March 3 2022

Seven & I sells Sogo Seibu to Fortress

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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February 2022 Issue

Seven & I to sell Sogo Seibu Department Stores

Numerous reports indicate that Seven & I is preparing its Sogo Seibu department store subsidiary for sale. This follows years of calls from major investors to dispose of underperforming assets at Japan’s second largest retail conglomerate. Although it is a step forward, Seven & I still has many problems to solve in its domestic business.

Editorial: International brands and more M&A

How do the young shop?

Gen Z – those born between 1996-2015 – are famously less acquisitive than previous generations, often happier to rent and buy used or just go without. While social media usage is mostly just to pass the time, when they do shop, they also do research, especially on Instagram and YouTube according to a new survey. However, a separate survey shows that Amazon is the most popular source for product information among the under 35s and online customers are more open to trying new brands than store customers.

Can Do to double stores in 5 years – and boost profits too

100 Yen shops have started to expand more rapidly after several tougher years dealing with the twin problems of labour shortages and higher wages – a particular issue for fixed price retailers. With more flexible pricing models and high demand for discount retailing, there is optimism again. Aeon, now the owner of Can Do, plans to double the size of its new acquisition and spread its merchandise across the Aeon empire.

Growth in cashless payments surges

Analysts are expecting figures for 2021 to show further accelerated growth in the use of mobile payment apps, exceeding 10% of all cashless payments for the first time, and for cashless payments to exceed 30% of all consumer transactions. Full figures are not yet available for the year but surveys suggest consumers rapidly increased their use of mobile payments and are even expressing frustration when the service is unavailable.

World buys Narumiya

World is desperate to diversify its portfolio and find new growth assets as it continues to slash the non-performing parts of its sprawling business. While childrenswear might not seem like a growth market, there are still opportunities, including at the premium end, explaining the rationale for its acquisition of Narumiya International.

Frozen food sales boom

Japanese are developing a growing love for frozen foods, meaning more opportunities for imported brands. Frozen foods were long overlooked within the supply chain because of a traditional emphasis on fresh foods, but as supply has increased consumer demand has grown to match and now, with the growth of e-commerce sales and home delivery, frozen foods offer key advantages to both consumers and retailers.

More brands in Japan as virus wanes

When the pandemic hit, many overseas brands put plans for Japan on hold and local distributors also paused new signings while waiting to see what would happen. With an end in sight and home markets still quiet, more brands are coming to Japan again, particularly in the outdoor and sports categories.

Welcia to acquire Kokumin

Last month, Welcia announced the acquisition of Kokumin, the 30th ranked drugstore that runs a well-respected chain stretching across the country. As the newly formed Matsukiyo Cocokara group continues to struggle, another year of high growth means Welcia will be only marginally behind the top ranked firm when FY2021 results come in. Overall growth in the drugstore sector remains strong and could even overtake convenience stores in the near future.

Familymart, the lifestyle store

Thanks to the huge supply chain capabilities of its parent Itochu Shoji, Familymart is moving into new categories of private label product, including apparel and cosmetics. Recent results show successful collaboration with Noin for cosmetics and with Hiromichi Ochiai from Facetasm for clothing basics. 

Lawson expands into takeaways

Lawson will begin offering made-on-demand meals direct from its convenience stores. Suitable stores are being renovated to include in-store kitchens, with 100 planned for completion by this time next year and 1,000 by 2025, with home delivery handled by companies like Uber Eats. Most other chains offering made-to-order meals are small, so Lawson could well take a large share of this growing market.

Marui: 70% of tenants to be non-merchandise

Marui is increasingly ethereal. While seen as a shop building operator, Marui is still true to its service origins as a consumer finance business. Now even its buildings are increasingly devoted to non-stuff with the company aiming for 70% of tenancies to be selling things other than merchandise by 2025.

LINE Gift up 330% in 2021

LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year. 

FOCUS:

E-commerce: omnichannel retailing becoming the norm as sales surge in 2020-21

E-commerce grew rapidly in 2020-21. People avoided going to stores so vendors of all kinds ramped up their online offer, and people who had never shopped online before discovered just how easy it is to shop digitally. We are now riding a wave of change as retailers integrate the e-commerce channel into their businesses, increasingly approaching a true omnichannel model. And this is important in Japan because, although e-commerce penetration appears low, this overlooks the importance, convenience and ease of access to physical shops. By 2023, e-commerce will be Japan’s single biggest retail channel, but it will be built on top of the physical retail offer – although one that will look quite different to what we have today.

DATA SPECIAL: 2021 Retail Results by Format

2021 results are now becoming available from the major trade associations and the winner last year was clearly food and delicatessen foods in particular. Several sectors are still ahead of 2019.

IN BRIEF

Alpen to open 12,000 sqm flagship in Shinjuku

Rock Field’s online sales drive growth

Softbank and Stripe close Stripe Department

Household assets hit record levels

Valentine’s promotions target sustainable luxury

Bic acquires Janpara to strengthen secondhand business

Major new Nihonbashi development planned

T-shirt print service, Image Magic to list in March

20% of food retailers considering closure

Toy/games market up 34%

Gap opens popup store at Shizuoka airport

Mitsubishi plans major complex in Shibuya

Nitori closes Ginza store, expands Beams partnership

Meiji Koen to get PFI treatment

TSI ties with Wacoal

Shopping malls up 6% in December

United Arrows closes all inner station stores

GF acquires Java Group

Delivery robot trials enter 2nd phase

New Oisix DC hits problems

Muji Kitchen opens in Ikebukuro

Workman selling online-only camping ranges

Retail Data: Department stores up 8.8% in December

Companies and Brands in this Issue

Adastria, 1, 7, 16
Aeon Group, 5
Airy, 9
Alpen, 3
Amazon, 4, 16–17, 20–21
Amu Plaza, 23
Angel Blue, 7
Aoyama Shoji, 9
Askul, 1, 12, 17, 20–21
Atre Ebisu, 23
B8TA, 9
Baycrews, 16
Beams Design, 8
Bic Camera, 5
Cainz, 17
Can Do, 1, 5–6
Castore, 9
Cath Kidston, 11
Convenience Wear, 11
Cosmos Yakuhin, 10
Creema, 21
Crooz, 21
Daiei, 11
Daimaru Tokyo, 9
Daiso Sangyo, 6
DCM, 17
Demaekan, 12
Dentsu, 6
Disney, 8
ENEOS, 11
Facetasm, 11
Familymart, 1, 11–12
Fast Retailing, 16–17
Food Panda, 12
Gap, 8
Genky, 1
Geodis, 9
Haneda Airport, 6
Haruyama Shoji, 11
HokuHoku, 6
Holubar Mountaineering, 9
Hotel Koe, 4
IKEA, 17
Image Magic, 6
Isetan, 1, 5
Itochu Shoji, 7, 11
Java Holdings, 11
Joinus, 23
KDDI, 11
Keihan Mall, 23
Kokumin, 1, 10
Laura Ashley, 7
Lautreamont, 11
Lawson, 1, 8, 12
Locondo, 9, 21
Loft, 1, 3
Lohaco, 20–21
Lovetoxic, 7
Lowya, 17
Mackintosh, 9
Magaseek, 21
MakeShop, 21
Marui, 1, 13, 21
Matsukiyo Cocokara, 10
Matsuya, 1
McLaren, 9
Mercari, 6, 21
MerPay, 6
Mezzo Piano, 7
Mitsubishi Estate, 8
Mitsui Fudosan, 5
Mosburger, 11
Muji, 1, 12–13
Narumiya International, 7
Nippon Koei, 9
Nissen, 20
Nitori, 1, 8–9, 17
Noin, 11
Oisix, 12
Otsuka Kagu, 17
Parco, 1
Pepper Lunch, 11
Petit Main, 7
Qoo10, 21
Rakuten, 4, 12, 17, 20–21
Resona Wallet, 6
Rock Field, 3
Ryohin Keikaku, 13
Saizeriya, 8, 11
Seibu, 1, 5, 9
Seiyu, 17
Seria, 5
Seven Eleven, 1, 3, 6, 11–12, 20
Shopify, 21
ShopList, 21
Showfields, 9
Sofmap, 5
Softbank, 4, 20–21
Sogo Seibu, 1, 3
Sojitz, 9
Sopo, 11
Soundhouse, 17
Speedway, 1
Sports Depot, 3
Stripe Department, 4
Stripe International, 4
Takashimaya, 1, 5
Tansu, 17
Tete Homme, 11
TikTok, 4, 11
Tokyo Tatemono, 9
Tokyodo, 11
Toylo Park, 3
TSI, 9
Tsukishima, 11
Tsuruha, 1, 10
Uber Eats, 12
Ueno Shokai, 9
Uniqlo, 1
United Arrows, 1, 10
Vega Corp, 17
Wacoal, 9
Waon, 5
Welcia, 1, 10
Wolt, 12
Workman, 1, 13
Yagi Tsusho, 9
Yahoo, 4, 12, 20–21
Yamada Denki, 3
Yamato Transport, 21
Yoshinoya, 12
Yucho Pay, 6
ZHD, 20–21
Zozo, 20–21

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