JAPANCONSUMING

Japanese consumer markets decoded

OCTOBER 2010
year 11 | number 10

IN THIS ISSUE Back with a bang: Mitsukoshi

reopens in Ginza
Back with a bang: Mitsukoshi reopens in Isetan Mitsukoshi announced last month that it expected annual sales of ¥63 billion
Ginza............................................................ 1 from its newly expanded 36,000 sqm store in Ginza following the reopening on 11
Cross Company: a top 10 specialty chain in September. This is less than it made with just 24,000 sqm back in 2000, but with the
2015............................................................. 3 new store swamped with customers, is likely yet another deliberate understatement.
H&M sales double........................................ 3 The new store may not quite represent the department store of the future, but is a
Aeon to decommission Jusco brand............. 4 major improvement on what the sector has produced over recent years.
Amazon: No. 1 non-store retailer.................. 5
Isetan-Mitsukoshi reopened its flagship ulation within this area rose by 26% between
Sanei takes over Cath Kidston..................... 5
Ginza store in early September, generating mas- 2000 and 2010, and is expected to continue to
10 to15 stores for TopShop Japan .............. 6
sive interest from press and consumers alike. grow at a rapid pace thanks to the combined ef-
Lumine to get Seibu Yurakucho................... 7 The store has added a new annex building, tak- forts of the Tokyo government and local devel-
Marubeni: dark horse of food distribution..... 7 ing total sales space from 24,000 sqm to 36,000 opers like Mitsui and Nomura. The Mitsukoshi
109-2 goes men only.................................... 8 sqm at a cost of ¥4.2 billion. store introduced underground parking for 192
Itochu to merge wholesale subsidiaries........ 9 Originally opened in 1930, it was always too bicycles to accommodate local shoppers, along
Ciggie wars: nicotine boosts conbinis........... 9 small for the consumer flow in the Ginza area, with new baby changing facilities and a pre-
Parco to grow again – if Mori lets it............ 10 especially given competition from rival retail- mium baby sitting service – although only 12
Onitsuka Tiger the fashion brand............... 11 ers like Matsuya and Matsuzakaya just down babies are accepted at any one time.
the street. In addition to expanding sales space, Far more importantly, the annex introduces
Focus: Specialty apparel chains: Sales fall
the store introduces a host of new ideas, many 12 flexible merchandising areas (jishu henshu)
for 80%....................................................... 12
of them innovations for a department store. under the Ginza Style name, mostly targeting
Retail & Consumer Data........................ 17-18 The most important of these are less obvious to this same, younger age group. Isetan-Mitsuko-
consumers, but that hasn’t stopped huge num- shi commissioned researchers to take thousands
bers of visitors flocking to the store over the of photos of consumers on the streets around
ABOUT JAPANCONSUMING first month. Mitsukoshi reported 2,000 in line Ginza and had 750 employees canvassing local
before the opening, but that was just the start. consumers’ in their homes, all to build a data-
JapanConsuming is for companies with an By the end of the first day, the store had sold base of fashion styles that could be emulated
interest in Japanese consumer and retail mar- Salesand
¥700 million ¥m had reportedly
Sqm Mitsukoshi
seen 180,000 %in the store.
Sales per
One of the results is the 4th floor
kets. It is for those operating in Japan, those Total sqm ¥m
2000 people pass through
67841 its doors.
24056 This alone
967047sug- Mon7.0 Miroir sales
2.8 area for dresses. The displays
planning to, and anyone that wants to know
2001 gests that department
66802 stores,
24056and particularly
963327 are6.9
designed to2.8depict product use in daily life
about the second largest consumer market in
2002 the Mitsukoshi brand, may24056
65283 well have 942349
some life rather
6.9 than emphasise
2.7 the brand itself. The
the world. JapanConsuming covers most con- 2003*
sumer sectors, retail trends, product develop- in them yet. 63799 24056 916774 7.0
more relaxed 2.7 atmosphere also differentiates
2004 59574 24059 887782 6.7 2.5
ment and launches, consumer buying trends, 2005
As well as destination
60178
shoppers
24059
and842009
tourists, Mitsukoshi
7.1
from
2.5
the formal luxury of so many
company financials and has a special focus on 2006 Mitsukoshi expects59928 increased
23248custom from
804120peo- brands
7.5 in Ginza. 2.6
the activities of non-Japanese companies in 2007 ple living near53722
to Ginza. With
23248 new, large
773964scale Other reported
6.9 2.3 enhancements include as
Japan. It aims to deliver relevant, concise, and 2008 housing developments
48919 still
22980being added
669049 just much
7.3 as 30% in-house
2.1 developed own brands
usable information. We genuinely welcome 2009 41145
to the south, 63000
22980
well within 36000
547037
a short bicycle ride,
7.5
and fewer items
1.8
sold on consignment, giv-
feedback, comments and views. 2010* 1.8
younger housewives aged 30-40 have been cited ing the store more control over its actual retail
Editor Roy Larke as its new main target. The total residential pop- work. There is also a great deal more variety to
[email protected] suit different budgets, with the
Publisher Michael Causton MITSUKOSHI GINZA: ABOUT TOChart REVERSE
1 A FEW TRENDS?
4th floor, for example, offering
[email protected] 70,000 4.0
price points for dresses as low
Administration Sally Bedown as ¥30,000 and up to ¥300,000,
[email protected] 52,500 3.0 and a total of 300 styles. In jew-
Sales per sqm ¥mn

Research Staff Keiko Davies

Masao Suzuki ellery on the 2nd floor too, the
Sales ¥mn

Maiko Tohmatsu 35,000 2.0 emphasis is on variety and style

David Reed with zones for Japanese brands
Shohei Ando and non-branded product ar-
17,500 1.0
Production Control Miki Ishikawa ranged by design rather than the
Taizo Endo traditional focus on stones and
Subscriptions Sally Bedown 0 0 materials.
[email protected]
The brand floors still exist
00

01

02

*
04

05

06

07

08

09

*
03

10

Fax: +813-4496-6421
20

20

20

20

20

20

20

20

20
20

20

Sales ¥m Sales per sqm ¥m in the new store, but they have
www.japanconsuming.com *: Sales estimate. Source: Nikkei; JapanConsuming. adopted the Isetan Shinjuku »
2 | this month
SEPTEMBER SALES SNAPSHOT
YonY (%)
Focus, focus: hints of success
Company Total Comp 80% of specialty apparel retailers posted visuals, respectful but relaxed and knowledge-
Uniqlo -20.4 -24.7 lower sales during the last financial year. De- able staff, so entertaining customers in what is
Komeri 0.3 -2.0 spite this, the format still gained market share after all their principle leisure activity.
Shimamura -6.6 -9.9
from department stores and GMS chains. These All of which bodes surprisingly well for the
Honeys -17.4 -17.7
Nishimatsuya Chain -13.2 -18.6
figures reflect what was clear on the street, that newly opened Mitsukoshi Ginza. While it could
Right On -23.3 -24.1 FY2009 was one of the toughest years for ap- have gone further, the department store shows
Jeansmate -13.3 -19.6 parel retailing in the last two decades. Well doc- signs of the kind of innovation usually associ-
Point -2.9 -13.0 umented economic factors aside, the specialty ated with specialty chains, and a management
Workman 18.4 16.0 sector was also faced with further pressure on that has listened to its customers rather than its
Cox (includes Bluegrass) 95.5 -10.7 prices from the likes of GMS chains, and much suppliers. As well as unprecedented variety in
Uny -1.5 - slower rates of growth in new shopping centres, ranges and prices, the store includes product
Palemo -3.1 -6.4
closing off one of the easiest routes to expansion centred displays for key categories like accesso-
Mitsukoshi 1.9 -
Isetan -10.6 -
in the last decade. ries and jewellery, creating more fluid and dy-
Takashimaya -3.6 - Delivering product that customers want namic floors. For the first time, the east of To-
Matsuya (Ginza only) -2.8 - at prices that make sense are clearly factors in kyo now has a store to match Isetan Shinjuku.
Daimaru Matsuzakaya -3.9 - their success. What also distinguished success What both Mitsukoshi and the few specialty
Hankyu Hanshin -5.8 - from failure last year was investment in market- chain successes demonstrate is the growing
Askul -5.0 - ing, high levels of service, and sheer entertain- emphasis on focus and customer orientation.
G Foot -3.8 -8.6 ment at stores. While TV advertising is com- Aeon’s decision to discard Jusco and rebrand all
Tsuruha HD 4.7 1.1
mon for the biggest chains, spot prices have stores as Aeon, Parco’s split of building profile
Allied Hearts -2.5 -5.4
Nitori 2.9 -2.9
fallen enough for middle ranking retailers to by location, the relaunch of 109-2 as a Men’s
Kawachi Yakuhin -1.8 -3.4 afford, with great results. Their stores too are Kan and even the mergers in food wholesaling,
Nissen -8.4 - in contrast to the flat, municipal library like at- all demonstrate how focused distribution is be-
Megane Top 16.2 7.3 mosphere depressingly common at many fash- coming.
Genki 27.0 18.7 ion stores, offering more movement, dynamic Tokyo, October 2010
Kusuri no Aoki 14.7 3.5

» continued from Page 1

layout, with floors allowing sales areas for different brands in similar even Isetan managers are impressed at how the Mitsukoshi brand still
categories to seemingly flow together, using a uniform store design and pulls in customers – the trick is now to get them to spend some money.
brand names understated through simple names on walls. The aim is On a good weekend, 100,000 or so people still visit the Mitsukoshi Ni-
to allow customers to concentrate more on the product and so the pur- honbashi store, about double that for Isetan Shinjuku, even though sales
chase rather than the brand – a true innovation that has been one of for the two stores are roughly even.
Isetan Shinjuku’s saving strengths and has been improved further for On the whole, especially with the crowds in the store at the moment,
Mitsukoshi Ginza. the new Mitsukoshi looks to be a hit. The official sales forecast of just
While it has not been easy to see signs of synergy between Isetan and ¥63 billion simply suggests sales per sqm in the new store will be iden-
Mitsukoshi since their merger, Mitsukoshi Ginza provides the first clear tical to last year in the old store. Such understatement smacks of false
examples that progress has indeed been made. Although much of the modesty and, based on initial customer reaction, the figure is likely to
merchandising and layout has been adopted from Isetan and improved, be significantly higher. JC

Index
ABC Mart, 5, 7 Cocolulu, 14 Hankyu, 11 Lumine, 1, 6-8 Palemo, 15 Takashimaya, 6
Aeon Group, 4 Collect Point, 9-10 Haruyama Shoji, 9 Mac House, 13 Parco, 1, 7, 10-11 Tamaya, 13
Amazon Japan, 5 Cox, 13 Honeys, 15-16 Marc Jacobs, 9 Point, 6, 13-16 Thom Browne, 4
Anthropologie, 3 Credge, 14 I. T., 4, 11, 14 Marubeni, 1, 7-8 Rakuten, 5-6 TicTac, 11
Aoyama Shoji, 3, 10 Credit Saison, 3, 9 Isetan Mitsukoshi, 1 Maruetsu, 7-8 Reasterisk, 14 Tokyu Mall Developments, 8
Arcadia, 6 Cross Company, 1, 3-4, 7, Ito-Yokado, 5, 10, 17 Marui, 7 Reed Krakoff, 10-11 Tomorrowland, 7
Asahi Newspapers, 7 14, 16 Itochu Shoji, 7 Matsuya, 1, 10 Right On, 15 TopShop, 1, 6
Asics, 11 Daiei, 7-8 Itochu Shokuhin, 9 Matsuzakaya, 1, 5-7, 10 Ryoshoku, 9 Toys R Us, 5
Askul, 5 Daimaru, 5, 11 Iwataya, 10 Million Carats, 6, 9 Sagami, 13, 15 Trinity Arts, 14
Avail, 14, 16 E Hyphen, 3-4 Japan Tobacco, 9 Mitsubishi Estates, 8 San-ai Group, 13 Tutuanna, 9, 14
Axes Femme, 14 Earth, Music & Ecology, 3, 14 JBF Partners, 6 Mitsukoshi, 1-2, 6, 11 Sanei International, 5 Ufufu Girls, 5-6
Baroque, 8, 14 Exiv, 14 Jewelium, 6 Moncler, 10 Sazaby, 15 Undercover, 9
Baycrews, 14-15 ExxonMobil, 11 Jins, 6 Mori Building, 6 Seibu, 1, 7, 17 Uniqlo, 3, 8-9, 14-15
Beams, 14-15 Familymart, 9-10 Jusco, 1, 4 Mori Trust, 11 Seiyu, 3-4, 9 United Arrows, 5, 7, 11, 14-16
Bluegrass, 13, 15 Fast Retailing, 8, 11 Keio, 10 Moussy, 8 Seven Eleven, 9, 11 Urban Outfitters, 3
Candish, 8 Forever 21, 5, 15 Keizan, 14 Mycal, 4 Shimamura, 9, 13-16 Venus Fort, 11
Cath Kidston, 1, 5 Gap, 9, 12 Kokubu, 9 Niko and..., 14 Sly, 8 ViewCompany, 8
Cecil McBee, 6 Ginza Ins, 7 Konaka, 13 Nippon Access, 9 Spiral Girl, 14 Walmart, 3-5, 9, 12
Circle K Sunkus, 10 Ginza Maggy, 13 Leilian, 15 Nitori, 11 Start Today, 7, 9 Yamada Denki, 5, 7
Coach, 11 Hakuhodo, 4 Lowrys Farm, 10 Onitsuka Tiger, 1, 11 Suzutan, 13 Zozo Villa, 9

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 news & analysis | 3
Cross Company: a top 10 specialty Walmart launches own brand
credit card

chain in 2015
Walmart announced the launch of the
Walmart Card last month, causing further
rumours that it may soon move towards
replacing the Seiyu name in other parts of
Cross Company is the fastest growing specialty retailer of the last decade, increasing its business too. The card is offered through
turnover by more than 3,500% since the late 1990s. It became a top 30 specialty apparel Credit Saison, Seiyu’s long time associate
firm last year and is comfortably profitable. If it fulfils its new medium term plan, Cross will company, and carries the Walmart name
become a top 10 apparel chain with sales triple last year, from some 670 stores. As well – Walmart Card Saison American Express
is the slightly unwieldy official name of the
as existing chains, Cross looks set to enter the select shop market too.
card. As with almost all Saison cards, sub-
scribers pay no sign-up or annual mem-
Cross Company is the creation of Yasuharu ented and experienced women staff – 90% of man- bership fee. Credit Saison and Seiyu were
Ishikawa, first set up in 1995 when he was just 25 agement staff are women – who would have been part of the same founding group at one
after a few years experience working at a branch either discarded by large corporates or unable to point, so Saison card holders have always
of Aoyama Shoji. He started with a select shop in work full time because of a wish to also be at home enjoyed 5% discounts on the 5th and 20th
of every month at Seiyu stores, a practice
his home town in Okayama, and then launched the with their children. Other company programmes,
common for other supermarket cards too.
SPA chain, Earth, Music & Ecology in 1999. Since such as its commitment to keeping the local town Unlike other chains’ cards, however, the
then the company has boomed, growing sales by clean through employee volunteer groups, and eco Walmart Card provides a permanent 1%
3,500% in just over a decade, and since 2003 sales programmes both here and in places like Mongolia discount to shoppers buying with the card
have increased nine times from ¥3 billion to ¥27 where it plants trees, help create a cohesive cor- at its stores. Once again, Walmart Seiyu
billion (see Chart). As of the end of FY2009, Cross porate structure and sense of mission beyond just CEO, Toru Noda emphasised the use of the
ran 217 stores with 1,350 employees, and for this selling nice clothes. Walmart name as proof of the US retailer’s
year it expects sales to hit ¥38.5 billion from 286 Above all, the clearly defined and thought out long term commitment to Japan. The name
already appears large on the HQ in Akabane
stores. Its key chains are Earth, Music & Ecology staff policies, its commitment to various causes,
and there have been several reports that
(EME), Green Parks, And E Hyphen. and the focus on its core business, show a strong Walmart may soon add its name to stores,
Along with nice stores, selling popular product company vision, clarity of purpose, efficient mar- with even Noda quoted in one Nikkei article
targeting mainstream women fashion consumers, shalling of resources and focus that are all too rare, saying Seiyu is a damaged brand.
Cross Company has something of a unique com- and these form the basis of the company’s confi-
pany organisation, at least for a company of its size dent execution of strategy and expansion.
today, and perhaps represents the future of more With a strong pool of talent, Cross has been H&M sales double
progressive Japanese companies. Ever since its able to grow consistently, develop new projects, H&M’s Japanese subsidiary saw sales
double for the first nine months of FY2010
launch for example, it has insisted on only employ- and still make decent profits. Improvements to the
according to a recent press release. Sales
ing full time staff despite the higher costs, entirely existing core chains are continuous and are reflect- rose from 634 million SEK (¥7.83 billion)
contrary to the preference in the apparel sector to ed in recent results. Same store sales for EME rose in FY2009 to 1.298 billion SEK (¥15.93 bil-
cut costs through the use of part timers. Ishikawa, 15% in January, 17% in February, 24% in March, lion) this year, a 105% increase and a 108%
however, sees a direct link between happy, well and then jumped 41% in April and more than 50% increase on a same currency basis. H&M
trained staff and satisfied customers, saying that in May. The growth was partly thanks to a major Japan now operates 10 stores in Japan.
shop staff are the face of the brand. The result is overhaul of product quality including switching to
that Cross Company’s shop staff are well known for Italian yarns as insufficient quality had held back
Urban Outfitters to open in
their attention to customers and a clear passion for the efforts of a strong design department. The huge
Japan
the company they work for. jump in April and May followed the first TV ad For the third time in a decade, US retailer
Employee satisfaction is also helped by flex- campaign in March, bringing new footfall to its Urban Outfitters has announced plans to
ible work plans. Mothers of young children are al- stores. launch in the Japanese market. The com-
lowed to work as few as four hours a day, not just The strong growth has given Cross Company pany said it expects to open a flagship for
in the early years, but until their kids are at least 10 the confidence to revise its five year plan which its Anthropologie chain here in 2012, and
years old. These are almost unheard of practices in began this financial year. The new plan now calls Urban Outfitters in other Asian markets.
corporate Japan, let alone in the world of apparel for sales of ¥93.6 billion by the end of FY2014, up
retailing where low pay and conditions are notori- from the previous forecast of ¥70 billion, produc-
Seiyu targets Uniqlo with new
ous. The pay back is that Cross has retained tal- ing pretax profits of ¥14 billion, up from ¥10.6 bil- pricing
lion. During the five years, Cross plans Cooler weather has seen crowds flock to
unbeatable growth: cross company to open as many as 450 stores taking the Uniqlo stores in the search of HeatTech
40,000 300 total to 677. products, but Seiyu is hoping to grab a
These are high targets but supported share of the market with new price cuts.
Shops
Sales by a coherent plan. As well as the core During October it will cut prices on its own
30,000 225 brands, Cross plans to expand into new cool weather lines called Eco Heat by 25%,
taking average price points down to around
consumer segments, turning itself from a
¥580-¥980, less than half of Uniqlo. While
young womenswear retailer into a diverse
Shop Nos
Sales ¥m

the discount is initially planned for just one

20,000 150
apparel group. EME and Green Parks will month, Seiyu says it hopes to quadruple last
remain the largest store chains, with a year’s results. Eco Heat offers just 10 SKUs
forecast 230 EME stores and 200 Green in menswear and 14 SKUs in womenswear.
10,000 75
Parks, producing turnover of around ¥30
billion each. To do this, Cross will make
0 0
a new sub brand of EME for suburban
2003 2004 2005 2006 2007 2008 2009 2010* SCs, and diversify the Green Parks brand
*Estimated
Source: Company Report; JapanConsuming.
further as well. E Hyphen, which was » »

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4 | news & analysis
»
a drag on group performance earlier in the year, ed staff from other select shop chains and lifestyle
38% shopping online – up 8 points is expected to double to ¥10 billion. New brands businesses to create a new division to target this
on 2008 and overseas expansion will provide the remainder older market. The first shops for the new brand are
In Hakuhodo’s two-yearly survey of lifestyles, of the planned growth. The first new brand was expected in Fukuoka and Futako Tamagawa next
38% of its sample (3,389 people aged 20-69
launched this Spring. Called Yecca Vecca, it tar- Spring, with a format extension in SCs later on.
living around Tokyo and Osaka) said they
had shopped online in the last 12 months. gets the OL market with planned sales of ¥3 billion As well as home grown brands, Cross has ac-
While this figure seems surprisingly low, it is within five years. quired US menswear label Thom Browne, and
higher than the proportion of people who have More tantalising is a launch into the around there are hints of plans to create a new high end
used catalogues and TV shopping (36%) 40s market next Spring. Cross is targeting ¥6 bil- SPA brand based on a second line, to compete
for the first time. The agency confirmed the lion in sales from a new chain with two compo- with select shop chains and international premium
now widely held view that economic stresses nents, a select shop chain at the higher end, and brands. Overseas, Cross has a franchise deal with
have pushed consumers to experiment more a lower priced SPA chain. 70% of the product for I.T. in Hong Kong as well as its own subsidiary in
with the internet as a new shopping channel,
the select shop chain will be imports, primarily Taiwan. It currently wholesales in mainland China,
particularly when it is cheaper and more con-
venient to do so. The percentage of online Italian brands, and 30% store branded. The lower but plans to begin opening stores from 2012.
shoppers is 8 points higher than in the previ- priced chain will be 80% store branded and 20% Cross Company’s targets are ambitious but,
ous survey from 2008 and the highest figure imports. Some stores will be located separately, in- based on its record so far, by no means a pipe
so far – Hakuhodo first began asking about cluding stand alone locations for the select shop, dream. Its growth history alone gives some confi-
internet shopping in 2000. The proportion and combined stores in other locations such as sta- dence, as do its plans to diversify into new markets
who shopped at more traditional non-store tion buildings. The concept for the new brand will where competition is less fraught. The strength
channels was also up 1 point, having hov- be natural taste and simplicity, but with high end of its management team combined with a loyal,
ered around the 35% mark since 2002. The
fabrics. The range will include accessories, home energetic and clearly committed retail workforce,
number of people using e-wallets was also up
8 points to 30%, doubling the figure from four goods, and even some foods in addition to apparel. provide a strong foundation. Most of all, its clear
years ago – but, again, given that the survey Its existing select shop chain, Kiwa Sylphy, has pro- vision and focus are rare characteristics in the
is carried out in Tokyo and Osaka, this too vided the expertise in shop management and high- cluttered apparel sector, and these underpin the
appears somewhat low. er end marketing for the new select shop chain, company’s success to date, and its popularity with
and Cross will combine this with newly headhunt- customers and developers alike. JC
Aeon taking food orders by fax
Aeon has begun offering food ordering serv-

Aeon to decommission Jusco brand

ices by fax. The service was introduced at 27
stores around the country over the summer,
almost all of the stores in smaller, regional
cities. While faxes now seem out of date, Nowadays, Japan’s best performing retailers have much the same goals and ideas on
Aeon hopes the new service will supplement
the rollout of its internet ordering service, with
how to achieve them as the best everywhere else. Aeon has struggled for 12 years to
those who do not or cannot use the online implement a streamlined, state of the art retail strategy, in the end producing very little
service being able to receive direct to door return despite substantial levels of investment. It has now finally made a big leap forward
deliveries by ordering on paper. The stores with the announcement of new, uniform branding of stores.
distribute an order book and customers must
go through the somewhat laborious process
of filling in fax forms with product numbers From February 2011, Aeon Group will formally other top retailer has grown through M&A (see
and names, but this may be easier than actu- merge Aeon Retail, Mycal and Aeon Marche into Chart), usually allowing acquired companies to
ally driving to stores for the old and infirm. a single operation, unifying three of its six directly keep both their original executives and most of
While online customers choose from a range run GMS operations. More significantly still, the their original identity in terms of branding, but
of around 6,000 SKUs, the fax service offers
hallowed Jusco name (Japan Universal Stores this has happened so often that it has led to signifi-
only 350 basic items. Orders received by 3pm
are delivered the next day. Initial results show
Company), along with names on Mycal and Aeon cant reduction in Aeon’s overall marketing effec-
orders of 15 SKUs on average, with a value of Marche stores, will be phased out to be replaced by tiveness. The new change means marketing com-
around ¥3,500. the single Aeon brand. This move, while simple, is mon sense has finally prevailed.
an unprecedented, almost revolutionary one for a Not coincidentally, in late August Aeon opened
large format retailer in Japan. Only in cases where its first Top Valu Collection apparel space in the
28% of retailers more than 100 a relatively small chain has been taken over by a huge Jusco Tsudanuma store in Chiba. The collec-
years old larger concern has anything like this happened in tion fulfilled its promise in being more fashion-
According to recent figures from Teikoku
the past. Usually firms cling on to old brands, store able than the usual run of the mill GMS clothing
Databank, Japan has 22,219 companies that
have been in existence for at least 100 years.
fronts, and logo designs, no matter how outdated range. As with specialty chain competitors, Aeon
The database firm has 1.3 million firms in its they become in consumers’ eyes. There are more is controlling everything from product planning,
records, of which 605 claim histories stretch- than a few such retail groups with a wide portfolio through production to sales promotion with the
ing back more than 300 years, with the oldest of poorly positioned stores and brands that could help of Mitsubishi Shoji Fashion. While there’s
apparently a Buddhist temple construction take heed of Aeon’s example – and they probably room to improve the first store, Top Valu Collec-
company which says it has been in existence will now that a leading firm has created the prec- tion arrives as Aeon is also rolling out better posi-
since founding in 578 AD, 1,432 years ago. edent. Indeed there is speculation that Walmart tioned sales areas within GMSs for a host of other
Another 38 firms also claim 500 year histories.
will replace Seiyu, already called a ‘damaged brand’ categories such as interior and variety goods, bicy-
Of the total, 347 listed companies have histo-
ries of 100 years or more. By sector, retailing
by its current CEO, with the parent company’s logo cles, pets, drugs and liquor.
has the largest proportion of old companies, and livery – the new store credit card is already While in the past such specialist sales areas
with 6,279 firms or 28.3% of all retailers on branded Walmart, not Seiyu (see Page 3). have generally been outsourced, Aeon is now keep-
Teikoku’s database, claiming histories going The Jusco name is thirty years old, but in mar- ing them in house. One of the key aims of merg-
back 100 years or more, and, unsurprisingly, keting terms the decision to decommission the ing its core GMS operations under one name and
brand is entirely positive. Aeon more than any management is to provide more space to add »
»

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 news & analysis | 5
these specialist areas, maintaining a standard look and fasciae. Over the past 10 years, it has also »
and feel in every case, greatly enhancing the power made significant efforts to spread the ‘Seven’ brand
of the Aeon brand. Previously, each group chain throughout the group regardless of the company the places with the largest numbers of older
companies are Kyoto and Aichi.
ran its own merchandising and store layout plans name, and, unlike Aeon, has even put this name on
so that, even with Aeon Retail providing the strate- its private brand range. With the current restruc-
gic lead, the other chains sometimes took months turing of its own Ito-Yokado GMS chain, Seven Sanei takes over Cath Kidston
if not years to introduce the same ranges and store & I is also taking care not to introduce a slew of Sanei International has taken over operation
designs. Since the end of August, Top Valu Collec- new names, keeping Ito-Yokado as the core brand of UK brand Cath Kidston from United Arrows
tion has already opened in a number of Aeon stores regardless of how the actual store format changes following concerns with performance during
including the old Carrefour store in Makuhari. around it – the only exception, of course, being the UA’s handling of the brand. The lifestyle
Of course, cost reduction through consolida- radically repositioned discount operation called brand known for its floral designs originally
tied with UA back in 2002, but by this year
tion of functions is another major incentive to The Price.
had just six stores and an online sales chan-
merge parts of such a disparate grouping. In Feb- Having come under increasing pressure after nel in Japan despite demand for this particu-
ruary this year, the cost of sales ratio at Aeon Retail 12 years of lackluster returns on investment, Aeon lar category from many shopping centres. The
stood at 30%. By 2014, the new company plans to has again shown that it is ready to make the kind brand offers original items for the Japanese
reduce this to 28%, with operating profit margins of changes necessary to resolve its problems. Aeon market, with total sales of a reported ¥1.1 bil-
increasing from a mere 1% to about 4%. undoubtedly needs to take group consolidation lion to March 2010. Following acquisition of
Seven & I, Japan’s other major conglomerate even further, but, given that many of its peers in the brand by a US fund, UA decided it couldn’t
, has not fallen into the same trap as Aeon and the retail sector refuse to divest brands no matter meet demands on future performance and
will pass the brand to Sanei once the cur-
has positioned each of its major store chains into how poorly performing, Aeon has set a precedent
rent agreement expires in January next year.
different formats with different roles within the in retiring its most prominent store name. JC Sanei, with some justification, says it sees sig-
group, even though it does employ multiple brands nificant potential for the brand in Japan.

SOAKING UP THE COMPETITION: A SMALL SAMPLE OF AEON’S M&A ACTIVITY SINCE 1970 ABC divests United Arrows stake
Mycal
Aeon Hokkaido ABC Mart announced at the end of August
Posful 2007 27 Stores
Hokkaido
¥150.3bn
that it will sell the entire 24.3% stake it holds
2003 in United Arrows. The stake was originally
Aeon Kyushu
Kyushu Jusco Aeon Kyushu 45 Stores acquired through ABC’s parent company and
2007 ¥258.9bn UA was unenthusiastic about its new largest
Mycal Kyushu shareholder from the outset. Providing further
2002 Mycal proof that simply owning a large chunk of a
Nichii Mycal 91 Stores company is not enough to influence it, ABC
¥567.1bn
2001 Mart is giving up having entirely failed to get
Futagi UA to agree to partnership terms after a year
Aeon Retail Aeon Retail of negotiations – although many would argue
Okadaya Jusco Aeon 2008 248 Stores 345 Stores that, in this case, a partnership may well have
1970 ¥1.85trn ¥2.448trn
not improved UA as it is at present. The stake
2005
Aeon Marche will be sold back to UA, and ABC Mart is set
Shiro 1972 Carrefour
Japan
6 Stores to make a profit of around ¥3.4 billion on its
¥31.2bn
original purchase price.
Ogiya 1976
2007
Daiei
Isejin Group 1977 Daiei 133 Stores
¥781.0bn Toys R Us investigated by FTC
Ryukyu Jusco Toys R Us came under the scrutiny of the Fair
Okinawa
Jusco
5 Stores Trade Commission in September after allega-
¥60.1bn tions of forcibly requiring suppliers to provide
Source: Adapted from Nikkei; JapanConsuming. discounts and accept product returns – a US
retailer emulating its Japanese counterparts
in fact. The FTC is said to have visited the toy

Amazon: No. 1 non-store retailer

retailer’s HQ and distribution centres. TRU
is in the unusual position for a foreigner of
totally dominating the toy channel in Japan,
Despite 20 years of economic stagnation and deflation, one sector that has done with sales to January 2010 hitting ¥168 billion.
There have been similar cases of FTC scru-
consistently well and is now doing even better is non-store retailing, covering catalogues,
tiny of retailers in dominant channel positions
TV shopping, and increasingly online sales. In the 20 years after 1990, total non-store over recent years with Yamada Denki receiv-
retail sales have trebled according to one recent report. More significantly, Amazon Japan ing attention last year.
is again placed as the country’s number one non-store retailer by a massive margin.

Newspapers continue to worry about the grow- The figures come from Tsushin Shinbun, a Matsuzakaya Ginza the fashion
building
ing success and influence of the likes of Walmart, relatively minor trade journal, which puts Askul as
Daimaru is bringing its popular young wom-
Ikea and H&M, but in non-store retailing, an over- number two, more than ¥140 billion smaller than en’s fashion space, Ufufu Girls to Tokyo.
seas company has quietly but firmly taken the lead. the US book and general merchandise store. The Launched in the Kita Kan in Shinsaibashi last
In a recent report analysing how non-store retail newspaper omitted Rakuten, which had total con- year and then expanded to Daimaru Kyoto,
sales have trebled between 1990 and 2010, Amazon solidated turnover of ¥298 billion last year, but this the space will now be launched in Matsuza-
Japan is placed as the country’s number one non- includes various financial services, online auctions, kaya Ginza this month. Targeting customers
store retailer with sales in 2009 estimated at ¥320 and fees collected from retail clients. Rakuten says in their 20s, it will complement the existing XXI
billion, up from estimates of around ¥280 billion total gross merchandise sales were significantly at Ginza by Forever 21 when it opens October
the previous year. higher than Amazon, roughly ¥800 billion » »

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6 | news & analysis
» from all merchants using the Rakuten online mall, or Spanish to a British one. But even so, just as de-
22. Along with Esperanza Market, a fashion
while retail sales by Rakuten itself reached only partment stores are learning to accommodate tour-
shoes space launched in April this year, Ufufu ¥115 billion, with a further ¥19 billion arising from ists at their physical stores, several larger chains are
Girls will help to affirm the building’s reposi- its travel business. already making plans to add new language sites to
tioning as the Ginza destination for young Department stores, despite their other prob- the online sales channels too.
women looking for fast and fun fashions. lems, have long been active in non-store channels Even with all this new activity, Amazon still
It also shifts Matsuzakaya further towards too. Their role as suppliers of formal gifts led them Amazon
leads the e-commerce
Japan 320,000 sector in Japan, largely be-
becoming a fashion building in terms of both to the catalogue business early with both Takashi- Askulcause it has the most mature business model with
186,325
the tenants and tenant contracts, which looks JapaNet Takata 149,178
maya and Mitsukoshi, the two chains with the larg- Nissenarguably the most 132,000 complete offer for consumers.
like being the best solution for the site. Ufufu
Girls Matsuzakaya will comprise just under
est geographical coverage for physical stores, also Senshukai
Rakuten remains its130,967 main rival, but, a bit like de-
1,000 sqm of space on the 1st and 2nd floors. ranked highly for non-store sales. For 2008, total Benesse
partment
Rakuten*
stores in the
120,742
115,000
physical world, its reliance
It will include 10 brands such as Liz Lisa, Cecil department store sales stood at around ¥8 trillion, Jupiter
onShop
renting
Channel space online 109,025to independent merchants

McBee, Free’s Mart, Million Carats, Barbie, while the total online market was some ¥6.1 tril- Otsuka limits its ability to provide
Shokai 92,990
the same level of coordi-
Misumi Group 89,180
and eyewear brand Jins. Also opening will lion, so total non-store sales for department stores Belluna
nation and clarity that Amazon currently offers. JC
86,231
be the first shop for Point’s much hyped new of just ¥23.3 billion seem relatively insignificant.
brand Jewelium on the street level. Jewelium However, with growth of 23.3% in 2008 alone, AMAZON JAPAN: TOP ONLINE RETAILER
was first launched as a webstore last month Chart 1
following a jump of 26.4% in 2007, it is an unusu-
and is regarded as the next big brand for Point 350,000

following Global Work and Lowry’s Farm.

ally positive part of department store business and
Jewelium targets Mi-ha (fashion-obsessed looks set to continue to expand. Both large and 280,000

in Japanese) 20s women with competitive small department store chains have been equally
active in developing digital channels too, with the

Sales ¥mn
210,000
price points (tops from ¥1,500, jackets from
¥10,000, dresses from ¥6,000, boots from big companies prominent in cutting edge media 140,000
¥7,000). channels like Social Networks and even on Twitter.
Much has been made in the press about the 70,000

popularity of Japan’s department stores with vis-

Digital reading gaining traction
Japan’s book and magazine cartel looks set
iting Asian tourists, and the same is true for e- 0

Amazon Japan

Askul

JapaNet Takata

Nissen

Senshukai

Benesse

Rakuten*

Jupiter Shop Channel

Otsuka Shokai

Misumi Group

Belluna
to be hit with its biggest challenge yet. While commerce as a whole. A survey by METI found
mobile novellas have become a phenomenon that 1.1% of sales on Japan based e-commerce
in Japan, few industry pundits believed the sites came from the USA, 1.3% from Korea, and a
traditional and cosy relationship between significant 4% from China in 2009 alone. Written
publishers, wholesalers and retailers could Japanese presents a lower barrier to Chinese and Note: * Net physical goods retail sales only.
be broken, despite the efforts of some retail- Korean customers than does, for example, French Source: Tsushin Shinbun; JapanConsuming.
ers. As usual new technology has challenged
these assumptions. While some dismissed

10 to15 stores for TopShop Japan

the iPad launch as irrelevant to Japan’s read-
ing market, others saw the potential. Naysay-
ers pointed to the plethora of slow selling
ebook readers already on the market as a
sign of the format’s niche appeal, but once TopShop launched tentatively in Japan at first, opening just one store in 2006 and then
again like the iPod and iPhone, it was the one waiting three years to open the next. However, following the opening of its largest and
click link between screen and content that fourth store last month, the Japanese franchisee wants to expand at a faster clip.
changed the game. Entrepreneurs quickly
began setting up deals to deliver e-books and
magazines for the tablet. And now Japanese TopShop Japan opened its fourth store in Japan Shibuya, Ginza and Fukuoka. T’s says that all the
competitors are piling in. Sony’s e-reader has last month in Shinjuku and announced tentative newer stores will be larger than Yokohama and
matured significantly recently, receiving new plans for as many as 15 stores within the next few Sapporo, with a minimum size of around 750 sqm
attention both overseas and at home, but so years. The new stores will also be larger. in order to better present the full range, which
far does little more than act as a digital book TopShop opened its first store here in LaForet now includes cosmetics and some exclusive lines
without other computing functions. The first Harajuku in 2006 in a deal with Mori Ryutsu Sys- from Japanese designers. Both the Osaka locations
Japanese rival to Apple’s iPad will be made
tem (a subsidiary of Mori Building). Despite the will be in excess of 850 sqm for example. If T’s can
by Sharp, which will launch two multifunction
tablets in December based on the Android small size and second floor location, the success of reach its target of 10 to15 stores it forecasts Japan
platform. While the machines are nothing the store eventually encouraged the Japanese side sales of ¥15 billion for the UK brand. JC
new, the key innovation is again Sharp’s crea- to invest further. It agreed a franchise
tion of links to content. Like Apple, Sharp says deal with TopShop operator, Arcadia, and TOPSHOP SHINJUKU: MORE OF THIS TO COME
it has forged direct links with the publishing incorporated the arrangement in 2008 as
industry, and buyers will be able to access as a company called T’s, with investment
many as 30,000 newspapers, magazines and partner, JBF Partners, an investment
books at the launch.
fund, as the majority shareholder with
65%.
Yama Girls to keep climbing Since then it has opened just a few
As reported in JC, the rise in Yama Girls fash- stores in Yokohama and Sapporo as well
ion has been a boon for sports brands in the as the new 1,000 sqm Shinjuku flagship.
last two years. While the Yama Girls tag is The next stores will be the first in the
meant to denote women who go hiking and Kansai region, starting with a store in an
dress in the latest hip hiking fashions to do so, Umeda shopping building in the Spring,
the look also seems to be equally popular with
and a flagship store in the Autumn in
women taking the metro to Shibuya, creating
Shinsaibashi. Other potential locations
» include Lumine Ikebukuro next year,

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 news & analysis | 7
Lumine to get Seibu Yurakucho »
an important new sports fashion market. The
number of genuine women hikers is also actu-
Lumine looks set to slide into the current Seibu store in Yurakucho. If negotiations go ally rising according to the Japan Productiv-
according to plan, this will be a coup for Lumine, cause local competitors buckets of worry, ity Centre’s 2010 White Paper on leisure. It
and presages further investment by JR East in retail buildings beyond its existing station claims a 110% increase in hiking enthusiasts
properties. to 12.3 million last year following growth in
the two years before that, an increase largely
attributed to new women hikers – and pre-
Lumine is one of the leading operators of shop- the local demographic of affluent women office sumably a few men hoping to meet them. As
ping buildings in the country but its strength is workers. Indeed some of the better selling current a result, Yano Research reports that outdoor
also its weakness: a reliance on the station land tenants of Seibu such as United Arrows and To- goods sales rose 3.4% in 2009, but suggests
owned by its parent, JR East. Lumine is now highly morrowland are also tenants of Lumine. A brand the market is still just ¥136 billion, forecasting
regarded as a fashion destination among the un- new building will offer JR East the chance to up- a further 2.8% rise this year.
der 40s, and favoured by the best fashion retailers. grade the image of the Lumine brand further, with
But while stations bring potential customer flow of a new design and tenant list, but will also bring ABC Mart’s new mega store
millions of commuters a day, there is a strong case it into competition with existing shop buildings. format
for the retail operation to look for locations outside These include Marui, Printemps Ginza, Ginza Ins ABC Mart has launched a new large format
JR East’s own building portfolio. and Matsuzakaya Ginza (see Page 5), as well as the store called ABC Mart Super Stock World,
This now seems about to happen if negotiations upscale shopping in Marunouchi. aimed at combating the problem of limited
with Asahi Newspapers go according to plan. JR If all goes to plan, JR East will open the new inventory at shoe stores and the high staff
East won the right to hold exclusive negotiations Lumine in September 2011, making it the 14th involvement in customer fitting and selec-
tion. The first trial store opened in April in
to take over Seibu in Yurakucho, which would take Lumine building in the country. With JR East now
Sendai’s Grandstage, and the second in mid-
the Lumine brand to a new level. Seibu has 11,700 clearly open to investment in locations outside the September in Mitsui’s new Lalagarden SC in
sqm of sales space and at its peak in 1992 sales for station network, more Lumine buildings are likely Kawaguchi. Designed to look like a sort of
the property stood at ¥27 billion, but fell to ¥16 bil- to complete the Yamanote line loop. JC glamourous stock room, the 900 sqm store
lion as of FY2008. emphasises selection over service. At the
Although this would be the first time JR East entrance for example is a map showing where
has opened a building on land not owned by it- different types of shoe are stocked, and below
self, the chance to establish a presence in such a JR East to remodel Ueno, Tokyo and the table displays are rows of drawers con-
Shinagawa station shopping taining sizes and colours, with fitting stations
preeminent shopping location is too good to pass
JR East plans to rebuild the shopping spaces within the close by. The point of the layout is to encour-
up – and for the owners, there is probably no bet- ticket barriers of Ueno, Tokyo and Shinagawa stations. At age customers to try shoes on alone from the
ter candidate for the master tenancy. JR East set a dreary Ueno station, JR East plans a sparkling new 10,500 draws without staff intervention, so requiring
precedent by opening its first Lumine not attached sqm space inside the Ueno Park exit which will launch this fewer shop staff per store – a concept not
to a station in Shibuya last year, a small men’s December. 4,800 sqm will be dedicated to shopping with uncommon in US sports stores. The store
shopping building by Tower Records – although 78 shops covering food, accessories, stationery, cafes and also sells bags and accessories to coordinate
the land itself was already owned by the railway restaurants, generating a projected turnover of ¥14 billion. with shoes.
company. JR East has also made it clear that it is As usual JR East has been looking to build excitement
through new tenants for station buildings, such as making
looking to make retailing a key pillar to its business
proposals to international brands of food and accessories. Itochu grabs more share of surf
separate from railways and is prepared to invest in At Tokyo Station, work is ongoing to renovate the Yaesu market
locations that support this strategy. south entrance as Keiyo Street. This November a new By all accounts, Itochu Shoji owns a sizeable
There were several other candidates trying to 1,400 sqm space with 27 food and food service tenants will chunk of the surf apparel market through a
grab the Seibu space including Aeon, Parco and open with a targeted ¥6 billion sales a year. At Shinagawa, range of licenses and import deals farmed
Yamada Denki. While Yamada is reported to have the area within the central gates will be become a 2,700 out to affiliates, but it will now grab even more
offered the best return in terms of rental income, sqm 35 tenant shopping and eating space in December thanks to a new deal with O’Neill. An agree-
the landowner, Asahi Newspapers, is believed to with potential sales of ¥10 billion a year. ment was signed last month giving Itochu
a master license for all product categories
have favoured Lumine because it is a better fit with
except for sunglasses and wet suits. As usual
Itochu will hand over core operations to an
affiliate, in this case sports firm, Nikki. Nikki

Marubeni: dark horse of food will produce men’s, women’s and children’s
sports apparel and swimwear. Other product

distribution
to come will include sports sandals, shoes,
bags, socks, underwear, gloves, towels and
snow wear. Retail investment will be cautious
Marubeni is the smallest general trading house, but it has significant operations in food with just two directly operated stores by Nikki
wholesale and retail. Claiming the dominant share in some imports of some key foodstuffs, within five years, 13 corners in sports chains,
and five outlet stores. Sales of ¥5 billion are
the company is looking to build new own brands and may even consider overseas forecast by 2015.
expansion of its retail operations. Problem is, it must first sort out Daiei.

More brands do TV ads

Marubeni is the smallest of the big five gen- Marubeni executives announced that the March to JC has recently reported on the growth in TV
eral trading houses, but with its interests in Daiei, May quarter returned the chain to operating profit advertising activity by a new crop of retailers
Maruetsu – which today include a partnership with and that cost cutting and restructuring were now and fashion brands such as Start Today and
Aeon – and smaller chains such as Sotetsu Rozen past their peak following fairly drastic improve- Cross Company. With spot prices at much
and Tobu Stores, its food retailing operations are ments last year. The GMS retailer’s new CEO, Mi- more affordable levels, TV advertising has
not insignificant. Daiei remains the group’s biggest chio Kuwahara who was seconded from Marubeni become more cost effective and the results
challenge, but despite another dismal year last year, in the Spring, is also talking more positively » »

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8 | news & analysis
»
than his predecessor, suggesting a new period of tions at Daiei, but while Aeon’s own stores have im-
for some have encouraged others to follow expansion is just round the corner. proved and changed markedly during that period,
suit. Cross Company has been one of the
most visible beneficiaries of TV ads, posting
While less prominent in the rankings, Maru- the only big change in Daiei stores is the introduc-
same store sales up as much as 50% in some beni also controls some of the largest wholesalers tion of Aeon’s Top Valu own brand ranges. Daiei
months this year after beginning ads in Janu- of frozen foods and confectionary in the country, thus helps boost Aeon’s economies of scale while
ary. Now Baroque Japan, the business behind including, like its larger trading house rivals, nu- reducing its differentiation from Aeon’s own stores.
brands like Moussy and Sly has launched an merous specialised and regional food wholesal- There is also the more recent complication of
ad campaign on Fuji TV for its Shel’tter web ing operations. Its food import business is also Marubeni’s rival Mitsubishi taking a formal stake
store (www.ec-store.net). The first tranche of substantial, notably in wheat, beef and pulses for in Aeon. Given Marubeni’s strength in the supply
ads ran through September with a second set which it has the largest shares of any trading house. chain, there is now talk of the trading house devel-
expected in November.
Recent reports suggest the trading house is also oping alternative own brands itself.
ambitious in what it hopes to do with its wholesale Marubeni plans to put its supply chain and
Uniqlo hires Hollywood and retail food operations. Its initial tie-up with newly learned retail skills to use in new overseas
Uniqlo has launched its latest TV and print Aeon, which saw Japan’s largest retailer take big operations too. In February, it took a 20% stake
campaign, featuring major Hollywood celeb- stakes in both Daiei and Maruetsu, came with the in Ace Cook Vietnam, the local arm of a Japanese
rities for the first time. It has hired Charlize admission that Marubeni needed some help with food processing major, and is rapidly building its
Theron and Orlando Bloom to be the respec- retail operations, particularly in turning around own wholesaling operations in the country. It now
tive faces of its women’s and men’s winter Daiei. Today, two years on, it increasingly looks plans similar expansion in other countries around
lines. While entirely unrepresentative of all but
a tiny number of Japanese women, Theron’s
like it may have got a raw deal. Aeon is said to be Asia and doesn’t rule out direct or joint venture
height also lends itself well to advertising the in charge of much of the day to day store opera- store operations overseas either. JC
new stretch jeans/leggings that Uniqlo has

109-2: men only

especially high hopes for this season. The
ads, press releases and the online store all
make it clear that the leggings are this sea-
son’s ‘fleece’, that is the single merchandise
line that Uniqlo hopes will prove a massive Sales at Shibuya 109 have been falling for the first time in 15 years. While expansion
hit. It may also be significant that, notably to new markets such as Yokohama are a source of growth, closer to its home market of
in Theron’s case, the chosen models are a Shibuya, the previously ailing 109-2 building has become a mecca for street menswear.
little older than in the past. While the chain
has used famous local stars in its advertis-
ing before, and has also used supermodels The shift by developers to focus shopping drawn to the eclectic mix of Japanese and inter-
famous among those in the know, this is the buildings on a core target market is exemplified by national men’s brands. At the moment, the men’s
first time it has felt a need to employ such high the latest announcement from Tokyu Mall Devel- floors at 109-2 are popular for the crop of shops
profile, non-Japanese talent. opments (TMD). After introducing men’s fashions devoted to Oni-kei and Gyaru Otoko-kei styles.
in some floors of the drab sister building of 109, However, TMD sees demand for more variety
109-2, in 2006, TMD has announced a complete including shops produced by male models, men’s
Candish Shoes
Fast Retailing has merged its various shoe refurbishment, the end result of which will be a versions of 109 brands, and a floor dedicated to
brands into a new operation under the brand new 109 Mens Kan shopping building. men’s beauty services such as nail and hair salons.
name, Candish. The new brand has been Mens only shopping spaces have become popu- The redevelopment is likely to enhance the per-
fitted to 90 footwear stores and key prod- lar among developers since the opening of Isetan’s formance of the 109-2 building, and help to offset
ucts will be sold at Uniqlo stores under the Mens Annex in 2006, and just down the road from the recent drop in 109 sales – the first fall in 15
Uniqlo Shoes brand, while the Candish chain 109-2 JR East already operates the small, experi- years. The strength of the men’s fashion market at
will also sell Uniqlo branded product. At the mental Lumine Mens building. the moment, and the fact that there is no dedicated
same time, Fast Retailing will introduce new
As well as the growth in the men’s fashion mar- space equivalent to the 109 building for men’s fash-
low cost lines ranging from ¥2,000 to ¥5,000.
As reported before, Fast Retailing’s venture ket overall, the decision by TMD was made easy ions, should make 109-2 a major draw for the na-
in the shoe business has not been an entirely given the much higher sales per customer it gets tion’s youth and youth-aspirant. Given the remark-
happy one. It acquired ViewCompany and from men’s tenancies. At 109-2 average transac- able levels of creativity, energy and innovation in
Onezone during the last decade but has not tion values for the current menswear tenants are Japanese menswear design – arguably greater than
seen any useful integration of the chains’ between ¥10,000 and ¥15,000, around three times in womenswear, at least at the street level – the
operations or improvement in performance. as high as 109 itself, thanks to the surprising popu- space should also be a major draw for male tourists
The Candish brand replaces the View and larity of the space not only with teenagers and stu- from Asia and beyond. JC
Bijoux brands among others.
dents, but even men in their 40s.
mens fashion emporium: vfx at 109-2
The first stage of redevelopment is a new 4th
Mitsubishi to launch 18,000 sqm SC floor this Autumn, to add to the 5th, 6th and 7th
in Minato Mirai floors which have been converted to men’s fashions
Mitsubishi Estates will open yet another new over the last three years, with gradual replacement
mall in the Minato Mirai area in Yokohama in of other floors leading to a rebranding as 109 Mens
2013. Dubbed a Life Entertainment Mall, the Kan in 2012. TMD has also begun introducing
space will include fashion and restaurants some men’s stores in the lower floors, for example
within a larger 117,000 sqm development.
the select shop VFX on the street level last Sep-
The basement will be linked to Minato Mirai
station. Mitsubishi says the new mall will be tember. As a result, already 35 of the 55 tenants are
one of the greenest in Japan thanks to vari- menswear stores.
ous energy saving technologies and some TMD says the dedicated space will encourage
green spaces around the development. No more older men, with their deeper pockets, to visit
announcements on tenants are forthcoming the space, as well as grow the already increasing
number of Chinese, Korean and European tourists
»

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 news & analysis | 9
Itochu to merge wholesale subsidiaries »
but Mitsubishi says it wants to attract a wide
Itochu has announced it will merge four major food wholesale subsidiaries by sometime profile of visitors from families to seniors to its
ambiguously hyped “bustling peaceful place”,
next year. It will not, however, include Itochu Shokuhin, one of the biggest Itochu emphasising perhaps that only in Japan do
operations, purely in order to protect its business with Seven Eleven. While this denies the bustling crowds bring peace of mind.
economic benefits of having a single uniform operation with less duplication of functions
and departments, personal relationships between suppliers and customers continue to
trump rationalisation. Tutuanna prepares for expansion
As reported in our focus this month, lingerie
retailer, Tutuanna, is one of the fastest grow-
Only a month after adamantly saying it Seven Eleven’s convenience store chain rival, Ito- ing specialty chains in Japan today. It has
wouldn’t happen, Itochu has announced it will af- chu shied away from including Itochu Shokuhin in been opening new stores at a rate of around
ter all combine several of its leading food whole- the merger. Also factored into the decision is Seven 40 per year since 2005, and now has close
sale subsidiaries under a single umbrella. Nippon Eleven’s notoriously strict handling of wholesale to 190. Turnover has more than doubled to
Access, Family Corp, Itochu Fresh and Universal suppliers in general. ¥17.2 billion. With such breakneck expansion,
Foods will merge to become part of Nippon Ac- As with Mitsubishi’s announcement last month, back office investment is sorely needed and
Tutuanna began upgrading this with a new
cess, creating an operation with sales amounting such consolidation is long overdue, in both cases
distribution centre in August. Tutuanna says
to around ¥1.5 trillion. The move follows the long having been delayed for the same purely relation- the new centre combines storage, logistics
awaited precedent set by Mitsubishi last month ship and face saving reasons outlined above. The and product repair and was indispensable to
when it announced it would merge Ryoshoku with decline of a clear role for wholesale intermediar- its future expansion plans. The new DC has
three other major subsidiaries to create the coun- ies in today’s market of more modern, organised automated stock flow from warehouse to pick-
try’s largest single food wholesale company. Itochu and above all powerful retailers, and a general ing to reduce staff overhead.
will officially rank number two after the merger, downturn in food markets as a whole, all make it
but even then the plan omits Itochu Shokuhin, its economically essential to reduce waste and dupli-
Haruyama looks for high ticket
core food wholesale subsidiary and all to save face cation. For Itochu, there’s also the added incentive
sales
with long term clients. to make a business better able to push forward its As well as launching a womenswear chain,
Such are the political and personal machina- interests in food distribution outside Japan, par- Million Carats, Haruyama Shoji is looking for
tions within distribution channels, with historical ticularly in China. other ways to offset the decline in the mass
ties between companies or even which university The news also means that Kokubu, which was suit market. It has recently begun selling a
the buyer and seller graduated from, all having as ranked as Japan’s largest packaged food wholesal- range of suits priced at ¥80,000. Unlike its
much if not more precedence than economic con- er seemingly forever, is now just a lowly number standard range of ¥20,000 to ¥30,000 suits,
siderations. Trading houses continue to stick to three, although it still commands sales over ¥1 tril- the top range is made using high end textiles
developed in collaboration with Drago, an Ital-
deals within their own group whenever possible. lion. It has been criticised in recent years for being
ian textile business better known for develop-
Similarly, it is not insignificant that Familymart too rigid and traditional, particularly its insistence ing fabrics for bespoke suits normally sold for
stores still stock Mujirushi product or that Seiyu on retail prices maintenance. With the new consol- ¥300,000 plus. The new range uses a fabric
chose Credit Saison to issue its new Walmart credit idated, trading house led companies in place, along specifically developed for Haruyama and tar-
card – all four companies were once part of the with their interests in the retail channel, Kokubu gets men in their 40s and 50s.
same retail group and their older employees still risks being increasingly frozen out of access to
feel themselves as part of the same family, and yes, the larger retail chains. Informal ties with Mitsui
many will have graduated from the same univer- already exist, and on economic grounds alone, Zozo grabs Marc Jacobs
Start Today announced another coup last
sity. everything would point to the logic of a merger
month with the launch of Marc Jacobs within
Because of such relationships, Itochu Shokuhin with Mitsui’s food operations, but Kokubu’s long its high end shopping portal, Zozo Villa. Both
is still a major supplier to Seven Eleven, despite the history as an independent will probably just result Marc Jacobs and Marc by Marc Jacobs are
latter’s more recent deal with Mitsui. And since in a messy mix of operational tie ups under a face available within Zozo Villa, and are the first
Nippon Access is a major supplier to Familymart, saving independent name. JC online stores for the brands in Japan. Zozo
Villa has expanded rapidly since its launch
last year as the premium space within the

Ciggie wars: nicotine boosts conbinis Zozo portal, and now includes brands such as
Paul Smith, Undercover, Toga, Dover Street
Market and DSquared.
Convenience stores now saturate Japan and there’s not a lot of room for growth. Even so,
all the big chains enjoyed a nice boost this summer thanks, once again, to changes in the
Shimamura opens biggest store
way cigarettes are sold. From 1 October a new tax on tobacco pushed prices up by about Shimamura will open its largest ever Fash-
a third, leading to bulk purchasing over the previous few months. ion Shimamura store this month in Yoko-
hama. The 1,500 sqm shop will be located in
Convenience stores are bracing themselves for rettes to rise by a third. Although officially private, Kohoku New Town, the new residential area
a major slump in sales in October having enjoyed low cigarette taxes have been maintained to protect in Tsuzuki-ku, in the Kohoku Tokyu SC. Other
a buoyant summer. The upturn was thanks entirely Japan Tobacco (JT), the Finance Ministry-linked tenants will include Zara, Uniqlo, Gap, and
Global Work, making for a very competitive
to anticipation of the increase in tax on cigarettes monopoly, and smokers can think themselves
trial to the more fashion orientated format in
that came into force on 1 October. This nicotine lucky such a tax increase has been so long com- Shimamura’s portfolio. Shimamura plans to
fuelled windfall mimics that of two years ago when ing and remains as low as it is. For convenience use the bigger space to showcase its latest
the tobacco industry introduced ID cards (called store chains, however, the changes brought a huge, fashion offerings, its Fibre Heat competitor
Taspo) for people wanting to buy at vending ma- short-term boost in sales, with many stores enjoy- to HeatTech, as well as new lines of bedding
chines – far too much trouble for most smokers ing bulk buying by customers. and interior items.
who bought at convenience stores instead. With prices fixed, chains used a range of pro-
The new tax level caused the price of most ciga- motions such as offering free lighters to lure »
»
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10 | news & analysis
» desperate smokers away from competitors. Some of sweets for people needing some alternative oral
Point in Shinjuku
even took advanced orders in order to properly stimulation. Japan being Japan, Sunkus is also pro-
Point will open a major new Collect Point meet demand. moting electronic alternatives to the traditional
store in Shinjuku this November. The 1,000 Circle K Sunkus took the logical step of then puff, with electronic cigarette products. While
sqm store will be its largest to date and will introducing campaigns aimed at people wanting these bypass the new tax increase, they probably
be located in a new shopping building being to give up the habit too, promoting Nicorette for shouldn’t. JC
developed by Keio near Isetan. Collect Point example, while Familymart has boosted its range
is the multi-brand format developed last year
by Point to showcase its key brands like

Parco to grow again – if Mori lets it

Global Work and Lowrys Farm. This will be
the fifth such collective store so far.

Moncler adds three stores Parco’s latest three year plan includes more shopping buildings at home and overseas,
Moncler opened three new womenswear investment in specialty retailing, e-commerce and entertainment ventures. While new
stores in September. All are located in depart- investment is long overdue, unfortunately Parco’s largest shareholder is trying to hobble
ment stores with the first in Matsuzakaya its independence.
Nagoya, followed by Matsuya Ginza and
Sogo Yokohama. The stores include the full
line including the new collection, Moncler S, Parco, one of the largest chains of fashion build- new to Fukuoka. Parco will also cut operating costs
designed by Chitose Abe, the designer of ings in the country, has announced a new, positive and staff overhead during the reorganisation.
Sacai. This Autumn also sees the launch of a three year plan having spent the past decade tight- The community buildings may prove some-
new men’s line, Moncler V, designed by Vis-
ening control of its existing buildings, closing the thing of an innovation. Instead of being diluted
vim’s Hiro Nakamura.
worst and selling off peripheral businesses. The versions of the city centre fashion buildings, sub-
next three years will see new investment to create urban stores will offer both wider product ranges
Aoyama sells more suits again a more diversified group by FY2015, combining a such as sports, electronics, home and children’s
After some worrying months, Aoyama Shoji stronger, more efficient fashion building business stores, but also add more services such as cinemas,
management breathed a sigh of relief when both here and overseas, with new growth busi- restaurants, beauty and other forms of entertain-
stores reported August sales at suit stores nesses in specialty retailing and entertainment. ment and education. This has already worked in
rose 3% overall and 1.8% on a like for like The main thrust of the new plan is to reduce its de- the case of the Hibarigaoka Parco in west Tokyo,
basis. Aoyama said the fierce summer heat
pendence on fashion by repositioning Parco build- where new kid’s zones and other entertainment
helped it sell more light summer suits and
other formal clothing. ings as mixed merchandise and service buildings helped it become the only property other than
– less Fashion Buildings than Lifestyle Buildings. Shizuoka to post higher sales last year. City cen-
Parco hopes this will mean an increase in group tre properties too will see space reallocated. In
Ito-Yokado opens another new sales to ¥300 billion by the end of FY2012, up 15% the new Fukuoka building for example, just 30%
home centre on last year, producing operating profit of ¥12 bil- of space is devoted to apparel compared to 50% in
As part of its ongoing programme to revitalise lion, up 40%. While sales have risen and fallen in other urban buildings.
and replace poorer Ito-Yokado GMS loca- the last decade (see Chart), its has shown a capacity The split into two divisions with clear target
tions, the number two chain revamped its
to extract more profit, growing operating income markets makes a lot of sense, and Parco hopes
Kawaguchi store at the end of September.
The store is now rebranded as a The Price from ¥6 billion in 1999 to a peak of ¥10 billion in that it can then exploit the greater focus to add
discount food store on the ground floor with 2007. Growth is expected to come from expansion new buildings for each division. In particular it
a Seven Home Centre DIY store on floors 2 and improvement in sales at existing buildings, in sees further opportunities to take over failed de-
and 3. This is only the third store featuring the addition to a small new investment of ¥50 billion – partment stores, as it has already done in Fukuoka
Seven Home Centre format, the first opening although Parco points out it has already spent ¥30 and Shizuoka. Such is its pessimism about the de-
in 2008 in Katsushika-ku, and the second in billion of this in acquiring the land under Parco partment store market that it expects to be able to
Musashino in March 2010. As with the other Urawa in March. open at least two new buildings a year to FY2013.
converted stores, the Kawaguchi outlet is old.
Parco will split its buildings into urban (city It will also open smaller city centre buildings under
It opened back in 1967 as the chain’s No. 22
store, but as a city centre outlet was too small centre fashion buildings) and community (sub- a new name, in new locations and also to replace
and no longer maintained the right positioning urban) divisions. Each division will have central some buildings such as the Shinsaibashi Parco
for the footfall in the area. Kawaguchi Station management to coordinate the mix of tenants for which closes next year.
has daily commuter through flow of around each local market. Parco will refurbish 1.5 times the Overseas, Parco opened its second mall in Sin-
160,000 people, around half of which use number of tenancies than in the last three years to gapore in March and plans as many as 10 Parco »
the east exit where the store is located. The make this happen,
store now has sales space of 3,300 sqm and greatly increasing Parco: looking for growth again Chart 2
Ito-Yokado forecasts annual sales in the first
the uniqueness of 350,000 5.0
year of around ¥1.5 billion. The Seven Home Operarting Income Margin
Centre packs around 50,000 SKUs, including tenancies for each FY Sales

more general items like beauty products, but area. This more
262,500 3.8
it expects 90% of sales to come from home targeted approach
Operating Margin %

wares, interior goods and furniture. It carries has already paid

6,000 SKUs in dining items alone. As with off with its latest
Sales ¥m

175,000 2.5
other converted stores, full-time employees mall in Fukuoka,
have been cut back, with just six people in the a location taken
home centre section, although it will employ
over from Iwataya, 87,500 1.3
30 part-timers and will see HQ employees
working in the store on an almost daily basis. where 30 of the
150 tenants are
new to Japan, and 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0

more than 110 are Source: Company Reports; JapanConsuming.

»

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 news & analysis | 11
buildings in China by 2016, and 20 longer term. for all its other plans, a sale to retailers specialising »
Parco says the growing Chinese middle class is in these businesses would seem more appropriate. Reed Krakoff in Aoyama
a huge opportunity for the kind of tenants it has Moreover, funding looks like becoming an even The first stand alone Japanese store for the
in its domestic buildings, and sees itself as a pro- more urgent issue. In August, Parco announced new brand named after Coach president
moter of Japanese retail and fashion talent overseas plans to raise ¥15 billion through a tie up with De- and creative director, Reed Krakoff, opened
– this has been successfully trialled in Singapore velopment Bank of Japan (DBJ), only to see its larg- in Aoyama early September. The brand is
where promotion of Japanese designers has been est shareholder, Mori Trust, immediately oppose also carried by Isetan Shinjuku and Hankyu
Umeda.
especially well received. Parco’s China operations the plan due to fears that issuance of convertible
may take the form of licensees, joint ventures or bonds to DBJ will dilute its 33.26% shareholding
direct management depending on the opportuni- and influence. Mori Trust is said to be particularly Fast Retailing trials new
ties available. peeved as it had previously offered to help Parco Princesse tam.tam concept in
The third pillar will be e-commerce, entertain- with more funds for expansion through a private France
ment and specialty stores. Entertainment includes share placement in January. However, this would Fast Retailing plans to launch a new shop
its cinema complex business as well as one off have increased Mori’s stake to just under 50% and concept to boost the sales of its lingerie brand
projects such as the Kanagawa Arts Theatre which Parco management is apparently jealous of its inde- Princesse tam.tam. A flagship store will open
in March next year in a central location in
opens next year. This division is a valuable addi- pendence – perhaps not surprising given the per-
Paris to test the concept. It has decided to
tion to the Parco operation in bringing footfall to formance of Mori’s own malls. The latest move has focus on stores in city centres and to avoid
its buildings, and will likely become more impor- forced Mori’s hand, and reports suggest it is now locations within shopping malls. In 2009, five
tant as it diversifies the suburban properties more lobbying to remove the current management at a loss-making Princesse tam.tam stores were
towards entertainment and services. future meeting of shareholders. For its part, Parco closed down.
The specialty retailing division on the other says the tie with DBJ will not dilute shareholdings
hand is an anomaly in an otherwise focused or- by much, and this will be offset by enhanced value
ganisation. Called Nueve A, the ¥16 billion busi- over the medium term. ExxonMobil to sell retail
business in Japan
ness consists of a diverse range of stores in eyewear, Parco’s plans look solid, and the split of its
ExxonMobil is rumoured to have plans to with-
watches, cosmetics, variety and fashion. Although properties into urban fashion hot spots and cen- draw from its retail business in Japan. Press
Parco plans to expand store numbers from 136 tres of entertainment and shopping in the suburbs reports suggest any potential sale is likely to
stores to 165 in the next three years, while increas- makes a lot of sense in a market of increasing plu- be only a small portion of the network of about
ing store branded merchandise, the portfolio lacks rality and competition for customers’ coin. There 4,000 ExxonMobil-branded petrol stations, of
focus. Apart from the watch chain TicTac, which are also undoubtedly opportunities for fashion which around 80-90% are already licensed to
accounts for nearly half the store numbers, none of buildings stocked with Japanese brands in Greater independent dealers including a minor and so
the other chains are of sufficient size or originality China, as I.T.’s new The One shopping centre in far not entirely successful venture with Seven
Eleven. According to reports, ExxonMobil
to warrant much attention, especially from a busi- Hong Kong indicates. All of which suggests cur-
Japan has started the bidding procedure to
ness focused on tenant management. The fact that rent management isn’t doing so badly given the sell the rights in Kyushu.
44% of stores are in Parco buildings may also create challenges, and their removal might actually dilute
conflicts in the drive to improve sales densities in the value of Mori’s shareholding even more than
the core business. Given Parco’s need to raise funds those convertible bonds. JC Nitori to open in Venus Fort
Nitori, the leading furniture retailer, will open

Onitsuka Tiger the fashion brand

in the Venus Fort shopping mall in Tokyo’s
Odaiba on 3 November. The 3,300 sqm store
will be the first city store Nitori has attempted
in Tokyo and marks a shift away from the
Asics is far ahead in export growth compared to its domestic sportswear rivals, not just in fashion targeted image of Venus Fort when
Asia but in the US and Europe too. A key component has been the success of its Onitsuka it first opened – an image which quickly lost
Tiger brand in the fashion world, and Asics is working to bolster its appeal further both at its sparkle because of the awful location.
home and abroad. Today, Odaiba is close to major housing
developments and the new furniture store
Asics has long held ambitions to create a global Asics Europe. could do well where clothing stores strug-
lifestyle brand and has focused its resources on the A key element in the brand’s development has gle. Nitori operates 225 stores, six of them
Onitsuka Tiger brand named after Asics founder, been investment in retail stores, which allow Asics overseas, with 68 stores in Kanto. Nitori says
Kihachiro Onitsuka. It first created a Berlin-based, to showcase the full line of footwear, accessories it is moving away from its previous strategy
of opening in virgin markets and, as with a
but Japanese led, design and marketing team in and the growing range of apparel. Within Japan,
number of other formats will use a dominant
around 2003 to create special edition pieces and expansion has been quite rapid and there are now area strategy in future.
links with local fashion leaders, and then estab- 10 Onitsuka Tiger stores in Japan. However, Asics
lished a new global organisation in 2008 to more now says it will triple the number of stores to 30 by
easily manage expansion in the four key markets of the end of 2012. For retail design, Asics originally global flagship for Duvetica
Asia, Japan, Europe and the US. tied with Amsterdam based Strawberry Frog in FEN (Fashion Evolution Network), a distribu-
A lifestyle brand demands a full line, but while 2006, opening concepts in the same city and then tor of European brands, will open the first flag-
footwear and accessories sales have been strong, Paris shortly after, and has adapted some of these ship store in the world for Italian downjacket
brand, Duvetica in Japan 2 October. The
apparel has been the weakest of the three catego- ideas for Japan.
150 sqm store is based in Aoyama near the
ries for Onitsuka. To fix this, Asics created a joint To date, almost all the Onitsuka Tiger stores Spiral Building, and features 24 screens on
venture with United Arrows in 2009, forming a have been free standing locations but future ex- the facade to display graphics and photos of
new company 86% owned by Asics, to develop ap- pansion will include department stores too. In the brand, as well as in-store touchscreens for
parel for the Onitsuka brand. Now plans call for September, Asics opened in Mitsukoshi Ginza and product review and brand history. The space
apparel sales to increase to ¥3 billion by 2011 from Daimaru in Kyoto. It will shortly open a temporary allows for the full line of downjackets which
¥1 billion in 2008. The design team includes the store in the Hankyu Men’s Kan, and the first air- range in price from ¥60,000 to ¥100,000.
designer Toshihiko Iwatani of Iwaya for Dress 33, port store at Haneda. JC
who is leading a product development team in

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12 | focus

Specialty apparel chains: Sales fall for 80%

Following on from September’s focus on apparel distribution overall, this month we take a closer look at the most dominant
apparel retail format: specialty chains. Just as for apparel retailing overall, it was a terrible year for the specialty chains.
Although the format extended its lead in market share, the impact of falling consumption, deflation and lower investment in
stores, hit the sector hard. Many more firms saw sales fall than in FY2008, with a knock on effect on profits. FY2010 is proving
an unstable year so far, but the fall out in the last few years has led to some pruning of the worst performing chains. What is
clear is that apparel retailing has emerged from the downturn more competitive than ever, and any retailer which doesn’t focus
on a great product range and dynamic stores and service, won’t see much joy from freer spending consumers.

NO JOY FOR SPECIALISTS: 80% see sales fall Chart 1:

Unlike in previous years when results from Leading specialty apparel retailers, FY2009
specialty chains looked relatively good com- Pretax
pared to other formats selling apparel, the re- Sales YonY Profit YonY YonY
sults for FY2009 show just how universal the Rank Company Type ¥mn % ¥mn % Stores Nos
1 Uniqlo Casual 538,100 16.4 106,000 22.5 770 11
downturn was. For the first time in more than
2 Shimamura Casual 406,020 4.4 38,044 14.2 1,588 289
a decade, the top 55 specialty apparel chains 3 World** General 285,880 -8.8 - - - -
saw sales fall overall despite the efforts of 4 Onward Holdings** General 194,624 -5.6 - - - -
some firms to expand the sector through more 5 Aoyama Shoji Mens 161,323 -4.1 12,263 -29.1 766 -1
stores. The rest let the sector down with un- 6 Ryohin Keikaku General 141,651 -1.8 13,161 -21.7 339 11
precedented culling of store networks and the 7 Nishimatsuya Chain Kids 117,720 1.1 9,405 0.4 705 54
8 Xebio Sports 117,226 -0.2 9,318 -4.2 303 17
majority lost large chunks of turnover too.
9 Right On Casual 100,606 -3.5 2,747 -50.8 484 16
Three years ago 17 of the top 55 firms saw 10 Sanei International** General 98,313 -7.0 - - 1,128 -103
sales fall, increasing to 29 in FY2008, but then 11 Point Casual 95,680 11.8 16,773 6.1 627 76
ballooning to 43 last year, 78% of the total (see 13 Aoki Holdings Mens 85,905 -1.6 - - 485 -10
Chart 1). The severity of the downturn could 12 Five Foxes** General 85,575 -8.2 - - - -
also be seen in the much larger number of re- 14 Sazaby League General 83,663 -6.5 4,751 -0.9 586 -40
tailers dropping more than 10%, hitting 14 last 15 United Arrows Select 78,657 2.7 5,943 22.1 138 0
16 Pal General 69,879 5.1 5,247 23.7 585 43
year, up from six in FY2008 and three the year
17 Honeys Womens 55,174 -7.2 3,892 -5.1 887 -17
before that. 18 Sanki General 53,372 1.3 1,982 55.9 185 10
As reported before, while the general eco- 19 Baycrews Select 51,970 7.0 3,294 -15.4 156 15
nomic downturn was of course a major cause 20 Leilian Womens 50,902 -9.8 1,097 -24.3 362 -6
of the decline, in truth, poorer returns were 21 Haruyama Shoji Mens 49,636 -7.5 1,647 - 372 7
already a growing concern in FY2007, and 22 Beams Select 49,010 -6.3 - - 96 2
the poor economy just exacerbated this trend. 23 Mac House Casual 48,942 -13.6 40 -98.2 542 -25
24 Baroque** Womens 39,263 7.0 - - 214 32
Put simply, the party is over for most specialty
25 Konaka Mens 37,336 -18.2 -907 - 318 -3
retailers in the apparel sector. In some ways, 26 Sagami Womens 34,532 -23.9 252 - 360 -40
during the early 2000s, just by being a spe- 27 Workman Work 33,319 -4.3 4,434 -8.1 649 21
cialty apparel chain with some reasonably ef- 28 Palemo Womens 29,893 -9.4 532 56.9 573 -40
ficient supply chain management would grant 29 Cross Company Womens 26,672 19.6 2,964 -6.9 217 39
you the ability to grow. This was partly the 30 Miki House Childrens 23,086 -5.2 208 -56.3 236 -12

result of the structural resistance in the mar- 32 Taka Q Mens 22,747 -3.8 974 47.1 259 6
33 Ships Select 22,536 1.7 - - 71 3
ket and partly generous funding and support
31 Zakkaya Bulldog General 21,406 -14.7 1,004 -39.6 294 -37
from land and mall developers. In the first 34 Yamato Womens 21,110 -12.4 -455 - 122 -
place, when specialty retailers expanded in the 35 Japan Imagination Womens 20,630 -8.7 1,384 9.1 114 6
1990s, other than sclerotic department stores 36 Bluegrass Womens 20,587 -19.5 -953 - 418 -96
and GMS chains, they found the retail market 37 Suzuya Womens 18,500 -9.8 321 221.0 65 -2
largely empty of viable competition. That the 38 Rio Chain Womens 18,013 -12.8 161 - 260 -21

market place was quite so empty was the result 39 Cox Casual 17,813 -14.0 -190 - 212 -22
40 Jeansmate Casual 16,800 -9.6 -1,162 - 112 8
of Japan’s unusual capacity to prop up legacy
41 Suzutan Womens 16,013 -14.5 -672 - 284 -14
businesses – by not allowing natural forces to 42 Tutuanna Womens 15,443 17.7 - - 166 25
extinguish failing companies, competition was 43 Familia Childrens 15,041 -12.3 -116 - 164 -2
held back. This continued until the pressure on 44 Mimatsu Womens 15,008 -14.5 283 - 121 -11
the dam walls just became too much, and spe- 45 Sakazen Group Mens 14,342 -7.8 1,707 -11.9 24 0
cialty retailing suddenly poured through the 46 Tabio Socks 14,336 -6.7 1,029 -44.6 277 0

gap. As a result, the bounty came to all modern 47 Summit Colmo General 13,769 -6.4 35 -81.1 39 2
48 Brooks Brothers General 13,654 -3.7 - - 74 0
specialty chains and in a rush. And just as the
49 Eddie Bauer Japan Casual 13,654 -3.7 - - 55 -8
party started, developers turned up with the 50 San-ai Group Womens 12,794 -29.2 - - 98 -25
equivalent of a truck full of beer, opening more 51 Zaza Horaya Group Mens 12,920 -7.5 335 -22.1 74 -2
shopping centres in the years to 2006 than at 52 Tamaya Womens 11,921 -21.5 -934 - 121 -9
any other time in Japanese history. 53 Urban Research Casual 11,770 -7.0 680 - 60 7
Such beneficence doesn’t happen often and 54 Laura Ashley Japan Womens 11,603 -5.0 - - 111 16
55 Ginza Maggy Womens 10,880 -12.7 - - 75 -3
then comes with a price when it does. Un-
Source: JapanConsuming; Company data, Nikkei, Senken, Teikoku Databank. **Estimated retail operations
fortunately for the sector, the hangover was

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 focus | 13
Chart 2: remained flat for the first time in more San-ai, which posted sales down nearly 30%,
Leading Apparel conglomerates, FY2009 than eight years. The sales of the 138 ended the year with a net 25 stores less than the
specialty apparel retailers with sales year before, and Sagami, down 24% had 40 less
Apparel of more than ¥1 billion totalled some – still 200 or so too many but still it’s a start.
Sales YonY
Rank Company ¥mn %
¥3.37 trillion last year. This compares The most dramatic among the worst perform-
1 World 314,117 -8.2 to ¥2.87 trillion for the top 20, giving ers was Aeon’s Bluegrass, which closed a net
2 Onward Holdings 234,181 -4.6 the latter around 85% market share, 96 stores, part of a wider campaign by Aeon
3 Wacoal Holdings 163,297 -5.2 exactly the same share as FY2008, and to tame its specialty apparel interests and re-
4 Renown 123,451 -17.6 a four point jump on FY2007. Flat or vitalise its apparel sales group wide. Indeed as
5 Sanei International 111,738 -7.0 not, the share is clearly huge, and the with department stores, there is a clear change
6 Sanyo Shokai 114,121 -14.3 same 20 specialty firms also account of mood in the boardrooms, with many sen-
7 Itokin 99,764 -11.8
for 41.5% of the apparel sales of the top ior executives openly saying that clearing the
8 Gunze 79,278 -9.2
9 Cross Plus 77,896 -9.1
100 apparel retailers overall (i.e. includ- deadwood from their businesses has become
10 Descente 76,019 -1.2 ing the likes of Aeon), up three points not only unavoidable, but socially acceptable,
11 Takihyo 68,865 -12.4 from FY2008, itself up three points on even fashionable. Directives like the one from
12 Jun 51,867 -6.4 FY2007. This compares to department Chiyoda to its apparel subsidiary Mac House
13 Java Group 41,984 -6.1 stores which, all chains combined, ac- to close stores that don’t make a return are now
14 Flandre 39,623 -20.0 count for just 31.6% of sales of the top the norm and further rationalisation is expect-
15 Caitac Group 38,831 0.6 100 apparel retailers, a sobering re- ed during this year and next.
Source: JapanConsuming; Company data; Senken
minder of the dwindling influence of
department stores in apparel retailing. Basics and feminine fashions
painful. Not only did shopping centre develop- The top 20 specialty firms now also ac- Although overall the chains that performed
ment wane, but the rush of expansion led to count for some 20% of all apparel retail sales in well were in the two broad categories of casual
a dense and competitive market by as early as Japan, up a point on FY2008. apparel and select fashions, last year good re-
2007. Just as serendipity facilitated the early turns came from a tighter group. Uniqlo was
expansion of the format, so its opposite led Lots of losses and store closures too already covered last month, and Shimamura’s
to the fall out of 2009. At the same time that With 43 of the top 55 companies losing growth was actually much better than the 4.4%
competition between specialty chains began to turnover last year, it was less a case of spot- parent only figure, bringing an increase of
create friction and slowed expansion, consum- ting winners than understanding the success 10.8% on a consolidated basis for retail alone
ers stopped spending and prices came under of the lesser losers. The list of course included with its subsidiary Avail chain added in. As
renewed pressure from the likes of Walmart’s the familiar names that have featured in the reported recently in JC, Shimamura continues
supply chain and the rapid expansion of fast worst performers’ ranking in the last few years: to impress analysts for its consistency and cau-
fashion brands. San-ai Group, Sagami, Tamaya, Rio Chain, Su- tious management of costs, only now entering
Before 2008, the larger chains had access zutan, Bluegrass and Ginza Maggy. But these city centres and expanding in shopping malls
to funds and could expand without too much have been joined by other chains now seeing as lower rents allow.
regard for the finer detailing of product and sales decline in double figures, including a Cross Company was the fastest growing re-
retail service. In the last year, the dangers of few big names like Mac House, Cox and par- tailer for the third year running, although even
continued dependence on the constant rollout ticularly Konaka, which may not survive as an for the operator of Earth, Music & Ecology,
of new store volume have become clear. Today, independent much longer despite its efforts to growth slowed to under 20%, down from »
merchandise range, originality, and intelligent diversify, such
mix of marketing options are as important if as its franchise Chart 3:
Fastest growing specialty apparel retailers with sales of more than
not more so than volume. What distinguishes deal with used ¥1 billion, FY2009
the few companies that grew in FY2009 is their apparel chain
commitment to product innovation, store DondonDown YonY
marketing and very high – and entertaining – on Wednesday. Rank Company Type Key Brand %
levels of service. In a way, 1 Trinity Arts Womens Niko and... 81.1
however, the 2 Exiv Womens Cocolulu 63.3
LARGEST 20 CHAINS own 20% of THE Japanese poor results can 3 Keizan Womens Spiral Girl 29.5
apparel MARKET be celebrated in 4 IGA Womens Axes Femme 27.0
All of which is clear in the numbers. The one sense as the 5 Cross Company Womens Earth, Music & Ecology 19.6
top 55 specialty apparel chains averaged nega- decline in turno- 6 Heart Market Womens Heart Market 18.3
tive growth of 5.5% last year, compared to ver in some cas- 7 Tutuanna Womens Tutuanna 17.7
an increase of 0.3% in FY2008 and 3.8% in es was the result 8 Uniqlo Casual Uniqlo 16.4
FY2007 – exactly the same performance as of closing more 9 Credge Womens Lip Service 12.2
the top 100 apparel retailers overall (see fo- stores than were 10 Point Womens Lowrys Farm 11.8
cus last month). Sales for the top 55 totalled opened. At last, 11 Crush & Company Womens Pinky & Diane (franchise) 9.9
¥3.64 trillion. The top 20 managed a much economic pres- 12 Baroque Womens Moussy 7.0
better performance, with an average decline sure has forced 13 Baycrews Group Select Journal Standard etc. 7.0
of only 0.72%. This compared with a slight the hand of in- 14 Maruoka Shoji Womens Heaven & Earth 6.5
improvement of 0.27% in FY2008 and a 5.3% transigent man- 15 Pal Group Womens Ciao Panic etc. 5.1
increase in FY2007. Of the top 20, as last year, agement and we 16 Shimamura Casual Fashion Shimamura 4.5
just two firms managed double digit growth, are witnessing 17 Project Five General Muji, Minipla (franchise) 0.5
compared to five in FY2007 and no less than the beginnings 18 Erina (Tanaka Kosan) Womens Armoire Caprice 3.3
15 in FY2006, a telling indicator of both sector of a clean out 19 United Arrows Select United Arrows 2.7
maturity and falling consumption. in the specialty 20 Only Mens The Super Suits Store 2.1
As a result the market share of the top firms apparel sector. Source: JapanConsuming; Company data, Nikkei, Senken, Teikoku Databank

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14 | focus
Chart 4; the core chain and operates brands Niko and… (the dots are part
womenswear Specialty retailers with sales above ¥10 Billion store closures, leaving of the name), Reasterisk, and Studio Clip, sim-
FY2009 the company with the ilar in style to Cross Company, and also locat-
same number of stores ed primarily in station and fashion buildings
%
as FY2008, but sales – not surprisingly it has become a favourite
Sales YonY Total
Rank Company Type ¥ % Sales have improved again with JR East among others. The company not
1 Uniqlo Casual 170,038 17.1 31.6 in the first months of only added 13 new stores, bringing the total to
2 Shimamura Casual 111,173 6.7 30.8 2010. Beams actually 90, but also enjoyed same store sales growth in
3 Point Casual 64,512 14.0 67.4 had a very good year in excess of 30%. It is also reworking its brands all
4 Leilian Womens 50,902 -9.8 100.0 menswear, up 14%, but the time to better fit market needs. In the case
5 Honeys Womens 48,786 -7.2 88.4 was let down by slow of Reasterisk for example, it is currently repo-
6 Baycrews Select 35,916 6.6 69.1 womenswear which sitioning the brand for a core 27-32 year old
7 Baroque Japan** Womens 33,373 7.0 85.0 the company says was market, offering a more basic range with sim-
8 Right On Casual 32,436 -7.7 32.2 due to errors in mer- pler styling, and increasing directly sourced
9 United Arrows Select 31,800 2.1 40.4 chandise planning. product above 50%. Plans call for expansion
10 Cross Company Womens 21,338 5.9 80.0 Baycrews is proving the of the chain from 25 to 50 stores within three
11 Palemo Womens 20,833 -9.4 69.7 most aggressive of the years, and sales of ¥6 billion.
12 Beams Select 20,094 -19.7 41.0 select shops in terms At the other end of the shock ‘n’ pink
13 Rio Chain Womens 18,013 -12.8 100.0 of store expansion, and spectrum is Exiv, which has had a hit with its
14 Ryohin Keikaku General 17,369 -2.8 12.3 also has the advantage Cocolulu brand since launching in 2004 with
15 Japan Imagination Womens 16,889 -12.6 81.9 of being a more diver- 55 stores. A similar brand is Credge with its
16 Mac House Casual 14,560 -16.8 29.7 sified business with Lip Service chain. In rockier vein is Keizan, a
17 Blue Grass Womens 13,608 -15.9 66.1 several strong chains Shibuya-based business that started out mak-
18 Suzutan Womens 12,439 -14.5 77.5 for specific segments, ing uniforms but then six years ago launched
19 Tamaya Womens 11,921 -21.5 100.0 making expansion into the SPA business with Spiral Girl and
20 Sanki General 10,728 -7.9 20.1 without cannibalisation hasn’t looked back. Today it has three core
21 Ginza Maggy Womens 10,097 -19.0 92.8 easier. brands, Spiral Girl, Royal Party, Royal Party
Source: JapanConsuming; Company data; Senken **Est. Note: World, Onward,
Sanyo Shokai etc. not included Muse and a new brand launched this year
Frilly and fun – and called Miia. It is one of the more courageous
rapid growth in expanding overseas too, with three stores in
33.5% in FY2008. A key factor in the lower
As Chart 3 shows, size and capacity for Hong Kong now thanks to a tie up with I.T.,
growth rate was the subdued performance of
growth are not necessarily related in the apparel and its own subsidiary in the US – just one
apparel, with womenswear up just 6%. How-
market, characterised as it is by a host of small store in Hawaii right now but big plans to ex-
ever, its popularity remains undiminished and
and nimble retailers experimenting with new pand onto the mainland next year. Another
growth in FY2010 has accelerated both overall
ideas, of which only some will grow nationally. consistent performer is IGA which continues
and on a same store basis thanks partly to its
Most of the fastest growing 20 apparel retailers to grow strongly but this is largely because of
first TV advertising campaign and new ranges
are small operators with sales of less than ¥10 the addition of new stores for its Axes Femme
including higher price points. Since 2003 sales
billion. The exceptions are Cross Company, chain.
have grown from ¥3 billion to ¥26 billion from
Tutuanna, Uniqlo, and Point. Having said that, »
214 stores. Cross Company expects to hit sales
even for smaller, less encum-
of ¥38 billion in FY2010, and has a medium
bered retailers, FY2009 was Chart 5:
term target of nearly ¥100 billion by the end of
not exactly optimal to achieve menswear specialty retailers with sales above ¥10 BILLION,
2014 (see Page 3 for more details).
high levels of growth, and FY2009
Also delivering another strong perform-
their success is a testament to %
ance was lingerie, homewear and socks re-
their skill and wit. One of the Sales YonY Total
tailer, Tutuanna, which has seen like for like
larger, more promising firms Rank Company Type ¥ % Sales
and overall sales grow fast since its decision in
to falter last year was Baroque. 1 Uniqlo Casual 171,112 9.4 31.8
FY2006 to concentrate on retailing, creating 2 Aoyama Shoji Mens 161,323 -4.1 100.0
Although consolidated sales
three retail brands, Black Label for city centre 3 Aoki Holdings Mens 85,905 -1.6 100.0
look to have increased some
SCs, Pink Label for suburban station and fash- 4 Right On Casual 49,297 -1.2 49.0
7%, on a parent only basis the
ion buildings, and Green Label for regional 5 Haruyama Shoji Mens 45,436 -7.7 94.1
company made a small loss on
SCs. Sales grew 17.7% last year to ¥15.4 billion, 6 Konaka Mens 36,891 -17.6 98.8
growth of just 1.5%. This was
almost exactly the same growth rate as the pre- 7 Shimamura Casual 30,373 -1.2 8.4
perhaps partly because of the
vious year. Further growth is expected as the 8 Beams Select 28,916 14.0 59.0
number of small firms snap-
company rolls out to more locations domesti- 9 United Arrows Select 25,860 -3.2 32.9
ping at its heels in the Shibuya
cally through direct and franchised stores, and 10 Mac House Casual 24,363 -13.5 49.8
Gal market. Apart from a few
expands in China, opening its first store in 11 Taka Q Mens 20,946 -4.2 92.4
exceptions, the fastest grow- 12 Point Casual 15,883 6.6 16.6
Shanghai last year. A new distribution centre
ing retailers last year are all in 13 Baycrews Select 14,047 5.0 27.0
has also been established this year to cope with
the younger fashion market, 14 Sakazen Group Mens 13,866 -7.1 96.7
growth.
either in the Gal market or 15 Workman Work 13,835 -7.1 29.0
Select shop retailer Baycrews also did well
the softer, feminine Natural 16 Jeansmate Casual 11,514 -9.4 69.0
again last year, showing the continued rel-
Woman fashion market served 17 Ships Select 11,446 -3.3 50.8
evance of the format and its capacity to inno-
by the likes of Earth, Music & 18 Avail Casual 12,548 1.1 29.9
vate to meet demand from emerging genera-
Ecology. 19 Brooks Brothers Mens 11,100 -1.6 81.3
tions of consumers. United Arrows had a less
The top performer by sales Source: JapanConsuming; Company data; Senken
successful year on the back of slower sales at
growth was Trinity Arts which Note: Avail and World, Onward, Sanyo Shokai etc. not included.

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 focus | 15
Menswear outperforms womenswear Growing fast: cocoulu
Womenswear retailers faced a tough year
last year, with all but six of the top chains with
sales of ¥10 billion or more suffering from
lower sales on last year (see Chart 4). Overall
the womenswear sector performed worse than
menswear for the first time in many years, with
sales down 5.6% compared to -2.5% for mens-
wear. However, the position is reversed for the
top 10, with an increase of 3.5% for the top 10
womenswear firms against a fall of 2.7% for the
menswear top 10. Excluding Uniqlo, Shima-
mura and Point, womenswear specialty chains
with sales of more than ¥1 billion saw sales
fall 6.6%. Needless to say, but the share of the
womenswear market held by the top 10, and
especially the top three, is growing at a good
clip. The top three alone accounted for sales of
¥345 billion, around 27% of the total specialty
womenswear market for companies with sales
of more than ¥1 billion.
As a general guide, the growth in womens-
wear was in one of three segments: Shibuya
brands, Station/Fashion building brands, and
particularly evident in womenswear, with the but add in Uniqlo and this reverses to growth
the top mass market chains in SCs. Among the
likes of Bluegrass and Palemo leading the de- of 5.6%. The specialty apparel sector overall
rest, middle market or just poor value brands
cline. has not seen growth in pretax profits since a
were hammered even more in FY2009 than in
In menswear, FY2009 was the second year 4.4% rise in FY2006. The reasons are well doc-
years past, as lower priced and better alterna-
of negative growth after several years of con- umented, such as the pressure on prices, lower
tives took their place – including the inter-
sistent expansion. Just four among the 19 firms same store sales, slower expansion, and the
national chains, H&M, Zara, and Forever 21.
with sales of more than ¥10 billion saw sales simple fact that there is only so much profit to
Within the top 10, Leilian and Honeys both
increase compared to nine the year before, and be squeezed out of low cost production over-
posted bigger declines on FY2008, and Right
15 the year before that (see Chart 5). Sales of the seas.
On continued to suffer from much lower same
top 10 fell 2.7% on average last year compared Those that did post better profits were ei-
store sales due to a seeming inability to inno-
to -1.8% the year before and an increase of 4% ther benefitting from much better sales on a
vate in recent years. As reported above, a key
and 7.5% in the years before that. Sales for all same store basis such as Uniqlo, or moving to
feature of the market last year was the willing-
chains with sales above ¥10 billion were down lower cost production sources such as United
ness to close loss making stores, and this was
2.5% compared to growth of 0.8% in FY2008 Arrows thanks to its new links with Mitsubi-
and 4.9% in FY2007. The only shi Shoji Fashion. Shimamura too benefitted
Chart 6:
growth came from Uniqlo and from higher margin fashion product for young
Top 20 most profitable specialty apparel firms by pretax
profit and pretax profit margin, FY2009 Point in mass markets, and women, and an increase in store branded sales,
Pretax Pretax
select shop chains Beams and now accounting for 40% of sales.
Profit YonY Margin Baycrews. Although growth
Rank Company ¥ % % was negative, the top 10 mens- More and less stores
1 Uniqlo 106,000 22.5 19.7 wear chains continue to own While numerous chains continued to open
2 Point 16,773 6.1 17.5 an astonishing 77% of the total new stores, the number of chains with a net re-
3 Workman 4,434 -8.1 13.3 specialty menswear market for duction in store numbers was at a record. Sanei
chains with turnover of over ¥1 led the cull, cutting 103 stores during the year,
4 Sakazen Group 1,707 -11.9 11.9
billion (estimated at ¥850 bil- followed by Aeon’s Blue grass, and then Sazaby,
5 Cross Company 2,964 -6.9 11.1
lion in total). Sagami and Palemo with 40 each.
6 Shimamura 38,044 14.2 9.4
Until FY2008, the net number of stores
7 Ryohin Keikaku 13,161 -21.7 9.3
Profits fall again opened or closed was always positive going
8 Nishimatsuya Chain 9,405 0.4 8.0 Following on from FY2007 back more than a decade. In FY2009, howev-
9 Xebio 9,318 -4.2 7.9 and FY2008, profitability again er, for the first time more stores were closed
10 Aoyama Shoji 12,263 -29.1 7.6 fell sharply in FY2009 among than opened (around 1,600 closed versus 1,350
11 United Arrows 5,943 22.1 7.6 the top 100 specialty apparel opened according to Senken). And this year,
12 Pal 5,247 23.7 7.5 firms – if Uniqlo’s profits are the same source suggests that just 840 new
13 Tabio 1,029 -44.6 7.2 excluded. Just eight of the stores are planned, 40% less than 2009 with
14 Honeys 3,892 -5.1 7.1 top 20 most profitable retail- more closures than openings again. Unfortu-
15 Japan Imagination 1,384 9.1 6.7 ers posted higher profits (see nately for suburban shopping malls, the same
16 Baycrews 3,294 -15.4 6.3 Chart 6). According to Senken, survey suggests station and fashion buildings
17 Urban Research 680 - 5.8 for the 90 retailers announcing have become the priority locations for the
18 Sazaby League 4,751 -0.9 5.7 comparable results to the pre- majority of specialty chains. Given that many
19 Zakkaya Bulldog 1,004 -39.6 4.7 vious year and with sales of tenant contracts signed during the boom years
20 Taka Q 974 47.1 4.3 more than ¥1 billion, pretax before 2006 are now coming up for renewal, a
Source: JapanConsuming; Company data, Nikkei, Senken, Teikoku Databank
profit fell an average of 5.1%, widespread changing of the guard is likely »

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16 | focus
Chart 7:
net Store openings and closures FOR THE LARGEST retail chains, FY2009
Chart 4
1,800 90
End of Year Store Nos
Net Change 60

30
Net End of Year Store Nos

1,200

Change in Store Nos

0

-30

-60
600

-90

-120

0 -150
Shimamura
Sanei International
Honeys
Uniqlo
Aoyama Shoji
Nishimatsuya Chain
Workman
Point
Sazaby League
Pal
Palemo
Mac House
Aoki Holdings
Right On
Bluegrass
Haruyama Shoji
Leilian
Sagami

Konaka
Xebio
Zakkaya Bulldog
Suzutan
Rio Chain
Taka Q
Miki House
Cross Company
Baroque
Cox
Sanki
Tutuanna
Familia
Baycrews
Mimatsu
Tamaya
Japan Imagination
Jeansmate
Laura Ashley Japan
San-ai Group
Beams
Ginza Maggy
Zaza Horaya Group
Ships
Suzuya
Urban Research
Eddie Bauer Japan
Ryohin Keikaku

Source: Company Reports; JapanConsuming

at many SCs. have defied this, expanding to contend for the comparable markets like the US and UK, and
With the number of new SCs again down top rankings too, with Cross Company grow- where a price war is being talked about next
on 2008, and existing SCs suffering along with ing 3,570%, Point 687%, Shimamura’s Avail Spring if production and cotton prices allow.
their tenants, opportunities for easy expansion 518%, Pal 467%, Honeys 428% and United Ar- Arguably, there is also plenty of room for ever
were few and demands for a better return were rows 307%. greater competition between firms, with the
many. While 2010 should show a continued Quite what the outlook is for this year and majority of leading firms positioned in very
enthusiasm for expansion for some, the new next remains unclear. Results since March differentiated segments at present, so that new
enthusiasm for closing poor stores looks set have been unstable with some good months entrants or new subsidiary brands could easily
to become more widespread. The good news followed by awful ones, although the better upset the balance and force prices to remain
is that rents are falling, with recent data from managed chains do look to have improved on relatively low.
Senken indicating that half of tenants have last year. What does seem to be clear is that There is also some sense that perhaps shop-
seen rents fall and fewer than 10% seeing rents one of the big issues for the industry in the last pers are tiring of buying so much volume, and
rise, while developers are proving more flex- decade – lower prices – may be coming to end. their wardrobes are groaning under the piles of
ible with easier and shorter contracts. Worldwide, apparel retailers are talking of ris- cheap clothing. But this is hard to quantify, and
ing prices as both production and raw material perhaps it is just too early to have an impact as
A great decade but a hard act to follow costs rise. The price of cotton has risen a re- yet. What is clear is that the appetite, funding
The poor results for FY2009 were caused ported 45% to a 15 year high, and higher man- and opportunity for very rapid store expansion
by a continuation of the same factors that hit ufacturing costs in China have led to a shift in is now over, providing yet another good reason
the market in FY2008, only more dramatic. production to Bangladesh, Laos and Cambo- to work on better return from existing assets.
These were a maturing sector, the downturn in dia – but even there, costs are reported to be JC
apparel consumption and continued pressure rising. Of course, unlike in the EU
on prices. Many specialty apparel chains have and US, Japanese retailers are buy- TUTUANA: THE PINK ONE
enjoyed a heady decade and while the format ing with a strong Yen which will
overall will continue to take share from depart- offset some price increases, but
ment stores and GMS chains, growth is harder even so the market is clearly gird-
to find and competition more intense. And be- ing itself for change, and pricier
ing big has clearly helped in taking advantage apparel for all.
of the best of times and avoid the worst effects While many pundits are pil-
of the downturn. ing in with their views on what
A recent report by Senken showed that the the effect will be, the reality is
combined growth of 84 specialty chains with that Japan, as elsewhere, hasn’t
comparable figures over a 10 year period was seen apparel prices rise for more
46.4%, while growth for the top 10 over that than 15 years, and no one really
period was 70%. During the last two years es- knows how customers will react.
pecially, the better performance of the top 10 The only caveat to this is perhaps
versus that of the rest has become ever more the t-shirt market where retail
pronounced. But the smaller, nimbler firms prices in Japan remain higher than

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17 | retail data

Life in the old dogs yet?

It took about 10 years longer than it should, but July brought a long proof that department stores can innovate – and that innovate means
overdue sign that some department stores may actually still have some doing something new rather than simply tweaking a formula that in-
life in them. Across the country, top stores suddenly recorded improved transigent executives insist can’t be changed.
sales on last year. The list was led by Daimaru and Hanshin in Osaka, Retail sales continue to climb overall thanks to further strength in
both with highly modified stores compared to last year, but it is, again, the specialty retailing sector, up 4.3% in August, although, at least over-
Seibu Ikebukuro that really stands out recording its second month of all department store sales seem to have reversed the trend of the earlier,
sales growth in a row. The adaptations and improvements being intro- month, down 5% overall and 3.2% for JDSA members alone.
duced through direct management from parent company Seven & I is

METI Retail and Distribution Trade Figures

Department Stores Chain Stores Convenience Stores Wholesale Sales Retail Sales Price Indices
Store Sales YonY Store Sales YonY Store Sales YonY YonY Sales YonY Sales YonY
Nos ¥100m % Nos ¥100m % Nos ¥100m % †% ¥bn % ¥bn % Whs Rtl
2001 Total 387 96,284 -3.8 3,511 127,093 0.7 36,176 68,788 3.3 -1.7 423,996 -5.4 136,808 -1.9 100.0 101.5
2002 Total 372 93,692 -2.7 3,641 126,702 -0.3 37,083 69,800 1.5 -1.7 400,346 -5.6 131,413 -3.9 98.0 100.6
2003 Total 364 91,067 -2.8 3,755 126,526 -0.1 37,691 70,964 1.7 -2.3 399,254 -0.3 128,870 -1.9 97.1 100.3
2004 Total 358 88,536 -2.8 3,932 126,139 -0.3 38,621 72,892 2.7 -0.6 421,267 4.6 133,712 1.0 98.4 100.3
2005 Total 345 87,630 -1.0 3,940 125,656 -0.4 39,600 73,596 1.0 -0.6 434,079 3.0 135,055 1.0 100.0 100.0
2006 Total 335 86,442 -1.4 3,989 125,010 -0.5 40,183 73,990 0.5 -2.4 459,111 5.8 135,257 0.1 102.2 100.3
2007 Total 323 84,675 -2.0 4,124 127,336 1.9 40,405 74,894 1.2 -0.9 478,594 4.2 135,080 -0.1 104.0 100.3
2008 Total 312 80,790 -4.6 4,258 128,769 1.1 40,745 79,426 6.1 4.2 485,605 1.5 135,477 0.3 108.8 101.7
2009 Jul 297 6,730 -12.8 4,324 10,627 -2.9 41,331 7,156 -5.1 -7.5 30,396 -29.8 11,287 -2.4 102.9 100.1
Aug 296 4,995 -10.3 4,333 10,709 -2.3 41,535 7,196 -3.0 -5.6 28,705 -28.0 10,769 -1.8 102.9 100.4
Sep 293 5,189 -9.5 4,341 9,751 -1.1 41,475 6,610 -2.4 -5.7 31,197 -27.1 10,547 -1.3 102.9 100.4
Oct 291 5,585 -12.3 4,349 10,025 -2.7 41,540 6,739 -2.9 -5.6 30,252 -24.2 10,822 -1.0 102.1 100.0
Nov 290 6,117 -13.3 4,377 10,098 -6.1 41,642 6,403 -3.6 -6.4 29,624 -18.7 11,030 -1.1 102.1 99.8
Dec 290 8,053 -7.0 4,391 12,639 -2.3 41,724 6,891 -2.8 -5.7 32,756 -14.6 13,011 -0.2 102.1 99.6
2009 Total 290 71,775 -11.2 4,391 126,011 -2.1 41,724 79,808 0.5 -2.1 361,467 -25.6 132,327 -2.3 103.0 100.3
2010 Jan 290 6,209 -7.4 4,396 10,938 -3.7 41,789 6,199 -2.5 -5.5 27,213 -6.1 11,124 2.3 102.3 99.4
Feb 287 4,763 -7.4 4,387 9,260 -1.2 41,975 5,777 -1.8 -4.9 28,131 -2.7 10,397 4.2 102.4 99.3
Mar 285 5,915 -5.6 4,391 9,916 -3.2 41,895 6,525 -2.4 -5.1 33,837 1.5 12,294 4.7 102.6 99.6
Apr 284 5,276 -6.0 4,399 10,187 -1.6 41,939 6,438 -1.2 -3.9 30,563 3.1 11,401 4.9 103.0 99.6
May 282 5,360 -4.1 4,411 10,297 -2.8 41,950 6,703 -0.8 -0.8 27,819 0.7 11,057 2.9 103.2 99.7
June 280 5,363 -7.4 4,412 10,272 0.4 41,955 6,692 1.2 -1.4 30,221 0.6 11,012 3.3 102.8 99.7
July 277 6,514 -3.2 4,413 10,676 0.5 42,063 7,363 2.9 0.3 30,359 -0.1 11,720 3.8 102.7 99.2
August 277 4,743 -5.0 4,419 10,754 0.4 42,171 7,427 3.2 0.7 29,029 1.1 11,232 4.3 - -
Notes: † Second Year on Year column for Convenience stores indicates like-for-like sales; Wholesale price figures were readjusted so that 2005=100 in January 2008, and retail prices are also pegged to
2005=100. Chain Store Sales adjusted February 2008. Source: METI; BOJ; JapanConsuming.

Consumer income & expenditure: WORKING HOUSEHOlds, two or more people

Average Monthly Income & Expenditure Working Households 2 or more people
Non-consumption
communication
Consumption

consumption
Medical care

Net increase
Expenditure

Expenditure

expenditure
expenditure
Transport &

Disposable
Furniture &

Clothing &

deposits &
household

recreation
Education

insurance
Culture &
footwear
Housing

utensils
Utilities
Income

income
Other
Food
Total

2003 524,810 410,709 326,566 71,394 22,222 20,718 10,427 15,444 11,603 44,730 17,857 32,181 79,991 84,143 440,667 73,327
2004 531,690 417,038 331,636 71,935 20,877 20,950 10,392 14,867 11,545 47,356 19,482 33,549 80,683 85,402 446,288 75,584
2005 524,585 412,928 329,499 70,947 21,839 21,328 10,313 14,971 12,035 46,986 18,561 32,847 79,671 83,429 441,156 71,798
2006 525,719 404,502 320,231 69,403 20,292 21,998 9,954 14,430 11,463 45,769 18,713 31,421 76,786 84,271 441,448 82,158
2007 528,762 409,716 323,459 70,352 20,207 21,555 9,914 14,846 11,697 46,259 19,090 33,166 76,372 86,257 442,504 80,900
2008 534,235 416,415 324,929 71,051 19,156 22,666 10,501 14,263 11,593 48,259 18,789 33,390 75,260 91,486 442,749 81,213
2009 518,226 409,374 319,060 70,135 19,614 21,466 10,152 13,773 12,036 47,093 19,493 33,243 72,055 40,878 427,912 77,853

2009. 07 573,821 420,874 316,623 69,830 21,387 17,503 12,216 13,508 11,181 50,090 14,385 34,223 72,301 48,335 469,571 97,157
2009. 08 466,393 394,961 318,067 72,243 20,529 18,643 12,178 10,092 12,289 49,477 12,739 39,559 70,319 33,259 389,498 35,094
2009. 09 422,120 375,131 301,796 68,121 17,674 17,617 9,562 10,978 12,060 46,432 21,907 31,622 65,823 30,801 348,785 7,288
2009. 10 459,704 379,055 306,399 69,540 18,342 17,570 9,285 13,196 12,394 47,510 23,571 28,921 66,071 30,507 387,048 53,654
2009. 11 428,219 377,029 303,564 67,629 20,579 18,984 10,262 15,280 12,510 44,529 15,892 31,482 66,417 31,131 354,753 28,287
2009. 12 906,884 497,751 359,254 81,158 20,341 21,639 12,512 16,353 13,218 53,727 16,230 40,327 83,752 54,251 768,386 345,613
2010. 01 434,344 393,749 321,633 67,140 20,145 25,663 9,335 15,660 11,134 49,254 16,576 31,768 74,958 72,116 362,227 22,908
2010. 02 464,866 359,036 285,211 63,085 17,231 26,204 8,747 11,042 10,743 40,796 17,292 29,783 60,288 73,825 391,042 58,285
2010. 03 439,410 429,495 352,552 69,088 21,290 25,805 10,091 15,745 11,682 56,364 25,585 37,018 79,882 76,944 362,466 -7,788
2010. 04 474,616 422,257 331,621 66,194 21,323 23,515 8,743 12,602 10,520 45,632 35,433 31,934 75,725 90,636 383,980 15,691
2010. 05 421,413 404,197 303,326 71,054 21,053 21,206 8,502 13,659 10,323 45,403 14,552 33,936 63,638 100,872 320,542 -7,281
2010. 06 733,886 432,025 297,809 66,926 22,666 19,038 11,523 13,150 11,235 43,511 11,785 31,485 66,490 134,217 599,669 258,511
2010. 07 562,094 415,306 316,659 70,593 17,225 17,993 13,902 14,894 12,241 51,129 13,060 34,481 71,141 98,647 463,447 99,106
2010. 08 470,717 405,997 323,758 72,256 23,554 19,642 11,564 10,412 10,479 57,305 11,408 38,472 68,666 82,239 388,478 31,795
Notes: JC uses figures for working households of two or more people, including primary industry workers. Annual figures indicate 12 month averages. Source: Household Accounts; JapanConsuming.

SINGLE USER SUBSCRIPTION © PLEASE DO NOT DISTRIBUTE 10.2010 | JapanConsuming

 retail data | 18
Leading Department Store outlets
July
by sales DPS/chains by category Dept. Stores by region
August August
Jul/ Sales YonY Ratio Aug/ Sales YonY Ratio Aug/
Sales YonY ¥m % % Jul ¥m % % Jul
Jun
Department Store Sales by Category By Major Metropolitan Areas
Company Locations ¥m % % Men's Apparel 22,551 -3.5 5.2 -40.7 Sapporo 11,402 -0.8 2.6 -20.9
Tokyo Stores Women's Apparel 87,984 -4.6 20.2 -36.2 Sendai 5,673 -7.9 1.3 -33.3
Isetan Shinjuku 21,337 2.4 25.2 Children’s Apparel 8,502 -7.0 2.0 -36.5 Tokyo 103,395 -3.4 23.8 -29.6
Mitsukoshi Nihonbashi & 3 others 20,538 -1.7 14.1 Other Apparel 11,968 -10.5 2.8 -24.3 Yokohama 24,620 -2.7 5.7 -26.8
Accessories 53,226 -3.6 12.2 -24.5 Nagoya 26,471 6.0 6.1 -29.8
Seibu Ikebukuro 14,666 1.5 9.2
Cosmetics 25,761 -1.5 5.9 -5.3 Kyoto 18,202 -4.5 4.2 -23.7
Takashimaya Nihonbashi 12,109 -2.7 10.8 Jewellery etc 19,290 -7.1 4.4 -20.8 Osaka 54,380 -3.1 12.5 -30.3
Tobu Ikebukuro 10,248 -2.6 11.2 Other General Goods 19,563 -6.7 4.5 -9.3
Kobe 12,686 -2.0 2.9 -26.9
Tokyu Shibuya, Higashiyoko 9,455 -0.6 16.1 Household Goods 23,533 -2.6 5.4 -13.3
Hiroshima 10,792 -6.1 2.5 -29.9
Foods 129,825 -2.1 29.9 -32.2
Odakyu Shinjuku 8,533 -3.3 16.8 Fukuoka 12,491 -4.5 2.9 -27.6
Restaurants 16,413 -1.9 3.8 3.0
Keio Shinjuku 7,795 -1.3 6.0 Total 280,111 -2.6 64.4 -28.7
Services 5,826 2.3 1.3 2.5
Takashimaya Shinjuku 6,489 0.9 25.3 Other 10,225 16.9 2.4 -10.4 By Region
Total 434,668 -3.2 100.0 -27.6 Hokkaido 2,586 -1.4 0.6 -19.5
Matsuya Ginza 6,146 -1.8 18.6
Chain Store Sales by Category Tohoku 9,022 -5.7 2.1 -15.5
Daimaru Tokyo 5,753 3.0 28.7 Kanto 71,580 -3.1 16.5 -26.6
Foods 676,391 -4.0 65.0 4.0
Matsuzakaya Ueno 4,821 4.8 25.7 Chubu 11,917 -6.9 2.7 -28.0
Apparel 93,597 -1.4 9.0 -20.9
Takashimaya Tamagawa 4,479 0.8 26.7 Kinki 15,336 -4.7 3.5 -18.3
Household Goods 85,157 -6.2 8.2 -0.8
Odakyu Machida 3,960 -1.5 7.2 Chugoku 11,158 -5.5 2.6 -21.7
Medicines & Cosmetics 35,959 -1.9 3.5 -1.9 Shikoku 7,847 -6.5 1.8 -34.0
Seibu Shibuya 3,816 -2.7 12.0 Furniture & Interior 33,488 5.8 3.2 -6.6 Kyushu 25,111 -4.9 5.8 -26.9
Mitsukoshi Ginza 2,588 -38.3 10.7 Electrical Goods 14,058 -1.9 1.4 -3.5 Total 154,556 -4.4 35.6 -25.4
Kansai Stores (Osaka, Kyoto, Kobe) Other Household 35,560 -1.2 3.4 -15.4 National Total 434,668 -3.2 100.0 -27.6
Hankyu Umeda & 5 others 20,840 -0.9 46.4 Services 3,774 -4.9 0.4 -7.4 Source: JDSA; JapanConsuming.

Kintetsu Abeno & 6 others 18,171 -5.2 21.3 Other 62,440 -3.7 6.0 -0.8
Takashimaya Osaka & 3 others 14,940 0.8 29.1 Total 1,040,425 -3.5 100.0 -0.9
Daimaru Shinsaibashi, Umeda 13,944 14.3 47.3 Note: Department store categories updated May 2010 to match JDSA statistics.
Source: JDSA, JCSA, JapanConsuming.
Daimaru Motomachi & 3 others 10,529 7.1 37.9
Hanshin Umeda 10,076 15.6 29.0
Takashimaya Kyoto, Rakunishi 8,193 -4.3 22.5
Daimaru Kyoto, Yamaka 7,288 5.2 31.9 GMS chains
GMs Sales and supermarkets
Isetan JR Kyoto 5,925 0.1 26.3 July
Sogo Kobe 4,608 4.1 5.3 Sales Jul/ Jul/
Keihan Moriguchi & 3 others 4,429 -2.8 7.0 Space Jun Jun Sales/ Sales/
Seibu Takatsuki, Hachio, Otsu 4,213 -2.3 -4.6 Sales YonY 1,000 1,000 Store Store sqm Store
Company ¥mn % sqm sqm Nos Nos ¥ ¥m
Other Regions
Takashimaya Yokohama, Konandai 14,070 -1.8 17.0 1 Aeon Retail † 136,995 -4.4 3,295 - 494 - 41,577 277
Matsuzakaya Nagoya 11,198 -4.8 30.4 2 Ito-Yokado 95,698 1.5 1,724 0 174 0 55,509 550
3 Uny 63,298 -2.6 1,778 -1 233 -1 35,601 272
Takashimaya JR Nagoya 9,277 4.4 30.2
4 Daiei 58,353 -1.7 1,124 -1 220 -1 51,915 265
Sogo Yokohama 9,168 0.6 5.1
5 Life Corporation 40,176 3.5 539 0 211 0 74,538 190
Iwataya A Side 7,344 -0.9 34.8 6 Izumi 36,821 5.1 1,085 1 77 -1 33,936 478
Mitsukoshi Sakae 7,230 -6.7 33.1 8 Maruetsu 28,221 1.3 326 1 249 0 86,567 113
Fukuya Hiroshima 6,178 -2.3 69.6 7 York Benimaru 27,832 1.1 494 0 167 2 56,340 167
Sogo Chiba 5,942 -1.4 5.7 10 Izumiya 25,443 -1.6 553 1 87 0 46,009 292
Meitetsu Nagoya 5,701 -6.0 28.1 11 Heiwado 25,203 0.2 722 0 124 0 34,907 203
Daimaru Hakata & Nagasaki 5,015 -3.1 -0.3 9 Fuji 25,106 2.8 668 0 95 0 37,584 264
Daimaru Sapporo 5,009 10.8 29.3 12 Beisia 23,397 3.8 653 5 98 0 35,830 239
13 Coop Kobe 20,542 -7.9 220 0 145 0 93,373 142
Yamagataya Kagoshima 4,848 -0.1 50.6
14 Tokyu Store 19,082 -1.6 237 0 97 0 80,515 197
Sogo Hiroshima 4,780 -1.2 15.1 17 Okuwa 18,248 -1.7 363 0 147 0 50,270 124
Tenmaya Okayama, Kurashiki, Hiroshima 4,471 -3.6 8.8 15 Summit 18,240 0.1 166 0 98 0 109,880 186
Izutsuya Kokura, Kurozaki 4,377 -8.5 -14.7 16 Kasumi 17,760 0.1 231 0 138 0 76,883 129
Fujisaki Sendai 4,338 -1.8 45.3 18 Inageya 13,662 -4.9 194 0 126 0 70,423 108
Saikaya Kawasaki, Yokotsuka, Fujisawa 4,202 -21.5 24.2 19 Tobu Store 6,776 -1.5 108 1 56 1 62,741 121
Tobu Funabashi 4,060 -3.1 20.3 Total 700,853 -1.9 14,480 - 3,036 0 48,401 231
Marui Imai Sapporo 3,743 -14.9 19.4 Notes: From March 2010, Aeon stopped releasing sales figures for all stores. The numbers here are estimated based on same store sales
change compared to overall sales in the previous year and should be treated with caution. Sales space and store numbers accurate to
Takashimaya Iyotetsu Matsuyama 3,721 -3.5 45.5 February 2010 only. In March 2010, Uny changed its method of accounting for sales space, increasing space by 159,000 sqm. Sales
Mitsukoshi Fukuoka 3,417 -9.8 37.7 space and store numbers not updated monthly by all companies.
Source: NMJ; Japan Chain Store Association; JapanConsuming.
Mitsukoshi Sapporo & Sapporo Alta 3,028 -6.5 23.8
Source: Nikkei & Japan Department Store Association: JapanConsuming.

Leading city shopping centre sales retail sales year on year for major formats
Retail Sales Year on Year: Major Formats 2009-2010
August YonY %
Kanto Total H’hold Apparel Food 10.0
Lumine Shinjuku -4.1 4.5 -6.4 -9.6 SCs DpS
Lumine Est 0.7 1.7 1.6 -4.0
GMS CVS
Shinjuku MyLord -2.2 -2.2 -4.2 -2.9
Ikebukuro Parco -3.5 - - -
Retail Overall
Lumine Ikebukuro -2.3 3.0 9.0 -8.3 5.0
Shibuya Parco -11.1 - - -
Shibuya 109 -6.0 - - -
Atre Ebisu 4.0 4.8 5.0 4.0
YonY Change %

Tamagawa Takashimaya SC 4.2 - - - 0

Lumine Omiya -4.8 -3.2 -12.3 12.1
Lumine Yokohama -12.0 -11.1 -8.1 -21.0
Kawasaki BE 0.6 1.1 2.6 -9.8
Shinyurigaoka OPA -1.7 -3.2 -8.4 -2.7
Kansai
-5.0
OPA Kawaramachi -9.9 -9.6 -7.7 -20.8
Hankyu Sanbanchi -8.8 -11.4 -9.9 -2.8
HEP Five -6.5 -6.5 - -5.7
Est -14.8 -15.9 -14.6 -3.0 -10.0
Gare Osaka -5.7 -5.9 -7.0 -1.7
Keihan Mall 3.0 2.2 2.4 -6.3
Shinsaibashi Opa -8.1 -9.1 -10.6 -13.1
Nanba City 1.8 - -0.3 5.8
-15.0
Sannomiya Opa -7.8 -8.0 -6.0 -1.4
J F M A M J J A S O N D J F M A M J J A
Tennoji Mio -7.9 -9.4 -8.2 -0.3
Kyushu Source: JCSC; JapanConsuming.
Tenjin Core -4.5 -4.0 -3.1 -9.9
Source: Senken; JapanConsuming.

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