Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<ul>
<li>Department stores are desperate to get back on track, having lost both the middle class at home and travellers from overseas. </li>
<li>There have been further squeezes on the middle class in the past 18 months and the average salary in 2020 stood at ¥4.24 million, just ¥180,000 more than in 1990.
</li>
<li>As a result, department stores are in a gold rush fervour to climb back upmarket and ply their wares to the rich. The problem is so is everyone else.</li>
</ul>


Department stores are desperate to get back on track, having lost both the middle class at home and travellers from overseas. 
There have been further squeezes on the middle class in the past 18 months and the average salary in 2020 stood at ¥4.24 million, just ¥180,000 more than in 1990.

As a result, department stores are in a gold rush fervour to climb back upmarket and ply their wares to the rich. The problem is so is everyone else.


Japanese Department Stores: Going After the Newly Wealthy

FY2020 was clearly a year when department store executives would have been better to live in an induced coma. Big city stores suffered especially because inbound tourists, their main growth driver of the past few years, disappeared and local shoppers stayed away, although some stores did manage to harness support from Japan’s expanding wealth market to offset the rout a little bit. The good news is that executives pushing for change in the last five years in the face of perennial intransigence are increasingly taking charge and the result should be a leaner, smaller and more clearly defined format that is more overtly upscale.

FY2020 was clearly a year when department store executives would have been better to live in an induced coma. Big city stores suffered especially because inbound tourists, their main growth driver of the past few years, disappeared and local shoppers stayed away, although some stores did manage to harness support from Japan’s expanding wealth market to offset the rout a little bit. The good news is that executives pushing for change in the last five years in the face of perennial intransigence are increasingly taking charge and the result should be a leaner, smaller and more clearly defined format that is more overtly upscale.

Japan's Department Stores: Radical Contraction Still to Come if Sector Is to Survive

Equity Bottom-Up

Isetan Mitsukoshi Holdings Ltd / Equity Bottom-Up

Isetan-Mitsukoshi is one of Japan’s most prestigious retailers – or at least it was up until the advent of the pandemic. Facing ongoing sales falls as customers are kept away from its stores, the company knows it has to evolve if it is to survive. As well as more online sales and a few merchandise tweaks, it is going after the rich like never before. Given that the wealth market is one of the few growing segments in Japan, this makes sense but the venerable department store still has a long journey ahead to improve returns.

Isetan-Mitsukoshi is one of Japan’s most prestigious retailers – or at least it was up until the advent of the pandemic. Facing ongoing sales falls as customers are kept away from its stores, the company knows it has to evolve if it is to survive. As well as more online sales and a few merchandise tweaks, it is going after the rich like never before. Given that the wealth market is one of the few growing segments in Japan, this makes sense but the venerable department store still has a long journey ahead to improve returns.

Department store numbers have dropped by a third in the past 13 years to just 199 and another third are likely to disappear this decadeThe hope that many of these properties would find new life as shopping buildings is now looking far less likely and, with Covid worsening the problem, an accelerated hollowing out of central retail areas looks unavoidable in many small cities.We are likely to see department store numbers drop to around 150 over the next five years.The impact on both the department store sector and regional retailing is profound.

Department store numbers have dropped by a third in the past 13 years to just 199 and another third are likely to disappear this decadeThe hope that many of these properties would find new life as shopping buildings is now looking far less likely and, with Covid worsening the problem, an accelerated hollowing out of central retail areas looks unavoidable in many small cities.We are likely to see department store numbers drop to around 150 over the next five years.The impact on both the department store sector and regional retailing is profound.

<a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing (3086 JP)</a> is well aware of the weakness of the department store format but also knows a market for high-end emporiums will remain. The key, it believes, is making the most of multiple formats and commerce at its best locations and that means investing in real estate of all kinds. The problem is all this real estate is in city centres and if working from home becomes even a small part of the working week, retail traffic may gravitate towards the suburbs.

J Front Retailing (3086 JP) is well aware of the weakness of the department store format but also knows a market for high-end emporiums will remain. The key, it believes, is making the most of multiple formats and commerce at its best locations and that means investing in real estate of all kinds. The problem is all this real estate is in city centres and if working from home becomes even a small part of the working week, retail traffic may gravitate towards the suburbs.

Japan

Isetan Mitsukoshi Holdings Ltd. is a holding company established through a merger of Mitsukoshi and Isetan. The group operates department stores nationwide, selling clothing, foods, household goods, cosmetics and general merchandise.

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Isetan Mitsukoshi Holdings Ltd (3099 JP)

Japanese Department Stores: Going After the Newly Wealthy

Japanese department stores are waking up to the fact that the middle class is no longer their natural customer. The renewed focus on the wealthy is...

Michael Causton

Japan's Department Stores: Radical Contraction Still to Come if Sector Is to Survive

Japan's department stores are in trouble and were well before the pandemic but their outlook is much worse now. Major changes are required, not...

Michael Causton

Isetan-Mitsukoshi Targets Wealthy

Japan's department stores are in trouble and Isetan-Mitsukoshi remains one of the least profitable. It has a new plan but it will take a decade to...

Michael Causton

The Japanese Department Store Debacle

The Japanese department sector has been in retreat for a long time but the decline accelerated from the start of Covid. Unfortunately, an end to...

Michael Causton

J Front to Focus on Real Estate

J Front Retailing is the most diversified of the main dept. store operators. Even then however, its main assets are all in city centres and will...

Michael Causton

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