Retail, Wholesale & Distribution

June 2007

Takashimaya, Mitsukoshi Report Op Profit Declines For March-May Period
Major department stores Takashimaya Co. and Mitsukoshi Ltd. reported plunging operating profits in the March-May quarter, while rival Daimaru Inc. managed to buck the trend, aided by strong supermarket sales and lower costs. Takashimaya's operating profit declined 12% to 8.2 billion yen on sluggish sales of spring apparel and other products, while Mitsukoshi's dived 62% to 1.1 billion yen due to store closings and other restructuring measures. In stark contrast, Daimaru managed a 3% increase to 6.9 billion yen. Although food sales rose in the March-May period, demand for mainstay clothing remained weak, leading to a decline in same-store sales at all three retailers. Takashimaya was hurt by renovations at its flagship Shinjuku store in Tokyo that reduced its sales area, as well as rising costs to issue new bonus point cards. Sales, including those of regional department store subsidiaries, fell 3%. Mitsukoshi's group sales dropped 5%, partly due to renovations in the basement of its main Nihonbashi branch in Tokyo that constrained customer traffic. Daimaru managed to achieve a 2% rise in group sales as growing revenue at supermarket chain unit Daimaru Peacock Inc., which opened three new locations, offset the decline in the department store business. Its pretax profit rose 9% thanks to the absence of a one-time system-related charge in the same period a year earlier. (The Nihon Keizai Shimbun, June 30, 2007)

European cookware creates boom in Japan
European cookware is catching on - again. The reasons are myriad, but one seems predominant, and that is unique design. At Mitsukoshi Ltd.'s main department store in central Tokyo, The Vitalis aroma steamer from German kitchenware maker WMF AG is selling well. It is a deep, shiny stainless-steel pan that measures 41.5cm long by 27cm wide, and during a four-day fair in April, Mitsukoshi sold 42 of them - in spite of their lofty 47,250 yen price tag. When a Mitsukoshi buyer first saw the aroma steamer, she thought some marketing gimmick would be needed to woo Japanese consumers. So she proposed to Kai Corp., which imports WMF cookware, that it print brochures with recipes that utilize the pan. Kai did so, and the result, which is given away to customers who buy the pan, includes pictures of gorgeous dishes of steamed pork and Chinese cabbage, among other foods. In a demonstration at the department store, a large, whole fish was cooked in the pan, with the steam shooting out of it making shoppers turn their heads. Steamed dishes are steadily growing in popularity, backed by an increasing number of sophisticated eaters who value organic flavors - a Japanese trend that is benefiting European cookware makers. When steamed, foods retain more of their nutrients that would dissolve into hot water if the dish were boiled. Steam cooking, which does not require the use of oil, also appeals to fitness buffs. At Mitsukoshi, relatively elderly people and newlyweds make up the Vitalis' two core buyer groups. The pan is partitioned, so it can steam more than one dish at a time, and its appearance allows it to flatter a dining table, a department store employee said. Japan has had several European cookware booms in the past, including one triggered by enameled cast iron pots and pans made by French company Le Creuset SAS. Another focused on pressure cookers from family-owned Fissler GmbH of Germany. What's next? That is anybody's guess, but let us consider the distinctive cookware produced by Swiss Diamond International of Switzerland, which hit the shelves of some Japanese department stores in late April. The cookers are coated with diamond particles. The use of diamond particles heightens durability as well as thermal conductivity, limiting damage to foods. Cut potatoes, for example, maintain their shape when cooked in the pan, according to an official of Nihon SiberHegner KK, the series' Japanese sales agent. Swiss Diamond has 13 models available in Japan, including a 20cm-across frying pan priced at 18,000 yen and a 28cm stock pot at 39,000 yen. "We target wealthy people in their late 30s and older who are fond of throwing parties," said the SiberHegner official. Then there is the glass-ceramic Silargan series from Silit Werke GmbH & Co. of Germany. These pots and pans fell under the spotlight recently after having gone little noticed since their Japan debut about 20 years ago. The smooth surface of the cookware, made of ceramic glass fused with ferromagnetic steel, does not diminish flavors and can be used on inverter burners. "Water boiled in the Silargan milk pot becomes mildly alkaline due to a far infrared radiation effect, making green tea using the hot water far more tasty," claimed an officer of Seiei, the series' importer. Monthly sales of the milk pot doubled to about 1,000 earlier this year. Besides green tea, the Silargan series boasts high compatibility with another Japanese icon - rice. The popularity of its pressure cooker began spreading after students at cooking schools specializing in macrobiotic regimens - which are based on brown rice, vegetables, tofu and the like - began talking up the glass coating's ability to produce especially tasty brown rice. The coating apparently keeps substances that other cookers might leak from seeping into food. Italian labels with products sporting a wide variety of colors are also making some inroads. Covo s.r.l., for instance, has applied Japan's traditional design to its cookware. The Latina Easy Cook series unveiled by Fratelli Guzzini SpA in 2006 is another example. These new cookware brands, industry analysts noted, could grow in the Japanese market to rival the Continent's current cookware king, Le Creuset. Two factors explain the popularity of these new European faces: versatility, and practical and unique design. That these pots and pans can be used for a variety of cooking methods - as well as their ability to produce splendid-looking dishes - convinces consumers they are worth their high prices, the analysts said. The Silargan milk pot, for example, can also boil water, cook vegetables without using water, handle stewing and cook rice. Internet blogs and social networking service sites are full of praise for the pot. Wrote one poster, "I took the plunge and bought the pot, and I was right in having done so." Said another, "I will continue to use the pot for the rest of my life." As for the design, the Vitalis aroma steamer appeals to consumers because it is handsome enough to be used as tableware. The Ciacapo teapot from Covo, whose design was inspired by a traditional piece Japanese cookware, "appears to intrigue the Japanese people with a subtle difference in appearance to a Japanese iron kettle," noted an employee of Azmaya Co., which imports Covo products. The original designs of European cookware often make for conversation during parties - a quality Japanese cookware lacks. (The Nikkei Business daily, June 25, 2007)