Outlet malls another American concept that may not work in Japan
This weekend marks the grand opening of Mitsui Outlet Park Kisarazu, a so-called outlet mall in the coastal city of Kisarazu in Chiba Prefecture. So far the mall has 171 stores, including 21 retailers that have never before participated in any Japanese outlet mall. Mitsui Fudosan, which developed and manages the facility, says it hopes to eventually have 250 stores in the mall. Its sales target for the first year is between ¥32 billion and ¥34 billion, which would make it the biggest money-maker of the 12 outlet malls the company operates.
Mitsui isn’t the only developer staking its future on the success of American-style suburban shopping complexes. In Japan there are now 39 outlet malls, which are characterized by stores that are directly owned and run by manufacturers. In principle, that means cutting out one or more middlemen and offering greater savings on name-brand goods. According to the most recent statistics we could find there are more than 1,600 “shopping malls” in Japan, though most of these are urban complexes that vary significantly in style and form from the classic American-style shopping mall.
Nevertheless, over the past decade or so, the number of shopping malls has increased in suburban areas as more traditional shopping arcades (shotengai) have declined in number or even vanished. The main features of these suburban shopping malls is one or two large “anchor” retailers, usually a department store and/or major supermarket chain, and, most significant for Japan, the fact that they aren’t located near train stations, where land is more expensive. That means they target motorists and feature the sort of enormous parking lots that are ubiquitous in the United States but which, until recently, were unheard of in Japan.
Outlet malls don’t always incorporate major department stores or supermarkets, but they do cater to people with cars. This aspect is particularly noteworthy in the case of the new mall in Kisarazu, which is the eastern terminus of the Aqua-Line bridge-and-tunnel route that connects Chiba’s Boso peninsula to Kanagawa Prefecture over Tokyo Bay. When this very expensive, 23-km highway was completed in 1997, one of its main purposes was to encourage visits to Kisarazu and the rest of Chiba by residents of Tokyo and Kanagawa, which includes the very large cities of Kawasaki and Yokohama.
That didn’t happen. Most of the traffic actually went the other way, if it went at all. When it opened, the toll was an intimidating ¥3,000 each way. As part of his election campaign platform, current governor Kensaku Morita promised to persuade the land ministry to reduce the toll, and now it’s only ¥800 one way (as a “test discount” that appears to be permanent), but still the tourists weren’t coming to Kisarazu. Instead, they went to the restaurant and retail complex built in the middle of the Aqua-Line. The Aqua-Line itself became the attraction, not the cities on either end of it.
So Mitsui worked with the local government of Kisarazu to build the biggest outlet mall in Japan, believing that its proximity to the Aqua-Line would draw more people from Tokyo and Kanagawa. Mitsui told Nihon Keizai Shimbun (Nikkei) that the mall is 60 minutes by car from central Tokyo and a potential 8.5 million customers; or 90 minutes from a potential 22 million customers. Unlike conventional shopping centers, outlet malls also convey the image of an amusement park, thus encouraging families to make shopping at one a day-long excursion. But as Nikkei points out, this image may have undergone a change in the time since the Kisarazu outlet mall was first conceived by Mitsui and local authorities. Now, most of the brand name products that people want can be purchased at even lower prices online.
Also, as gasoline prices fluctuate, a family will likely factor in transportation costs when planning a day of shopping. But Nikkei says the biggest problem for Kisarazu will be traffic. If the number of people that Mitsui envisions coming actually do come to shop at the new outlet mall, congestion will be considerable and thus become a disincentive for return visits. That’s why so many shopping malls in Japan have set up bus services from nearby train stations to the malls. Initially, bus service was provided to encourage older people who don’t drive to visit the malls. Now, they may need to supply free transportation to everyone, but that would also contradict the main appeal of shopping malls, which is that you can easily drive to them and buy as much as you want, since you don’t have to worry about lugging all your purchases home on the train or paying for a delivery company to ship them.
Consequently, the future of outlet malls may not be as bright as it once was thought to be. Japan’s first outlet mall, Outlet Rism, located in Fujimino, Saitama Prefecture, opened in 1993 and was covered extensively by the media. It was popular for a while and every weeked there were traffic jams on the roadways leading to it. However, since 2000, other malls have opened in nearby cities and more and more retailers found it difficult to compete. When the anchor supermarket closed in 2009, Rism’s revenues dropped steeply. The mall closed in June of last year, but the supermarket chain Aeon, which itself has developed many non-outlet malls throughout Japan, plans to redevelop it around a branch of the Isetan department store.
Another major mall developer, Chelsea Japan, recently announced it would open the Shisui Premium Outlet Mall in March 2013. The facility will be located 15 minutes by train from the international airport in Narita. It will specifically targest tourists, presumably Chinese tourists, but that doesn’t seem like a guaranteed money-making idea either. In 2007, a smaller developer opened the Big Hop Garden Mall in Inzai, Chiba, along the Hokuso Railway, initially as an outlet mall. The plan was to attract tourists from Narita because several years ago the Hokuso Line starting running the Sky Access express train between Haneda and Narita, but the mall never took off. When it opened there were about 100 stores. Now there are only half that, and very few are actual outlet retailers. In truth, the outlet mall idea seems to have died even before it had a chance to mature.