten in e-commerce: PayPay Mall. Branded to appeal to a younger generation less attracted to the Yahoo name, PayPay Mall is a curated collection of merchants presented in a calm, muted UI, a world apart from the messy chaos of Yahoo! Shopping.
Adastria bounces back but omnichannel service delayed
Adastria seems to have found its groove again thanks to improved supply networks and product planning at its larger chains, Lowry’s Farm and Global Work. Same-store sales rose 4.6% in the first half but Adastria’s efforts to grow its direct e-commerce operations has been delayed. Like United Arrows, Adastria is learning that online retailing really does require different skills to operating stores.
Seven & I: slash and burn
Seven & I announced a large-scale restructuring exercise last month, with stores and even jobs due to be culled from across the group in an effort to cut costs and ensure profitability. The company has struggled to revitalise the poor performance at most of its subsidiaries, while record profits at Seven Eleven convenience stores allowed it to delay difficult decisions. Although more severe than previous culls, the latest round includes few ideas for new growth, and questions remain as to whether Ito-Yokado and other chains are really viable, even on a smaller scale.
Aeon pushes organic produce
Aeon is already Japan’s largest seller of organically grown vegetables by volume, making up around 1% of total vegetable sales at the retailer’s Aeon Retail GMS chain. It plans to expand this share to 5% by 2021 and last month established a new support venture to increase supply.
Nitori the fashion chain
Akio Nitori, the founder and chairman of the hit interiors chain of the same name, has been talking about diversifying into the fashion business for about five years but no one really believed him. With so much competition at the value end of the market, few considered there was an opportunity for Nitori to apply its undoubted skills in supply chains, merchandising and marketing to a market that has only grown in two of the last five years, but they will likely be proved wrong.
Sogo Seibu to close 30% of remaining stores
Sogo Seibu will undergo significant restructuring as part of the cull of Seven & I’s least functioning businesses. The department store has slashed the number of stores in half since the 1990s with just 15 today, but five more will now close, with one more converted to a mall. Other department stores have already earmarked 10 stores for closure in 2019, but Seven & I’s decisiveness will encourage even more.
Onward: 600 stores to close
Onward Holdings will slash the number of brands and stores in its portfolio over the next two years, following a now familiar strategy for Japan’s large apparel wholesaler-manufacturers. Onward, however, has a strength in e-commerce that may help it emerge smaller but a lot more profitable longer-term.
FOCUS:
Convenience stores: saturation bringing changes, but major chains continue to grow
The convenience store sector is today the single largest in retailing. Combining both merchandise and digital services, e-commerce generates more revenues overall, but for merchandise alone, the ‘conbini’ or ‘CVS’ sector is still ¥2 trillion larger. It is also the most concentrated of any in retailing, with just three major companies and, depending on how you look at it, the most profitable. There is every chance that the dynamic nature of convenience retailing, along with its close integration with Japanese work practices and society as a whole will provide room for further growth in the medium-term, but the current growth rate is about to slow. FY2019 marks the first reduction in new store opening plans among the top three chains for more than a decade, and investment is now shifting to existing stores and new ideas to ensure continued customer interest.
Retail Data: Jewellery sales up 103% in pre-tax hike shopping
IN BRIEF
Korean dispute means ¥70 billion tourist trade loss
LINE Shopping passes 30 million members
Dutch brand Denham acquires Japanese business
GMT to open first Japan store for GH Bass
Stylevoice online mall launches
Nishimatsuya Chain aims for 1,500 stores
Aoyama offers low-cost semi-bespoke suits
Ain opens ‘Beauty Factory’
Bic Camera breaks ¥100 billion online
Mitsukoshi Sakae under threat
Mitsui signs Canadian and Russian brands
Muji: sales up, profits down
Workman enlists brand ambassadors
Staff Start signs Stripe International, sales up three-fold
Dinos-Cecile invests in New Rope AI business
Sun sets on Sun Motoyama
Locondo launches try before you buy service
Uniqlo to open in Harajuku again
Yokohama Bayside Outlet Mall to re-open in April
Snow Peak opens in London
Merpay reaches 5m users, 1m added in 41 days
Levi Strauss Japan to delist
Ministop closes 220 stores
20% of consumers have just ¥10,000 to spend freely
Brands and Companies in this Issue
Adastria
Aeon
Agricreate
Ain Pharmaceuticals
Amazon
Aoki HD
Aoyama Shoji
Apple Mart
Aratana
Arctic Explorer
Barnyardstorm
Baycrews
Beams
Beauty Factory
Belluna
Bic Camera
Big A
Big Globe
Boni Moriya
Bose
Chacott
Chanel
Circle K Sunkus
Coco Store
Comfort Market
Daiei
Daily Yamazaki
Daytona International
Denham Japan
Diesel
Dinos-Cecile
DoClasse
Don Quijote
Dyson
Enoteca
Familymart
Fast Retailing
Field Dream
FitFit
Fonte Akita
GH Bass
Gibo
Global Work
Godiva
Good Spoon
Gucci
H2O Retailing
Haagen Dazs
Hermes
IKEA
Isetan-Mitsukoshi
Ito-Yokado
Itochu Shoji
Joseph
Joshin Denki
Joy Urban
JR East
JR West
Jun
Kashiyama The Smart Tailor
Keikyu
Keio Department
Kojima
Kokobuy
Komeri
Konaka
Lalaport
Lawson Bank
Laxus
Leilian
Levi Strauss
LINE
Little Star
Local
Locondo
Lohaco
Louis Vuitton
Mai Basuketto
Maruei
Maruetsu Petit
Marui
Mash Holdings
Mercari
Merpay
Ministop
Mitsui Bussan
Mitsukoshi
Muji
Nakasan
Nanaco
New Rope
Newdays
Nishimatsuya Chain
Nissen
Nitori
Nojima
Onward Crosset
Onward Holdings
Opening Ceremony
PayPay
Ponta
Qoo10
Rakuten
Reebok
Ryohin Keikaku
Save On
Secoma
Seibu
Seicomart
Senshukai
Seven Bank
Seven Eleven
Shimamura
Snow Peak
Sofmap
Softbank
Staff Start
Stylevoice
Stylife
Sun Motoyama
T-Point
Takashimaya
Three F
Topvalu
Trickers
Uniqlo
United Arrows
Universal Language Measures
Uny
Urban Research
Vanish Standard
Vanity Beauty
Venerable Ginza
Weejuns
Welcia
Workman
World
Wowma
Yahoo Japan
Yamada Denki
Yamazaki Bread
Yamazaki Daily
Yanagen
Yodobashi Camera
York Mart
Z Holdings
Zozo