Duty Free Cosmetics?

According to the Japan National Tourism Association, more than half of all Chinese visitors to Japan buy cosmetics as souvenirs as they are small and easy to take home in bulk.  No wonder the Japan Department Stores Association recently submitted a request to the Ministry of Land, Infrastructure, Transport and Tourism to add cosmetics to the duty-free list, a list that has traditionally included sales of items taken from Japan including apparel, and electronics not cosmetics, but with the Japanese government expected to make it easier for Chinese nationals to get tourist visas, the retail industry, particularly the cosmetic industry sees big opportunity in the Chinese status shopper as do the department stores where a vast majority of cosmetics are sold.  Could this be a new profit driver for department stores or just another quick fix?

Fast Retailing Among the Top Ten Retailers of 2009

In 2009 for the first ever Fast Retailing ranked among the top ten retailers in terms of sales with 16.8% increase from 2008 (where they were number 12 on Nikkei's Retail Survey).  Overall Japanese specialty stores rang up strong sales in fiscal 2009 even as the economy was still in a downturn.

Survery Results from Nikkei Retail Survey

Weak Euro Makes Luxury Goods Affordable Again

Well, at least a little. With the Euro in recent decline prices for European goods and services are also in decline making the luxury bag, watch and even luxury cars more affordable. In a recent study by Nikkei Japan several luxury brands were found to have lowered their prices due to the currency exchange rate. While not naming brands a Spanish luxury brand recently marked down one of their popular handbags from 180,000 yen to 150,000 yen. While another French luxury brand soon followed. Of course luxury brands do not advertise price cuts or sales, even when it is due to currency exchange as any discount would have the perception of discounting and damaging the brand. These price adjustments occur to prevent the differences between prices in Europe and those in Japan from becoming too large and noticeable - especially with the popularity of online price comparison, thus now is why you can purchase a Rolex watch at a discount brand shop at 499,000 yen instead of the regular price of 539,900 yen. The Euro's weakness is expected to continue to for several more months so now is the time buy that luxury item you have been longing for but was just a little financially out of reach.

Retail Sales Experience Five-Month Sales Increase

Sales at Japanese retail stores including fashion and luxury retailers increased 2.8% in May this year from May of 2009. This is the fifth straight month of retail sales increases following an especially strong increase in April this year of 4.9%.

This is a positive sign consumers are slowly resuming their spending as economic conditions improve including employment and income.

Data: Ministry of Economy, Trade and Industry

Marui Taking Over Kyoto Hankyu Department Store

H20 Retailing Corporations' Hanyku Department Store in Kyoto Shijogawara is set to close on 22 August - and set to open in its place is Marui Group Co. No further details are currently available though as I learn more I will update Tokyo Fashion Daily.

Fast Retailing Goes English

To successfully expand and survive in the competitive global apparel market Fast Retailing, the operator of Uniqlo and several other fast-fashion and apparel brands announced it is going to make English the official language spoken by its managers worldwide, with implementation to be complete by 2012 March.

Following the example of the subsidiaries of several American companies in Japan, Fast Retailing will require executives at the company's offices at home and abroad to primarily use English at meetings, in email and in paperwork. This will also affect store manager in non-English speaking companies including Japan. The goal is to have all executives and store managers reach a TOEIC score of 700.

This is definitely a step in the right direction for Fast Retailing to achieve their goal of global apparel domination.

Shimamura Co. Same-Store-Sales Up in June

Bouncing back from sales declines in April and May, Shimamura Co., the fast-fashion store operator experienced a same-store-comparartive sale increases of 3.5% for June. The increase was rewarded with an increase in their stock price of 330 yen to 8,470 yen.

United Arrows' Stock Up - Fast Retailing is Down

With domestic stocks in demand and with United Arrows profit expectations increasing, so too is their stock price.  Despite any real incentives United Arrows' stock price increased 115 yen from Wednesday to 1,160 yen today.

Too bad the same cannot be said for Fast Retailing's stock which dropped 120 yen in value from Wednesday to 14,140 yen today, even on the news they were expanding and diversifying their production outside of China.

Japanese Apparel Makers Look Outside of China for Production

With increasing labor costs and the rising Yuan, Japanese apparel makers are looking outside of China for production. Companies like Fast Retailing have already stepped up their production outside of China to 15% this year and look to double it to 30% by the end of 2011. Following Fast Retailing's lead Aoyama Trading Company which produces roughly 70% of their suits in China is also looking to expand their production outside of China to 50% buy 2015. Countries of interest for expanding production facilities are Vietnam, Sri Lanka and India - with all of them offering low-cost labor and some offering zero tariffs on textiles.

Another Quick Fix for Department Stores?

Department stores in Japan experiencing 27 straight months of sales decline are searching for any way to increase sales. From the successful opening of Forever 21 in Ginza Matsuzakaya to unimaginative renewals, department stores are trying it all. The latest endeavor by department stores in Japan is by Daimaru Matsuzakaya Department Store of J. Front Retailing Company. Starting 1 July via the internet Daimaru Matsuzakaya will be buying and reselling second-hand luxury goods. Daimaru Matsuzakaya's new business will cover about 250 luxury brands across categories, including Louis Vuitton, Gucci and more. To become a seller you must register and too buy you can simply go to the web site and peruse the used luxury goods and make your purchase. Prices will vary depending on the items' condition though all second-hand goods are expected to sell for about half the price of a new one.

Will you buy second-hand luxury goods online and especially from a respected, high-end department store like Daimaru Matsuzakaya?

Japan Department Store Sales Fall in May...Again

In May, for the 27th month in a row sales at department stores in Japan fell. The decrease in sales this year was only 2.1% compared to May 2009, not as bad as the Japan Department Store Association expected - though a decrease in sales is still a decrease in sales - nothing to celebrate. The Japan Department Store Association also expects sales to decrease further in this month (June) due to the rainy season.

I am curious how department stores are able to continue operating after experiencing 27 straight months of sales decreases.  Any thoughts?


* Data from Japan Department Store Association

Frederick's of Hollywood to be Distributed in Japan

Look out Victoria's Secret and Agent Provocateur, Frederick's of Hollywood will soon be in Japan. Although not retail and not just intimate apparel, Frederick's of Hollywood will be distributed through an international distributor in Japan.

The decision to distribute internationally came after a strong third quarter rebound as Frederick's of Hollywood looks to increase their licensed product categories from swimwear and intimate apparel into a lifestyle brand including fragrance, jewelry, accessories, footwear, headwear, handbags and costumes.

Could the entry of Frederick's of Hollywood be the push Victoria's Secret needs to finally enter the Japan market?

Sales are not Sparkling at Damiani Japan

Italian jeweler Damiani Group posted a sales decline in Japan of 12.2%.  Citing the still depressed economy and consumer reluctance to spend, especially on high-priced items Damiani is experiencing sales declines in both retail and wholesale in Japan and other geographic markets.

Department Store Sales Come Early This Year

With traditional sale season starting in July, Japan department stores eager to spark sales and reclaim fleeing customers have moved up their sales to June, with some already started. 

Hankyu Hanshin Department Stores in Osaka took the lead by already discounting their summer apparel and women's shoes on 9 June as well Sogo & Seibu Co. also discounted their prices on private-label clothing and accessories at some stores, including the Seibu Ikebukuro location.  Following their lead Daimaru Matsuzakaya Department Stores will begin sales at all 19 of their directly run stores from today. 

Beginning summer sales season early is beginning to turn into a trend as this is the second year in a row department stores have moved up their sales from July to June.  Will the trend continue?  And will customers ever pay full-price again when they know a sale is just around the corner?

GLS Japan Announces Glamour-Sales MEN’S

I like to shop and like most people these days I shop both retail and online, so today I was excited to hear about the launching of Glamour-Sales MEN’S, the first “Men’s only” flash-sale website in Japan.  Launching at 759pm today, Glamour Sales Men’s serves modern dads who are looking for quality brands from sports, apparel, accessories, design and lifestyle items to kid’s wear and cooking utensils.  While Glamour Sales Men’s remains loyal to Glamour-Sales mission of bringing well selected quality brands to its member base, the new site is designed to target modern men in an easy-to-navigate, informative and fun shopping experience with a distinctly masculine style.

With father's day approaching quickly the timing couldn't be better as Glamour Sales Men’s initial sales include Ray Ban, Maurice Lacroix, Longchamp, Peugeot, OmniPeace, Timex, Folli Follie, Roen, Baby Bjorn…

“We saw an opportunity in the men’s online retail space after hearing from our male members that they wanted their own site – and we answered them with Glamour-Sales MEN’S”, says Guillaume Davin, GLS Japan CEO. "At the same time we saw the emergence of a new generation of men who are adapting and expanding their family roles. Modern dads do not hesitate to help with cooking, cleaning, child caring and shopping for the family. They are technologically sophisticated with Internet, e shopping and mobile shopping, are current with fashion trends, physically fit and heath conscious – so that they can keep up with their children. Glamour-Sales MEN’S gives the “modern father” everything he needs to live the life he would like to lead” adds G Davin.

Launched in August 2009, Glamour-Sales.com has established itself as one of the leading flash-sale retailers in Japan. Glamour Sales has arranged over 250 sales to serve to its exclusive, invitation-only membership. Each sale lasts just 72 hours and features luxury and quality brands across various product categories. Glamour sales currently serves 200.000 members through its 3 platforms, PC, iPhone and mobile.

For more information check out Glamour-Sales Men's, and for press information contact Sabrina Watanabe at GLS KK 03.3479.5529

Issey Miyake Names New President

Nobuyuki Ota, the president of Issey Miyake is stepping down after ten years leading the company.  With his departure longtime employee Masakatsu Nagatani has been named the new president.  Starting from 1 July 2010 Nagatani will take over the Japanese fashion house which is currently in good shape with over 10.7 billion yen in sales turnover in 2009. 

These Shoes Aren't Just Made for Dancing

Repetto, the French company made famous by their ballet flats is expanding their retail presence in Japan. With a shop-in-shop already in place in department store Printemps, Repetto has signed a deal with Look, Inc. to expand their retail stores including stand alone shops in Tokyo & Nagoya set to open in 2011.

Repetto, with their Parisian-charm has made their name famous with their ballet flats also big in the high-heel category, with about one-third of their sales coming from heels.

Controlling production they still manufacture their shoes in Dordogne, France as well they aim to control distribution and skip traditional shoe stores and sell directly to department stores and multi-brand fashion retailers including Opening Ceremony, Rodarte, and Colette in Japan.

With their well-priced, feminine and sweet designs Repetto is sure to get their foot-in-the-door in the Japan market.

Orrizonti Files for Bankruptcy

Japanese fashion company Orrizonti, distributor of such popular fashion brands Ann Demeulemeester, Vivienne Westwood and Patrizia Pepe has filed for bankruptcy protection today. Orrizonti which also has in-house brands Interplanet, Actuel and IP International had sales of 9.1 billion yen and debts of 8.4 billion yen down from its 1999 sales peak of 11.6 billion yen.

What will happen to the Ann Demeulemeester, Vivienne Westwood and Patrizia Pepe brands in Japan? Well, not all is lost even if Orrizonti is, as other Japanese distribution companies are already vying for the rights to distribute them in Japan.

Top Luxury Brands in Japan

According to a survey conducted by the New York-based Luxury Institute, involving six hundred participants (half female, half male, all with a minimum household income of $165,000) Japan's top rated luxury brands are not just about high quality and craftsmanship but also involve exemplary customer experience on a highly emotional level as well as the romantic aspect of by-gone times with a strong brand heritage.  The brands were rated in five areas: women's RTW, women’s handbags, women’s shoes, men's RTW, and men’s shoes with tthe criteria for each area; quality, uniqueness and exclusivity as well as customer service with the top performing brands being given the accolade "Best of the Best" - and these brands are Hermes which was in the top three in every section, except for men’s Shoes.  Ferragamo, Giorgio Armani and Chanel were also winners as well as Testoni, John Lobb and Christian Louboutin who also won in both men's and women’s shoes.  The "Best of the Best" are (score of 1-10)...

Women's RTW

Hermes -7.28

Chanel -7.27

Giorgio Armani -6.80


Women's Handbags

Hermes -7.77

Chanel -7.06

Louis Vuitton -7.01


Women's Shoes

Christian Louboutin -7.39

Hermes -7.20

Ferragamo -7.18


Men's RTW

Ermenegildo Zegna -7.17

Hermes -7.01

Giorgio Armani -6.89


Men's Shoes

John Lobb -7.34

Testoni -7.32

Ferragamo -7.11

Department Stores' Quick Fix

The retail marriage of Forever 21 and Matsuzakaya Ginza is a successful one so far.  With the fast-fashion chain Forever 21 attracting crowds of young women not just to their store but also to Matsuzakaya Ginza, which helped push up sales in May to 4.4% - the first time in eleven months Matsuzakaya Ginza has experienced positive sales. 

Other department stores are hoping for similar success like Fast Retailing which recently opened three new Uniqlo shops in Takashimaya department stores.  So far the results have yet to be seen but that does not stop other department stores from reaching out to trendy fast-fashion brands looking to lure young shoppers back to their stores.  It is also rumored that several department stores are currently in talks with H&M to open one of their successful fast-fashion stores in the hopes of increasing customer traffic and sales. 

Even if these mergers between department stores and fast-fashion chains prove successful it is only a short-term solution, as the reasons behind the fall of the once mighty department stores is many and will require more than just a quick trendy fix.

Uniqlo on the Rise Again

Well, investors were wrong in hedging against sales growth in May for Fast Retailing's Uniqlo. For the first time in three months and only the second time this year Uniqlo saw same-store-comparative sales rise in May 3.1% while customer traffic grew 6.9%, though spending per customer fell 3.5%.

With the unseasonably cold weather over and a long and very hot summer about to begin Uniqlo expects their same-store-comparative sales to keep rising, along with the temperature.

Shares at Fast Retailing Declining Fast

With investors hedging that sales at Fast Retailing's Uniqlo will decline for a third straight month and four out of five months for 2010, Fast Retailing's stock price declined one day before the announcement of May sales resultd.

Fast Retailing has about 790 Uniqlo stores in Japan and worldwide and has forecasted growth of opening 50 new stores a year over the next five years to reach its goal of becoming the biggest apparel company (in terms of sales) worldwide.

Where They are Shopping

Japanese consumers’ preferences of shopping locations were recently revealed in a survey by Rakuten Research Inc. The survey conducted in mid-May of this year polled women in their 20’s to 60’s who have purchased a foreign luxury brand item in the last three years, with 75% of the respondents having made a foreign luxury brand item in the last one year.

Shoppers have spent their money 32% of the time at department stores, followed by overseas duty-free shops and outlet stores 26% of the time. More shoppers are now buying online with 24% of respondents buying on online at ecommerce sites and only 13% of respondents are making a purchase at boutiques.

What does this all mean? Even though department store sales have been decreasing for the past 26 straight months along with their customers, they are still winning the majority of Japanese shoppers’ luxury brand purchases. As well, sales at online shopping sites like GLS are increasing as Japanese consumers are finding better bargains online and paying up to only half the price they would pay at traditional retail boutiques. Outlets are also increasing as consumers are still looking for bargains and though this bodes well for overall sales it has the consequence of pushing down average sales per item as well as reflects the consumers’ hesitation of paying full-price for luxury brand goods. The worst is for boutiques as they have witnessed decreasing sales and customers losing out to lower-priced outlets, ecommerce shopping sites and more full-service department stores.

Hopefully these research numbers will be a wake-up call to foreign luxury brands to develop their sales channel strategies moving forward, i.e., relying more on ecommerce sites and less on outlets and that additional boutique.