March 17 2023

Rakuten fighting hard but Amazon now No. 2 retailer

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March 2023 Issue

Rakuten fighting hard as Amazon Japan becomes No. 2 retailer

The big online malls continue to grow at higher rates than many branded e-commerce stores, meaning consecutive annual gains in market share. But between them, Amazon’s lead now seems to be widening while Rakuten is also pulling ahead of Z Holdings, which continues to struggle with poor integration of disparate assets.

Editorial: Easy money, hard consumption

Inflation hits 4.2%, affecting younger generation the most

Japan’s consumer prices continue to rise at rates not seen in decades. February will bring some respite as the government’s gas and electricity subsidies kick in and, despite thousands of price hikes still to come up to April, Teikoku Databank recently found plans for only 94 increases in May. Some economists are optimistically predicting that inflation rates will slow by the summer. Meanwhile, younger households who have less savings are reducing spending to cope.

Iwataya opens Lounge S – a new space for the truly wealthy

Like all department stores, Iwataya in Fukuoka is keen to grow Gaisho services for its wealthiest customers. It already has special lounges for high spending customers and has now opened a new, invitation-only lounge for its top 300 clients, many of whom are under 40.

Shopping malls up 8.6% in 2022

Shopping malls closed CY2022 still down on 2019 but facilities in city centres managed to exceed 2019 levels in January and, overall, non-anchor tenants significantly outperformed anchor tenants as fashion and other tenants bounced back.

Zozo Next plans for 2040: climate, personalisation and inequality

Zozo Next has been tasked with coming up with new technologies and innovations to meet the challenges up to 2040, including offering more personalisation and digitisation in fashion to make buying more fun and intuitive, as well as combating climate change and poverty.

Food & drug: challenging supermarkets – and wholesalers

Drugstores were already the fastest growing format before Covid and the health scare only improved their performance further. Several of the largest chains are now powerful players in food, using their non-food base to shake up the supermarket sector in ways that Japan has never seen before. Being price-led, inflation is only helping them along.

Yamato and Sagawa increase prices

The big parcel couriers, Yamato Transport and Sagawa, announced price increases averaging around 10% last month. Unlike the last big hike in 2017, the latest round is in response to multiple external pressures such as increased costs and a growing labour shortage, but the constant growth in e-commerce demand remains the most significant factor.

Stripe to rebuild under new CEO

Stripe International, the fashion retailer, has been struggling after the fallout from the resignation of its founder following scandals around sexual harassment of staff, as well as a sharp fall off in sales at key chains. A new CEO, arriving from from Sumitomo, plans to go upmarket to seek better returns while investing more in e-commerce.

Oisix hit as people return to work

Oisix is Japan’s largest online food retailer but sales were flat in 1Q-3Q2022 as people returned to work and cooked less, and profits suffered as inflation brought increases in costs. The company’s US operation also shrank as fewer people bought food online, but other international subsidiaries and its expanded wholesale businesses at home all grew strongly.

Rakuten: 17% more points in 2022

Loyalty points offer a significant incentive for consumers when deciding where to buy, and with inflation biting, the big loyalty programmes are promoting points as a way to save on future purchases. Rakuten is by far the largest provider and enjoying strong growth, but others will try to steal share.

Samantha Thavasa attempts rebirth but losses continue

Once a major hit with young women, Samantha Thavasa has struggled to find relevance in the past five years despite an injection of capital and management from new parent, Konaka.

7Now available at 5,000 stores

Seven Eleven has finally installed its 7Now home delivery service at 5,000 stores and is well on the way to having its entire chain online by 2025. Rivals are doing the same thing through Uber Eats and other services, but Seven Eleven thinks its proprietary system will provide a long term competitive advantage once the entire chain is online.

Aeon wage increase for part-timers

Aeon will raise wages for its 400,000 part-time workers by 7% at a cost of around ¥32 billion a year. Analysts are hopeful this and other increases will help boost consumption, and Aeon expects the cost to be offset by digital technologies. Others warn that wage increases will only provide temporary relief for consumers.

Magaseek beats majors in survey

An NTT survey claims Magaseek has more loyal customers than its bigger online fashion rivals. The survey also shows that mobile apps are increasingly popular.

FOCUS: Supermarket sector under unprecedented strain

With food inflation exceeding 8% in December, prices have become the focus for all supermarket retailing. This is good news for those that are set up for price competition but it presents a serious challenge to the majority of chains. Without some relief from inflation and settling of consumer worries, 2023 could prove a watershed for the supermarket sector.

Retail Data: Savings at record high but dept. stores still up

IN BRIEF

Rakuten Zenkoku Super adds 2 more chains
Adastria makes Forever 21 more upmarket
Fast Retailing aims for productivity improvements
JAL to open online mall
Parco closes in Matsumoto but opens in Kyushu
Large developments in Shinjuku and Roppongi
Japan expects ¥200,000 spend per tourist in 2025
Stores offers app creation service
Tokyu signs collaboration with JR East
United Arrows lifts forecasts
Geo takes Japan used goods overseas
Another prefecture loses its last department store
Regional department stores collaborate to attract tourists
Tsutaya: 100 co-working lounges in 3 years
Lawson: supersizing to beat price inflation
Gift Market expands 4.1%
Yamada Denki adds furniture for movers
80% of teen women know the SHEIN brand
Snow Peak up 20% but profit falls
IKEA expands pickup points to 15
Asics up 20%
Grandfront to host 23 new tenants
Giftmall achieves GTVs of ¥15 billion
Crossbred beef replacing wagyu

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