Japan’s General Merchandise Stores, most notably represented by Ito Yokado, Aeon (Jusco) and Daiei face a significant shift of consumers away from their stores. Don’t underestimate the challenge this sector faces just to maintain share, much less regain ground.
A recent study by Kojima Fashion Marketing showed that alone out of a 10.3 trillion retail sector, General Merchandise Stores have lost over 10% of the overall market over the last 10 years. Where department stores and high end specialty stores held their own at nearly 30% of the retail market, more consumers than ever turned to the value end of the market.
Behind this trend is a decline in real incomes: The average household income declined over the same 10 year period, from ¥6.3mm to ¥5.9mm, largely on increases in health and pension scheme withholdings authorized by the Koizumi administration. With disposable income down, the value retail sector is up.
Caught between the department store and high end specialty sector on the one hand, and the rapid growth of the value sector, represented by Shimamura, big box home centers and the ubiquitous 100 yen shops, the GMS sector is forced to play monkey in the middle, with neither the best values, nor the most inspiring product. Aeon is working hard to stake out an EDLP (everyday low price) strategy. IY is headed the other way, repositioning itself as a lifestyle destination. Both face an uphill battle just to maintain share.