Archive for the ‘Retail’ Category

Deflation Watch: bean sprouts

Monday, December 15th, 2014

Bean down so long: Cheap moyashi is still the norm

Bean down so long: Cheap moyashi is still the norm

Last week Tokyo Shimbun reported that an industry association of food producers sent letters to supermarket chains and other food retailers saying that they had reached their limit of patience. This particular association represents companies that produce moyashi, or bean sprouts, a pretty lowly item, even within the realm of produce, and one that is not strictly agricultural in nature.

Though bean sprouts definitely qualify as vegetables, almost all Japanese producers import the basic ingredient, which is mung beans (ryokuto or midori mame), and then make them sprout in factories. In other words, no land cultivation is involved. Bean sprout production is a ridiculously simple process, since all it entails is making the mung beans wet, setting them aside for a few days to sprout, and then packaging them.

The moyashi association is saying that production costs have become untenable, which sounds strange considering how easy the process is, but what they’re really talking about is the cost of mung beans, 80 percent of which are imported from China, mainly Jilin Province, where farmers are switching over to corn because the price of animal feed has gone up and they can make more money. Consequently, the market price for mung beans has also gone up, by as much as 30 percent since a year ago.

CONTINUE READING about the cost of bean sprouts

Cosmetics market shifts up in age

Monday, December 8th, 2014

Poster for Shiseido makeup outside discount drug retailer Matsumoto Kiyoshi

Poster for Shiseido makeup outside discount drug retailer Matsumoto Kiyoshi

You can tell how important an industry is to the media by how many news outlets cover the same story in the same way. What happened was a company put out a press release that everyone feels obligated to cover since the company is a major advertiser.

Last week everyone mentioned that cosmetics maker Kao will be coming out with a new line of eye shadow targeting older women under its Aube brand. Makeup specially formulated for older consumers isn’t a new thing, but what makes Aube Couture Bright Up Eyes of more than just passing interest is that its main appeal is the application rather than the wearing. When older eyelids become flaccid, it’s more difficult to put on eye shadow evenly, so Kao came up with a special foundation that makes it easier for the customer to apply the shadow on top of it. In addition, the case comes with a special 2X magnifying mirror for older eyesights.

Shiseido also announced a brand new line of 33 items for older women called Prior that will come out Jan. 21 and is centered on a cream that gives the skin a glossy tone which “medicates” wrinkles and age spots as a way of “reducing” them. It’s another way of saying that the cream covers them up. It also obviates the need for foundation, thus making it “easy to use.” Also, Prior’s eye shadow comes in a box with instructions in large type and photos to make it easier for consumers to understand how to apply it. CONTINUE READING about new markets for cosmetic makers

Megabanks start to feel the heat from upstarts

Tuesday, November 11th, 2014

Shop 'n' save: Taking applications for Aeon credit cards and Aeon Bank accounts

Shop ‘n’ save: Taking applications for Aeon credit cards and Aeon Bank accounts

With the coming sale of the retail banking operations of Citibank in Japan, many of the bank’s customers here are looking for an alternative, especially if those customers want to transfer money to and from overseas. Japanese banks tend to be disappointing when it comes to this type of service, but they are also becoming less appealing in terms of other matters most people used to take for granted.

For instance, we have done most of our banking with the Bank of Tokyo Mitsubishi UFJ for many years, but since we moved out of Tokyo we’ve had to carry out local transactions at convenience stores because there are no MUFG branches or ATMs anywhere near our home, even though we live in a populous and growing suburb of Tokyo.

So we’ve been looking to change banks, and have found that new financial services provided by retailers and IT-related firms are more attractive than what’s available from so-called mega-banks. A recent article in the Asahi Shimbun described how the retail giant Aeon has been signing up new customers for its banking business by offering services that regular banks can’t . . . or won’t.

CONTINUE READING about new banking upstarts →

Foreign tourists expected to take up (some of) the slack in consumption

Monday, October 6th, 2014

Everyday low prices: Duty Free store at Narita Airport

Everyday low prices: Duty Free store at Narita Airport

According to a survey of 12,000 tourists in 2013 carried out by the Tokyo Metropolitan Government, the Chinese spend more than any other group, which isn’t surprising. What is surprising is by how much they outspend other nationalities.

On average, a Chinese visitor spends ¥191,741 in Tokyo. The average spent by all foreign tourists in Tokyo is only ¥46,546, which means Chinese spend about three times as much.

After China, the most spent is by Singaporeans (¥135,377), and then Spaniards (¥129,558). Another notable aspect of Chinese spending is that the bulk is not spend on accommodations or dining, but rather on souvenirs, about ¥122,000. The most popular area for Chinese shoppers is Ginza, because that’s where all the luxury brand stores are.

The government wants them to spend even more, and is thus expanding the list of items that foreign tourists can buy without having to pay consumption tax. Previously, consumables like food, liquor and cosmetics were not exempt from CT when bought by foreign tourists at stores in Japan, but since Oct. 1 they are.

CONTINUE READING about new duty-free lists →

Mail order scofflaws are the exception that proves the rule

Monday, September 15th, 2014

The gods know if you're honest: An unmanned farm stand in Inzai

The gods know if you’re honest: An unmanned farm stand in Inzai

A recent article in the Asahi Shimbun described a small cross section of consumers who take advantage of a peculiar aspect of mail-order sales in Japan. Some small- and medium-sized sales agents who do their business over the Internet have problems with customers who don’t pay. In most cases, Internet and mail order sales are done on a prepaid basis: The buyer either provides credit/debit card information or makes a bank/post office money transfer prior to the item being shipped. But a few work on what can best be described as the honor system. They send the item to the buyer with a bill that the buyer pays after receiving the item. Sometimes the bill has a handling fee attached and sometimes it doesn’t.

According to the Asahi article, some people don’t pay up, and perhaps never intended to. A non-profit organization called the Mail Order Unpaid Protection Network (MOUPN), which monitors such scofflaws, estimates that mail-order sales companies lose about ¥20 billion a year to such people.

Asahi, in fact, found one, though he seems reluctant to admit it. In the article, a reporter visits an unnamed man “in his 50s living in an apartment in Tokyo.” The man receives an order of green tea by courier, but the reporter notes that the name on the package is that of a woman. “I made the order on behalf of a friend,” the man explains. When asked why he didn’t use his real name, the man doesn’t answer. Other packages arrive addressed to different women. When asked what’s in one of them the man shrugs and says, “Maybe food?” He insists that he will pay for it but usually “just forgets.”

CONTINUE READING about abuse of Japan's honor system

Inflation Watch: Food manufacturers offering less

Saturday, August 2nd, 2014

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Use your noodle: ¥198 regular price 5-pack of Aeon instant ramen vs. ¥198 sale price 3-pack of Sapporo Ichiban instant chanpon

Economists in Japan have been carefully scrutinizing buying trends since the consumption tax was raised in April. Everyone has noted that buying has dipped by at least 4 percent since the 3 percent tax hike went into effect, but many think that it will rebound later in the year since so many consumers bought a lot of stuff just before the hike. And it is also true that some prices of goods and services have gone up, as well, especially food, but for the most part makers have tried to keep them the same, despite the fact that the lower yen has resulted in higher prices for imported ingredients, not to mention increased demand for all food products in developing countries. In addition, the higher price of oil has boosted the cost for packaging.

There’s, of course, one tried-and-true solution to the problem of stabilizing resale prices when costs go up: reducing volume. Rather than raise prices, especially at a time when consumers are specially sensitive to any change, manufacturers trim the amount being sold, according to Asahi Shimbun. Nippon Ham, for instance, did not change prices on 82 items in its product line but did reduce the amount being sold by an average of 10 percent. The company’s European sausage used to come in bags of 7 weighing 140 grams. For the same price, it’s now 6 sausages, or 120 grams. The company’s main competitor, Ito Ham, however, has decided to take a chance and increased the price of its pork products, saying that it was inevitable because worldwide demand for pork has risen recently.

The confection industry has been affected as well. Lotte cut the volume and weight of 6 products. Meiji shrunk 10 of its chocolate items, citing a 20 percent increase in cocoa prices from two years ago: Its best-selling Almond Chocolate treat went from 23 pieces to 21.

Chain restaurants are also dealing with the environment. Ringer Hut has increased prices on a number of its chanpon dishes by 3 to 5 percent, mainly due to higher prices for shrimp grown in Thailand, as well as higher transportation costs.

CONTINUE READING about cost-cutting measures →

Japanese franchises cut loose by overseas brands after serving their purpose

Sunday, July 20th, 2014

Burberry outlet run by Sanyo Shokai in Matsuzakaya department store in Okachimachi.

Burberry outlet run by Sanyo Shokai in Matsuzakaya department store in Okachimachi.

According to Asahi Shimbun’s online magazine Webronza, the U.K. apparel maker Burberry has decided to end its long-standing licensing agreement with Japan’s Sanyo Shokai in order to develop its own retail outlets in Japan. Sanyo first signed the agreement in 1965, and since then has made Burberry one of the most consistently successful foreign brands in Japan by tailoring the company’s line to Japanese bodies and tastes. Though Burberry’s famous tartan check pattern is at the heart of Japan’s love for the brand — owning a Burberry scarf was, for a time, a rite of passage for Japanese high school girls— Sanyo’s main achievement was making the Burberry trench coat a timeless fashion favorite.

In 2006, an American, Angela Ahrendts, became the CEO of Burberry and worked to return the company to its roots as a high-end brand. She downplayed the tartan check pattern, reducing its use to only 10 percent of the product line, and concentrated more on new, original designs. From 2006 to 2013, when Ahrendts left to become senior vice president of retail and online at Apple, the company doubled its sales revenues and tripled its stock price. One of Ahrendts’ main concerns was doing away with all the licensing agreements the company had with regional companies. She bought out the Spanish franchise and opened directly owned stores in Spain that have become just as successful if not more so than the franchise business.

As it stands, of Burberry’s ¥349 billion annual sales, only ¥18.5 billion comes from franchises, or 3 percent, but after Spain was cut loose, Japan accounts for 60 percent of all franchise business. Burberry obviously thinks it can make more money dealing directly with Japanese consumers, specifically high-end Japanese consumers, since an imported Burberry trench coat costs as much as ¥230,000, while the trench coats that Sanyo makes under its Black (men) and Blue (women) Burberry labels only cost half as much.

Sanyo isn’t the first Japanese company that has worked hard and long to successfully popularize a foreign brand among domestic consumers only to be let go by the foreign licensor. Adidas did the same thing with Descente in 1998, and Mercedes Benz eventually took over Japanese sales of its cars from Yanase, who no longer has the import license for Mercedes, only a sales license. However, in Yanase’s case the situation was the opposite of Sanyo’s. Yanase cultivated Mercedes as a brand only for the well-to-do (leading to the old joke about the cars being the exclusive property of doctors and yakuza), but Mercedes wanted to cater more to middle class buyers and started opening their own showrooms in Japan.

The luxury Belgian chocolatier Godiva, now owned by a Turkish company, is also discontinuing its long-standing licensing arrangement with a Japanese company, the tea importer Kataoka Bussan. Starting in 2015, Godiva will start selling its chocolates at directly owned stores in Japan.

Some franchises suffer more than others. At least half of Sanyo’s ¥106 billion annual sales comes from Burberry products, which it sells in 300 dedicated department store outlets, so the loss of that business is a serious setback. The advantage of this model to the overseas brand is incalculable in that, for years, Sanyo took care of all promotion, building the brand to where it is now. For what it’s worth, Burberry by far sells more trench coats in Japan than any other apparel maker, domestic or foreign.

The reason these franchises can do this is Japanese consumers’ distinct identification with brands, which accounts for some unusual distribution deals, especially for brands that are considered exclusive. The problem for Japanese makers who also count on brand identification is that it seems to be a one-way street.

Japanese brands don’t have the traction overseas that they once did. Sanrio has made Hello Kitty famous worldwide, but mainly by giving the trademark to anyone who pays for it. If you buy the rights to Hello Kitty, you can do anything you want with the name and the image. That’s good for licensing, but now the company wants to make money from sales, and the transition has proved to be more difficult than Sanrio thought.

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