Shimamura Sees Profits & Sales Grow

Driven by strong growth of their Avail private label line Shimamura Co. reported an increase of 9% to 18 billion yen n net profits for the first nine months of the year ending November.  Shimamura also saw an increase of sales of 2% to 327.6 billion yen.  Even with same-store-sales decreasing, all-store sales rose 1% due to new store openings.  Overall operating profits rose 8% to 30.5 billion yen.

Data Shimamura Co.

J. Front Retailing Sees Profits Where There Are No Sales

Experiencing strong women’s apparel sales J. Front Retailing reported a 50% to 4.7 billion yen increase in their net profit for the first nine months of the year ending in November.  Even as net profit grew, sales dropped 3% to 687.7 billion yen with pretax profits rising 1% to 10.2 billion yen.

J. Front Retailing was able to accomplish this by cutting costs in sales & administration, general management and human resources (staff). 

It goes to show how inefficient business really was for J. Front Retailing if they were able to realize positive profits while sales declined.

Data J. Front Retailing

F21 Shibuya

For those of you who missed it Forever 21 opened their new Shibuya flagship store on Thursday 23 December.  The new flagship store is the fifth for Forever 21 in Japan (with more to follow) and is more than 4,000sqm, even larger than the Ginza Matsuzakaya's 3,000sqm store and now the largest F21 store in Asia…so far.  Spread out over six floors; 1-4 are for the ladies, 5 for men, women & kids and floor number 6 is for accessories including shoes and intimates.

The Shibuya Forever 21 store took over (with lots of renovations) from HMV which vacated the location this past summer. Originally planned to open in January, the store was able to open earlier as renovations were completed ahead of schedule.

What’s next for Forever 21? A sixth store in Fukuoka is set to open by 2012, followed by stores in Osaka, Nagoya and Kyoto. Six down and only ninety-four more stores in Japan left to open. Forever 21 plans on being in Japan for…well, forever.

Information Forever 21

An End To An Icon; Seibu Yurakucho

Today, Seibu Department Store in Yurakucho bids a fond goodbye to Japan.

Long an icon of department store might it is now just a vivid reminder of how far the mighty department stores in Japan have fallen. 

First opened in 1984, Yurakucho Seibu steadily lost costumers and sales as other apparel and accessories retailers opened up and took hold.  For the year ending 2010 Yurakucho`s sales amounted to 13.8 billion yen a far cry of from 1982 when it reached almost 30 billion yen. 

Taking over from Seibu will be Lumine, which it set to open in the fall of 2011, while Hanyku department store next store will renovate and copying their Umeda success open a men’s annex. 

Will Lumine find success where Seibu could not?  Although the demographics are different the overall strategy of department stores is not, having not changed in decades by lack of want or will, Seibu is not the first department store to close down and surely will not be the last.

Wholesale Versace

This is how it happened; Due to weak sales (even before the luxury bubble burst) Versace took control of their distribution in Japan in an attempt to compete with Gucci Group and Giorgio Armani.  What happened next – Versace closed down their few remaining stores and operations in the summer of 2009.  To continue the story – Versace under CEO Gian Giacomo Ferraris announces Versace plans to return to Japan in 2011, but this time on a wholesale basis.  Versace still has a strong brand name so with new and improved merchandise planning, pricing, positioning (make nice with the department stores) and strong Japanese management; Versace may have a second chance where many brands do not.  Buona fortuna Versace.

Shimamura Same-Store Sales Down – Profits Up

Shimamura Co. is reporting an increase of 7%, about 30.5 billion yen in operation profits for the nine months finishing up in November. Overall sales were up 3% to 330 billion yen while same-store-sales decreased over this time (blamed on warm weather in the summer and early fall) though profits were still up.

Shimamura has been taking a run at Fast Retailing and other fast-fashion retailers by aggressively opening new stores outside their traditional stronghold of the suburbs and into Tokyo and other major urban areas. The latest of such openings occurred in October when Shimamura opened the largest shores in Yokohama, where sales are actually doing well.

Information Shimamura Co.

Forever 21 will soon have 6...stores

Per their strategy of opening 100 stores in Japan Forever 21 is taking the next step by opening their sixth store in Fukuoka in 2012. The Fukuoka store will join the newly opened Shibuya store along with their Ginza flagship, Chiba LaLaport at Tokyo-Bay in Funabashi, and Shinjuku super-store.

What’s next for Forever 21? Well, continuing their path of oversaturation of the Japan market they will soon open locations in Osaka, Kyoto and Nagoya.

Information Forever 21 Inc.

A First for Herman Miller

US-based Herman Miller has entered the retail market in Japan by opening their first ever directly-owned and managed store. This first global retail store located in the Marunouchi area of Tokyo is a 250sqm showroom selling chairs, desks, lighting, cabinets, accessories and more for home and office. The Herman Miller retail store is set to expand the brand and business away from dealerships which have been the traditional form of marketing and sales in Japan up until now.


Herman Miller founded in 1923 though not really involved in furniture sales until the 1960s is credited with the invention of the office cubicle among other developments through partnerships with Charles and Ray Eames, and George Nelson and Irving Harper.

The (first) Herman Miller retail store is located in Marunouchi on the first floor of the Meiji Yasuda Life Building.

Information Herman Miller

The American Invasion

Through their partnership with Aoyama Trading Co. (really?) American Eagle Outfitters will enter Japan by 2012, with their first store rumored to be located in the new fashion complex in Harajuku where the Gap was previously located.

AEO is part of the American invasion of casual clothing companies entering and expanding in Japan. With Abercrombie & Fitch already making their mark though probably not in the way they intended, they will launch their younger line, Hollister by 2012.  Also expanding in Japan is Tommy Hilfiger which recently bought their Japanese license back and has been changing their merchandise assortment globally and for the Japan market.  Polo Ralph Lauren's Rugby has thus far been successful by staying away from the A&F business model and also has plans to expand throughout Japan.  Another hotly-anticipated entry into the Japan market is of course Urban Outfitters which plans on introducing their URBN, Antropologie and Free People brands in Japan also by 2012.  While Urban Outfitters and each of their brands have a relevant style and a real culture attributed to them and will no doubt prove successful in Japan, what can we expect from Hollister and AEO; cargo shorts, flip-flops, and baseball caps or more dark, noisy and malodorous nightclubs?

If AEO and Hollister really do want to succeed in Japan they should look to PRL Rugby as a successful American-brand case study on how to enter Japan and Abercrombie & Fitch as well what it is - fashion-tainment.

Japan Department Stores Down In November

Sales at Japan Department Stores dropped 0.5% to 555 billion yen in November after an increase in October - the first rise after thirty-two consecutive months of decline.

By category apparel declined 0.9% and high-priced items such as jewelry and art fell 4.4%,

By region Tokyo department stores actually increased 0.3% to 142 billion.

Although the euphoria of October was short-lived there is still hope for the failing department store industry in Japan as there is some innovation among the department stores in terms of promotional strategy. 

Will Japan Department Stores bounce back?

Data Japan Department Stores Association

Cosmetics Decline But Not That Much

Leading up to the burst of the luxury bubble or as some refer it to it the Lehman Shock, the culture of luxury consumption in Japan and worldwide was one of insatiability and self-indulgence.

Since the bottom dropped out on luxury at the end of 2007 not only has consumption dramatically decreased but in correlation so have sales. Nowhere is that scene more prominently than in department stores which experienced thirty-one consecutive months of declining sales. Overall every product category has experienced declines and are still in decline, some more than others i.e., luxury timepieces and RTW. One product category which has rebounded – relatively – is cosmetics, which has experienced an only 8.1% decline in sales since the luxury bubble burst.

Cosmetics, a boon for department stores are seen as a necessary expenditure for both Japanese women and men, so ahem, their rebound comes as little surprise.

Data Japan Department Stores Association

Takashimaya finds a silver lining in declining sales

Despite a 1% decrease in sales from March to November, Takashimaya reported strong operating profits of 54% to about 10.5 billion yen. Sales for high-priced items such as jewelry and art were down as consumer sentiment is still lagging though sales for fall/winter apparel were up as the temperatures went down.

Takashimaya was able to increase operating profit even while sales were down through a series of cost-cutting measures including advertising, administration, and sales staff. With their renewed Osaka store showing strong sales, Takashimaya increase sales staff while at cutting sales staff at weaker selling stores in Shinjuku and Tachikawa.

Takashimaya forecasts full year (ending February 2011) operating profits at 15 billion yen, a growth of 12% while expecting continued sales decreases of 2%.

Takashimaya is a good example of how to increase profits while steadily losing sales.

Data Japan Department Stores Association, Takashimaya Co.

bebe. for women.

bebe, the edgy women’s brand with a sexy and stylish assertive attitude is coming to Japan. This past summer the US-based bebe was actively searching for a CEO and according to my network hired one – at the moment he will remain nameless.

bebe is know for using edgy, high-impact, visuals in print, outdoor, in-store and direct mail, communicating a playful and evocative imagery of the bebe lifestyle; hip, sophisticated, body-conscious fashion. With 213 worldwide can bebe find success in Japan’s highly-competitive and saturated fashion market?

Speaking with several sources in the industry they feel bebe’s merchandising, price-point and branding have a high potential of success in Japan especially behind the leadership on their new Japan CEO.

How do you think bebe will do in Japan?  Expect to see their first store in Japan within the next one year and they you can see for yourself.

Bulova Japan

Continuing their strategy of overseas expansion, US-based Bulova Corp, has established their subsidiary in Japan aptly named Bulova Japan Limited.

With the launch of Bulova Japan in November came the introduction of Bulova’s premium watch brand Bulova Accutron. Bulova Japan will offer 5 collections of 45 mechanical watches starting from 80,000 to 190,000 yen. Given the price-point Bulova will not go unnoticed by Japan’s consumers though will still have a difficult time competing with the likes of Rolex, Cartier, Chaumet, Tag Heuer, and many more..

Bulova Japan is the sixth subsidiary set up outside of Japan for Bulova and is sold at major department stores and specialty watch retailers.

Information Bulova Corp & Bulova Japan Limited

Who Will Replace Japan’s Aging Luxury Consumer

*As of 2009, the population of elderly citizens in Japan (65 years and over) was 29.01 million, constituting 22.7 percent of the total population of Japan.  In 2009, the younger age population in Japan (0-14 years old) amounted to 17.01 million, accounting for 13.3 percent of the total population, the lowest level on record since the Population Estimates began.

I am not an academic and am not going to get involved in the all of the implications of an aging population in Japan – not all but one – who will replace the aging luxury consumer in Japan?

It's a fact that the elderly in Japan control half the country's wealth, and it is also a fact as they are aging they are not buying luxury goods.

When speaking with several CEOs of luxury brands in Japan, one of their biggest concerns voiced is losing these wealthy, elderly consumers and having the challenge to replace them in an economy where the work force is made up of over 30% temporary workers and where only about 54% of new college graduates are able to secure jobs upon graduation.

Watching the market we can observe some of the ways luxury brands in Japan are starting to adapt to the aging population. 

Diffusion lines and second lines; once relegated to luxury’s aspirational consumer and made popular after the luxury bubble burst at the end of 2007, diffusion lines and second lines are strategically changing with the population demographics and realities of a younger generation not as wealthy as their parents.  Red Valentino by Valentino is one brand that hits the mark, as well as Bottega Veneta, not only ever-so-slightly changing their merchandising and pricing but also replacing most of their older workers in Japan (in their mid-to-late 40s and over) with younger workers to reflect the younger generation.  Through social media brands like Hermes, Gucci, Burberry, and more are taking different approaches toward building a rapport with Japan’s young consumers with the hope the brand awareness they build now will translate to sales later.

These are just some of the strategies I have so far been observing in Japan’s luxury sector.  I am sure we will soon witness the incredibly creative and effective to the inane and ineffective.

What strategy is your luxury brand implementing for the preparation of Japan’s aging population?

* Ministry of Internal Affairs and Communications, Bureau of Statistics

Uniqlo - Here We Go Again

Fast Retailing today announced it will open their first Uniqlo store in Thailand in Bangkok in the fall of 2011. This will be Uniqlo’s third store in South East Asia after Singapore in 2009 and Malaysia earlier this year.

Fast Retailing’s goal is to become the number one apparel company in the world. They are currently number three behind Inditex, H&M and GAP.

Fast Retailing’s goal of global apparel domination is based on Japan being a cash-cow, financing their overseas expansion. Unfortunately that planned has encountered a harsh economy where Uniqlo’s same-store-sales have been down nine out of eleven months this year – a far cry from their glory days of 2009 when same-store-sales were reaching double-digit growth month-after-month.

With falling sales in Japan Fast Retailing has had to re-forecast their original sales goal of one trillion yen by the end of this financial year.

With 822 stores in Japan do you think Fast Retailing should open more stores in Japan?

Information Fast Retailing Corporation & Nikkei

What Went Wrong With Kao`s Purchase of Kanebo?

In an effort to increase business and sales Kao Corporation spent roughly 400 billion yen to acquire Kanebo and so far the acquisition has not produced the desired results.  In fact the combined operating costs of both Kao and Kanebo have only resulted in operating losses and declining sales.

Theories of Kanebo being too big, in fact being the larger cosmetics brand than Kao have been mentioned as well as little-to-no integration of Kao management into Kanebo.  In fact besides the integration of the distribution system which realizing cost savings of 13 billion yen, there seems to have been little attempt to have the companies work together at all.

What do you think made this potentially strong acquisition inefficient? 

Information Kao Corporation & Nikkei

The Globalization of Fast Retailing

In an effort to truly globalize operations and immerse themselves in the global economy Fast Retailing has announced it will send all of its Japanese store managers and managerial personnel overseas to work and train for the global environment. Overall there will be about 900 employees from Japan sent overseas for up to three years to work at about 150 stores in nine countries including the US, Europe and Asia. Fast Retailing will also transfer foreign employees based abroad to Japan for training and to foster cross-border relations within the company.
As well as globalizing their workforce Fast Retailing will also globalize their manufacturing by relocating some of the designing, product development and operations from Japan to China, Vietnam and Bangladesh which is considering a special economic-zone for Fast Retailing and other apparel manufacturers.

Besides the cost savings of moving design, development and production management overseas Fast Retailing also expects to increase sales – up to 50% of total global sales by 2016.

Information Fast Retailing Corp.

Honeys` China Strategy

As many Japanese and international brands face an oversaturated and competitive Japan-market, they are more and more turning to China to grow their business.  Fast Retailing’s Uniqlo has been most prominent in the news with their China expansion, but other brands as well are making headlines with growth strategies based in Japan and implemented in China – Honeys Co. is one of those companies.

Honeys, a trendy fast-fashion company based in Japan and manufactured in China, will celebrate the fifth anniversary of their launch in China next spring by increasing their number of stores to 220 and opening a total of 150 new stores in China by the 2012.  Launching up to 300 items a month, every month at prices as low as 1,000 yen (79 yuan) Honeys has positioned itself as a true fast-fashion giant competing with the likes of H&M and Uniqlo.  Capitalizing on the popularity of the latest Japanese fashion trends, Honeys makes Japanese fashion available in China at the same time it is available in Japan, allowing it to build a strong following among young, fashionable Chinese who want to be current on what their contemporaries are wearing in Japan.

Information Honeys Co. & Nikkei

Point Inc. is Coming to a Train Station Near You

Not to be out-sold by Uniqlo in the battle to gain retail dominance of the new retail space opening in Japan’s train stations, one of Fast Retailing’s big competitors, Point Inc. plans on opening up to 50 casual wear shops over the next several years.

Point Inc. is focusing the new stores in and around Tokyo and is already forecasting more than 5 billion yen a year in sales. The first Point Inc. store to open inside a train station will take place this on Saturday 18 December in JR Ueno Station…with about 49 new stores to follow.

With the recent decline of retail store openings in Japan, retailers are turning to train stations to help boost sales with half the store size.

Do retailers really think opening many small stores instead of big ones especially in train stations where commuters are pressed for time, will increase sales more than several large stores?

Comments welcome.

Information Point Inc.

ABC Mart Down Again

ABC Mart, which was doing so well in the first half of the year, has been experiencing a decline of late – and this last decline came in the form of a decrease in November same-store-sales.  Sales for November dropped 6%, their latest drop-off in sales in this second half of the year.  The only good news that came out of November for ABC Mart is their same-store-sales per customer increased again for the fourth straight month. 

With this latest fall in same-store-sales investors punished ABC Mart on Friday by closing down their stock 37 yen to 2,851 yen.

Data ABC Mart Inc.

Tokyo Fashion Daily on Dualité

Great story about Tokyo Fashion Daily on Dualité.  Check it out plus other stories on Dualité, I am sure you will enjoy Dahlia`s blog as much as I do.

http://www.fashiondualite.com/2010/12/02/qa-timothy-schepis-from-tokyo-fashion-daily/comment-page-1/#comment-12758

Uniqlo Same-Store-Sales Down Again

For the fourth month in a row and the ninth month this year same-store-sales at Fast Retailing`s Uniqlo brand have dropped. November same-store-sales dropped a significant 14.5%, with customers decreasing 7% and sales per customer down 8.1%. 

Fast Retailing held a special four-day sales campaign celebrating Uniqlo`s 61^st anniversary and during this promotional campaign sales dropped 4.48%. 

Is Japan getting tired of Uniqlo?  Or are there too many Uniqlo stores (over 800) to actually sustain positive sales month-to-month.  Maybe it is time for Fast Retailing to consider the Law of Diminishing Returns.

Data Fast Retailing Corporation

3 Out of 4 is Not Bad, But is it Good?

For the second straight month departments store sales in Japan have increased. November same-store-sales for three of the big four department stores increased from the same time last year. At Mitsukoshi sales grew 5%, while sales at Isetan increased 0.3%, and sales at Hankyu also saw an increase of 1.4%. Meanwhile sales at Takashimaya fell 0.8%.

After 31 straight months of sales declines this is the second month that sales at Japanese department stores have increased.

I guess the information-gathering trip to South Korean department stores was a success, or was it the Christmas cake sales in November?

Data Japan Department Stores Association

Social Media Requires a Bespoke Approach

Thank you to Sophie Doran of Luxury Society for publishing my new opinion piece. Please have a look and let me know your comments.
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Is your luxury brand on Facebook or Twitter? Does it have a digital flagship that allows visitors to post questions to the designer? Is your luxury brand streaming your collection shows live on the web? Does your brand have an iPod/iPad application that allows users to upload photos and music? Is your brand using Foursquare or other location applications to pull customers into their retail stores? If your answers to these questions are yes than congratulations your brand has now entered the digital social media age. Not sure what that means? Don’t worry most luxury brands don’t either but that is not stopping them going digital.


Digital Social Media is supposed to be an extension of a brand, an integral part of the overall media campaign strategy including press, advertising and overall marketing, not a stand-alone one-off try. If a strategy is not going to fit into a brand’s overall marketing strategy nor reflect a brand’s image than what is really being accomplished? Would you rather be known as a brand that really gets it and integrates digital social media across their full marketing strategy like Burberry with “Art of the Trench” or would you like to be known as the luxury brand that uses a finger skateboard to generate hits on a viral video? Which do you think ties-in best with the brand’s image and will have a lasting positive effect on brand perception?

Which social media is best for your luxury brand? To answer that each luxury brand needs to understand where their brand came from, and what direction it is going, and as in any marketing campaign understanding the best media to get their message across. Social Media is not a one-size fits all marketing strategy. It won’t work for every luxury brand and what does work for some luxury brands may not work for others. When using social media luxury brands need to consider what message they want to convey and how it will integrate in their overall strategy. If a brand is not going to use a message in their print strategy then why make it a one-off or stand-alone campaign that does nothing to further the brand’s image or message and actually may detract from the brand and make people take it less seriously. For as long as I can remember luxury brands have centered their marketing messages on aspiring to a luxury lifestyle. Working in collaboration with print magazines and even their own web sites they have been able to convey this message – this has been one of the strengths of luxury brands, why change it now. As more magazines are entering the digital age and launching interactive web sites and iPad applications there are new opportunities to convey the same message across new digital media as well as using other social media to reinforce this message and get users to interact with luxury brands in a way that will enhance a brand’s image, not dilute it. There are many different social and digital media that can be used together or on their own as long as there are integrated into an overall strategic marketing campaign. Earlier in this article I cited Burberry and their “Art of the Trench” campaign as a strong example of relevant social media. Another example of integration across multiple media is Coach’s Poppy campaign in which they not only used a minisite but also used relevant blogs across the blogosphere to convey their message and get users to interact and take part in the campaign. Besides Burberry and Coach there have been many strong and relevant social media campaigns online by luxury brands, and sadly along with the relevant campaigns there have also been some irrelevant ones too. Just because one luxury brand is using a viral video of a finger skateboard to gain hits on the web, does not mean your brand should do it to.

Support Atelier Incurve

An exhibition to help benefit Atelier Incurve launched in Tokyo on Monday night. Atelier Incurve, an organization that provides workspace, training and venues for exhibitions to mentally handicapped artists in Japan, was supported by Japanese fashion brands N. Hollywood, Sacai Luck, Kolor and Jun Takahashi’s Undercover. The brands all created unique t-shirts which sell at United Arrows for 5,040 yen as well as online at Zozotown, Yoox and Cibone. Lend your support to Atelier Incurve and please stop by United Arrows or go online to get your t-shirt today.