September 29 2022

Japanese department stores: survival of the few

Highlights from JapanConsuming monthly report

News and Analysis on Japanese retailing and consumers

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September 2022 Issue

E-commerce 2021-22: another high growth year

E-commerce sales of physical goods jumped nearly 9% in FY2021. Although this was well down on the pandemic-induced surge the year before, it is still higher than in any year since 2016 and leaves the sector well on track to become the largest single format channel. Total sales finished above ¥20.6 trillion.

Editorial: E-commerce now and tomorrow

Amazon acquires stake in @Cosme

Japan’s cosmetics market is the focus of attention from many large international businesses thanks to strong sales and new growth businesses. The latest is Amazon, which is to become the biggest shareholder in iStyle, providing a major boost to the @Cosme operator. iStyle, meanwhile, plans to offer cosmetics brands the chance to open popup stores within its retail chain for fixed monthly fees.

Itochu grabs Eddie Bauer and Barbour

A few years back, Itochu Shoji announced its intention to aggressively grow its brand business. It has just confirmed deals with Eddie Bauer and Barbour after a year in which it also signed Reebok and Under Armour.

Rakuten’s netsuper expands with new partners

The battle for online food sales continues to heat up, with Rakuten and Amazon squaring up to challenge for supremacy. Although Amazon has signed two of the largest names, Life and Valor, Rakuten is quickly catching up, last month adding Comodi-Iida to existing members, Seiyu, Beisia and Inageya. Other supermarket chains are already preparing to sign-up with Rakuten.

Chrono 24 comes to Japan

Chrono 24 is a leading online luxury watch marketplace. In July, it set up its own subsidiary in Japan to better serve the market here, but it may be launching just as the bubble bursts.

Premium supermarkets using SPA to develop their own brand lines

There are too many supermarkets in Japan and the sector suffers from a lack of variety and differentiation. To fix this, premium supermarket chains are now building their own production and import capabilities to increase originality, while also providing new opportunities for foreign brands and manufacturers. Premium chains are also growing at a pace that could begin to challenge even some of their larger rivals.

Tracking reduces repeat deliveries

The number of packages delivered to residential addresses jumped to 4.95 billion in 2021, an increase of 2.4%, but Japan’s major couriers have still managed to make great strides in reducing repeat deliveries and improving customer service. Customers have got onboard and more now use tracking services so that they know exactly when a parcel is likely to arrive.

Staff Start operator considers IPO

Staff Start has become a ubiquitous tool for retailers selling online, offering a way to make the best use of shop staff across both stores and e-commerce. Its success – it had GTVs of ¥130 billion last year – may mean an IPO, with funds being used to extend services and open overseas.

Major wholesalers up 2.8% in 2021, but problems looming

Major wholesalers in food, pharmaceuticals and books continue to prosper due to their role in both serving and protecting fragmented distribution channels. Profits returned last year as clients picked themselves up after Covid, but as inflation sets in, these middlemen are being squeezed by both manufacturers and retailers and need to offer an ever increasing array of value-added services to continue to grow.

Zozo creates fashion production service for retailers

Zozo has bounced back in terms of revenue growth from the nadir it reached when its founder was losing interest and the company lost its way. At the time, it also lost the confidence of some of its key merchants and this has taken longer to return. A series of new services designed to support merchants and expand Zozo’s reach look set to bind merchants ever closer to the online fashion platform.

Yahoo to merge with PayPay

Z Holdings’ created PayPay Mall to offer a more reliable e-commerce platform to compete with Amazon and Rakuten but has struggled to create a clear differentiation from Yahoo Shopping. It will now merge the two operations and create tiers of merchants within the one mall based on reliability.

FOCUS:

Department Stores: some recovery but plenty of work still to do

Department stores managed a partial rebound in 2021-22 but remain around 19% behind pre-Covid levels overall. As a result, profits remain elusive and the shake up in the industry continues. A shake up is good news: more dysfunctional stores are being closed, meaning that what funds are available can go into improving viable stores rather than propping up white elephants. On the plus side, luxury sales continue to surge and management is now more engaged than for years, while ideas to generate higher sales and, above all, higher profits are being implemented, with particular attention on the wealth market, more directly managed fashion, and slightly more dynamic sales floors.

Tokyo department store sales up 17.6% in July

IN BRIEF

PPI records 33rd year of growth

Hotel Chocolat Japan to restructure

Mall openings rise again, sales up in July

Hermes opens first beauty store

Yahoo! Mart retail stores open

PayPay claims 60% share of payment market

Oisix introduces quick-cook meal kits

Takashimaya selling companion robots

Premium Outlet Fukaya to open with charming vegetables

Wefabrik expands clothing collection at retailers

Hibuya Park redevelopment

Ginza Six to add more luxury stores

Parasol sales boom as weather heats up

Popup shops for luxury foreign brands in Sapporo

Product introduction videos most effective on social media

Ito-Yokado netsuperoffers click and collect at Seven Eleven stores

Montbell expanding tourist destination stores

Gucci loses trademark claim

Oisix wants a 33% stake in Shidax

Nitori goes digital

2nd Street continues expansion

Arc’teryx plans expansion

Nursery school places continue to increase

Mitsui Fudosan to open combined LaLaport and Outlet mall

ABC Mart starts omnichannel

GU to open popup store in New York

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