Osaka dept stores locked in scrap for survival

Osaka dept stores locked in scrap for survival

Tuesday, November 5, 2013 – 10:42

Takeshi Nagata

Kentaro Takahashi

The Yomiuri Shimbun/Asia News Network

OSAKA – Competition among department stores has intensified in Osaka due to renovations and expansions in addition to the opening of a new department store. To survive, department stores have been thinking outside the box and offering new events-and even teaming up with their rivals. Meanwhile, department stores’ survival measures, such as creating new types of stores and cooperating with rivals, have also been spreading.“Department store competition in Osaka is the toughest among major cities,” Daimaru Matsuzakaya Department Stores Co. President Tatsuya Yoshimoto said at a press conference to announce the company’s financial results, held in Osaka on Oct. 8. The 2013 March-August sales figures for the company, which runs Daimaru and Matsuzakaya department stores, increased by 4.9 percent over the same period in the previous year. However, sales for Daimaru’s Umeda and Shinsaibashi stores declined.

The environment surrounding department stores in the city has drastically changed in recent years. In May 2011, JR Osaka Mitsukoshi Isetan department store opened in the Umeda district around JR Osaka Station. Hankyu department store’s main Umeda store underwent a complete renovation in November 2012.

The total store space of the four department stores, including Hanshin’s main Umeda store and Daimaru’s Umeda store, is about 247,000 square meters. The floor space is larger than Tokyo’s Shinjuku district where four department stores, including Isetan’s main store and Takashimaya’s Shinjuku store, are in fierce competition.

According to the Japan Department Stores Association, September sales of 11 department stores in Osaka were up 8.3 percent compared to the same month the previous year, and for the 11th consecutive month. In addition to the increased floor space, the economic recovery spurred increases in sales. However, sales per 100 square meters decreased for three consecutive months and is only two-thirds of the sales made at department stores in Tokyo.

In March next year, Kintetsu department store’s main store at Abeno Harukas will mark its grand opening in Osaka’s Abeno district. Its floor space is expected to be about 100,000 square meters, the largest for a department store in Japan. Department store competition in Osaka is likely to intensify further.

Not just selling goods

Hankyu’s Umeda main store was crowded with shoppers on a Sunday at the end of October. At the four-story festive plaza on the ninth floor of the department store, some families were eating lunch they had bought in the store. A 41-year-old company employee from Izumi, Osaka Prefecture, said, “This place is nice with an open atmosphere.”

The average number of people who visit the department store is 140,000 on weekdays and 180,000 during holidays. The figure is nearly double the number of visitors to the store before its renovation and reopening.

The store’s strategy of dedicating 20 percent of its floor space to areas other than retail space, such as areas for holding events, has played a key role in attracting customers. The department store intends to use its unique offerings to attract customers in hopes that they will also stop by stores to shop.

Kintetsu department store’s Abeno Harukas store also aims to offer places where people can stop by even if they do not do any shopping. The store will allocate one-fourth of its floor space to plazas where nonprofit organizations can carry out activities or for creating a rental vegetable garden to entice customers back.

Hand in hand with rivals

In response to the crisis felt by many department stores, there has been a move toward working in cooperation with rival stores. Takashimaya’s Osaka store and Hanshin’s Umeda main store jointly planned and held an event showcasing popular gourmet food from Rakuten Ichiba, an online shopping site, from Oct. 9 through Oct. 15. About 60 shops from Rakuten Ichiba opened pop-up shops in Takashimaya department store and about 50 other online stores opened shops in Hanshin department store. During the event, the department stores offered a free shuttle bus service between them.

It was the first time that these department stores had collaborated on an event. Mitsuaki Awano, store manager of Takashimaya’s Osaka store, said, “We’d like to attract customers to the entire Osaka area.”

Although the event did not significantly boost sales of the two stores, they kept advertising costs low with their joint publicity efforts. The department stores are exploring the possibility of collaborating again in the future.

Daimaru’s Umeda store and JR Osaka Mitsukoshi Isetan have also worked together in advertising specialty food and men’s suits events.

In Osaka, the population with purchasing power is expected to continue decreasing. Each department store will need to make further efforts to attract customers from overseas and retain repeat customers to raise its profits.