February 2020 Top Stories

Feb 03

Key stories in this month’s issue of JapanConsuming, the essential monthly analysis and data update on Japan’s retail & consumer markets:

Merchants battle with Rakuten over new terms
Rakuten has been working hard to catch up with Amazon on customer service but, to do so, it has had to impose new disciplines and costs on its merchants, including free shipping on some orders. Merchants, initially resigned to their fate, have now begun organising, forming a union and fighting back by appealing to the Fair Trade Commission. If Rakuten loses, other malls may face the same rebellion but Rakuten’s CEO says the new measures are necessary to combat globalism.

Editorial: Drugstores enter the ¥1 trillion stakes

Tourists up 2.2% in 2019 but spending up 6.5%
Visitors to Japan may have dropped off in the last few months of last year – and could fall away even faster given the implications of the Coronavirus – but overall, more tourists still came to Japan in 2019 than ever before, and also spent more too.

Outlet malls expecting record sales in 2019, moving up market
Malls in general face increasing pressure as shopping shifts online and customers look for instant gratification. For outlet malls, which are mostly located away from other major shopping areas, the challenge is doubled by the need to get customers to travel. So far, though, the sector remains buoyant and 20 years since Gotemba first opened, both Mitsubishi and Mitsui are introducing new and higher end brands and services to make a visit more worthwhile.

Kintetsu: hybrid stores replace department stores as profits lift
Kintetsu runs the fifth largest chain in the department store sector and the largest with no presence in Tokyo. Last year, its HQ store in Abeno outperformed all stores in the top 30, and primarily because it is now run as a shopping centre in a hybrid model. Kintetsu is now applying the same model throughout its chain.

LINE Shopping: a ¥200 billion non-shop shop 
LINE Shopping has become one of the biggest generators of e-commerce transactions despite not being an online store. Since launching 18 months ago, it has built GMVs to ¥200 billion and, from next month, will add more SMEs through a tie up with GMO.

Goldwin: a store in San Francisco and then the world
Goldwin has been one of the strongest performers in the sports/outdoor market in the last three years. Key to its success has been The North Face and other licensed brands, as well as its willingness to invest heavily in retail stores. Goldwin now has big plans for the Goldwin brand itself, hoping to create a global premium outdoor brand based on Japanese R&D.

Payment wars continue: Mercari acquires Origami
Origami, the only independent mobile payments provider, will sell to Mercari and merge its systems with Mercari’s own Merpay service. Origami has scored a couple of major successes since launching in 2016 but, after the recent consolidation among the biggest players, it realised it couldn’t scale fast enough on its own. Even with Origami, Merpay remains one of the smaller players in the market.

Workman quits Rakuten
Workman is the first major brand to leave Rakuten’s online mall in response to the new flat rate delivery pricing due to go live on the mall in March. Workman is concerned about the cost and inflexibility of Rakuten’s system, so it sees this as the perfect opportunity to build a new online channel that better promotes its stores on the roadside and that services the needs of its franchisees.

GU on path to renewed expansion
After a drop in operating profits last year, GU has recovered momentum with more stores, investment in e-commerce and new brands. The Fast Retailing subsidiary has also begun to shave away costs in its supply chains to pare down prices further and improve efficiency and sustainability.

Convenience stores: tougher trading
The convenience store sector is arguably Japan’s strongest and most creative. It has grown while other sectors have suffered but, while food sellers have generally had an easier time following the October consumption tax increase, results at the biggest CVS chains were still disappointing in December. For the first time in 14 years, store numbers fell and, worryingly, customers are spending less.

K’s Denki: thriving in the suburbs
Consumer electronics retailer K’s Holdings has had two excellent years by pursuing a policy that its rivals have all but abandoned. It has cut its range down to concentrate on home appliances, removing more technologically fast moving gadgets, while focusing on large stores out in the suburbs. Despite this success, it faces market saturation.

United Arrows fixes e-commerce, moves into China
After the debacle of its failed e-commerce launch in September, United Arrows has created a dedicated e-commerce and digital division with its own direct reporting to senior management. The move is all the more urgent as the select shop retailer looks to expand into China.

FOCUS:
Drugstores: with maturity comes marriage

The drugstore sector is about to consolidate more rapidly than at any time in its history, with big implications for the cosmetics, medicines, food and toiletries industries and, among retailers, worries for supermarkets and convenience stores. The imminent merger of Matsumotokiyoshi and Cocokara Fine will trigger a wave of other mergers among competitors big and small, creating a modernised sector with huge buying power across many product categories. In food in particular, this buying power is already causing headaches for retailers in regions like Kyushu where drugstore discounters are strong and this trend will play out across Japan over the next few years.  While the drugstore market may not grow, its leaders will.

Monthly Retail Data: Incomes up but consumers not spending it

IN BRIEF
Matsumotokiyoshi and Cocokara Fine confirm mega-merger in drugstores
Mixed results for 2020 New Year Sales
Tod’s Japan opens new Ginza flagship
Snow Peak signs 50-store deal with Korean firm
Can Do profits drop sharply on flat sales
NEWoMan in Yokohama with Gucci, Tiffany, Burberry and Balenciaga
Dr. WU comes to Japan
Timex ties with Ueni
Men: more house work please
Louis Vuitton opens biggest Japan store
Patagonia gives staff Wednesday off
Samantha Thavasa does cosmetics
Tokyu creates new lifestyle chain, +Q Style
JINS ties with environmental group
Japanese chains shutter stores in China due to Coronavirus
Department stores down 2.2% in 2019
Locondo misses targets
Mitsubishi Estate to invest ¥700 billion in Yurakucho and Tokiwabashi
Hankyu Umeda targets wealthy in latest update
Japan bankruptcies rise due to labour shortage
Aoki closes Aoki Tokyo chain
Food producers warn of lower profits
Itochu meeting growing demand for artificial meat products
Rakuten building brand in USA
Seven Eleven hits 70,000 stores globally, buys more in USA
Easy courier services for tourists

Companies and Brands in this Issue

Actus

Aeon

Aesop

Ain Holdings

Air BNB

Amazon

And Lovely

Aoki Holdings

Apple

Aratana

Asahi Group Holdings

B-Style

Balenciaga

Baycrews

Bianchi

Bic Camera

Bovet

Burberry

Can Do

Canterbury

Cawachi Yakuhin

Christian Louboutin

Chubu Yakuhin

CIAL

Coca-Cola

Cocokara Fine

Cohen

Converse Tokyo

Cosmos Yakuhin

Costco

Cupie

Daiei

DCM Holdings

Direx

Disney

DKSH

Dr. WU

Drug Eleven

Dyson

Earth Ship

Ebates

Edion

Evergreen

Facebook

Familymart

Fast Retailing

Fuji Yakuhin

Gap

Genky

Google

Green Label Relaxing

GU

Gucci

H2O Retailing

Hakuhodo

Hanes Brands Japan

Hankyu 

Hapycom

Harukas

Hello Kitty

Helly Hansen

Henry London

Isetan Mitsukoshi

Ito-Yokado

Itochu

Itoen

Japan Chain Drugstore Association

Japan Tourism Bureau

Jaxa

JINS

JR East

JR Kyushu

KDDI

Kintetsu Department Store

Kisarazu Outlet Park

Kokumin

Komeri

Konaka

L Capital

Laurent Ferrier

Lawson

LINE

Locondo

Loft

Lotte Department Store

Louis Vuitton

LVMH

Maji Treats

MakeShop

Matsumotokiyoshi

Matsuya

Mercari

Mercedes Benz

Merpay

Mitsubishi Estate

Mitsui Real Estate

Mixmania

Moleskine

Mountain Athletics

Muji

Nichifutsu Boeki

Nihon Chozai

Nippon Access

Nippon Kotsu

Nissen

Nitori

Nojima

NTT Docomo

Odakyu

Off-White

Origami

Orihica

Otsuka Kagu

Otsuka Seiyaku

Parco

Patagonia

PayPay

PayPay Mall

Pigeon

Ponta

Poplar

Q Style

Qol

Rakuten

Rakuten Express

Recruit

Saint Laurent

Samantha Thavasa

Saniku Foods

Sanrio

Seijo Ishii

Seven Eleven

Shimamura

ShinQs

Shopping Go

Snow Peak

Softbank

Spiber

Sugalabo V

Sugi

Sundrug

T-Joy

Thom Browne

Tiffany

Timex

Tod’s

Tokyu Hands

Tsuruha

Ueni Trading

Uniqlo

United Arrows

Uny

Valor

Versace

VF Corporation

Wakayama

Walmart

Welcia Holdings

Woolrich International

Workman

Yahoo

Yakuodo

Yamada Denki

Yodobashi Camera

Z Holdings

Zara

Zozo

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