Mixed Retailers in Japan

TRENDS

A warm 2015/2016 winter season had a heavy impact on mixed retailers, with winter clothing sales being subdued as a result. This resulted in many mass merchandisers and department stores facing excess stock, in turn resulting in heavy discounting at the start of the year. Economic uncertainty at the start of the year further impacted consumers' willingness to spend and encouraged those that did to seek out discounted goods. Furthermore, mixed retailers also faced strong price competition from apparel and footwear specialist retailers, as these players also used sharp price promotions in order to shift winter stock.

COMPETITIVE LANDSCAPE

AEON continues to lead mixed retailers and accounted for close to 19% value share in 2016, while this player also saw one of the strongest gains in share at close to half a percentage point. This player benefits from the strength of its AEON brand in mass merchandisers, with this brand proving adept at shifting its strategy in line with changing consumer demand. The chain for example increased its focus on targeting tourists towards the end of the review period and also capitalised on Japanese consumers' growing focus on provenance by increasing its offer of locally-produced goods both within and beyond food. The company also continued to benefit from a strong omnichannel strategy, investing not only in ongoing upgrades to its internet retailing operations but also in ongoing store network expansion. The company was furthermore the first leading mass merchandiser to participate in the Black Friday discount event in November 2016. Consequently, despite the overall current value sales decline seen for mass merchandisers, AEON continued to grow sales in 2016.

PROSPECTS

Department stores and mass merchandisers are expected to be impacted by softening tourist demand at the start of the forecast period, due to a stronger yen. These channels are also likely to be impacted by a weaker identity in comparison to specialist retailers, with many consumers preferring to visit shopping malls and districts and to visit specialist retailers with a stronger identity. This trend is expected to be particularly strong in luxury retailing, thus having a heavy impact on department stores.

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