Ginza Mitsukoshi department store’s longtime renovation project is nearing completion just as the department store industry faces tough times.
On Sept. 11, its renovated 80-year-old store will open with its combined floor space increased by 1.8 times, thanks to a new annex boasting 12 stories and two basement floors.
“Increasing floor space has been Ginza Mitsukoshi’s longtime wish,” Kunio Ishizuka, Isetan Mitsukoshi Holdings president, said last month to announce the completion of the renewal.
While it has been a bad time for the industry, with annual sales decreasing for the past 13 years, Mitsukoshi is determined to succeed with this project, vowing to show a new model for department stores, with a focus on Ginza style.
Some industry observers said Mitsukoshi is making a good move, considering the characteristics and potential of Ginza, Japan’s most upscale shopping area and a district that is likely to grow and continue to draw foreign tourists.
The ¥42 billion renewal includes remodeling of the current building, which is connected to the new one, to manage the store in a way as though the two were actually one store and will mainly target women in the middle to upper age groups.
“Our goal remains the same, which is to maximize the level of satisfaction of our customers who pursue a new quality lifestyle,” said Ishizuka, adding that such a market segment is not expected to disappear.
“To become a leader of this market is the way we will survive,” he said.
He also said earning ¥63 billion in sales is the store’s goal for the first year.
Tatsuhiko Adachi, Ginza Mitsukoshi’s general manger, said a key is to provide attractive items, while not depending on just famous brands, and to have products selected by Mitsukoshi’s buyers with a focus on “Ginza style.”
“We thought again what kind of a town Ginza is. We think that town is suited with key words such as ‘real,’ ‘first class,’ ‘culture’ and ‘mature,’ and people who come here hope to experience these. It’s not just about brands or trends,” said Adachi.
Recently, some department stores have invited low-cost, fast-fashion brands like Uniqlo to boost customer flow, but Ishizuka rejected such an option, since it goes against Ginza Mitsukoshi’s style.
Masafumi Shoda, head of the retail industry research group at Nomura Securities Co., said Mitsukoshi’s stance is strategic in a way.
“The time has greatly changed, and many department stores have been put in a position where they have to have reasonably priced items to attract customers,” said Shoda.
Even though their numbers may be limited, there are those who enjoy shopping for upscale products, and “I think Ginza Mitsukoshi attempts to meet all demands in that market,” he said.
Experts said Mitsukoshi’s other new facet is an increased number of restaurants, facilities and services to generate hospitality for a variety of customers.
For instance, the store has a 3,000-sq.-meter terrace, setting up grass and 134 seats for resting.
In addition, it also features an information center for foreign visitors that provides English and Chinese services, as well as family-friendly facilities like a day care center and nursing rooms.
Shun Tanaka, chief analyst at SMBC Friend Research Center, said although department stores used to be a family place, they have recently been more like shopping spots for women.
“I think it’s about time for them to again draw a wider range of customers,” he said.
Although Ginza Mitsukoshi is gearing up for a new challenge, the industry itself has been in dire straits.
According to the Japan Department Stores Association, the industry’s annual sales peaked in 1991 at ¥9.7 trillion. They have fallen for the last 13 years straight and the 2009 figure was ¥6.58 trillion.
Yet industry observers say the situation of department stores in Ginza is a little different from other shopping areas, as the district has long been associated with department stores.
Also, Ginza draws more older customers, who are accustomed to shopping at department stores.
But it is also true the district has changed with the recent rise of fast-fashion brands, including Uniqlo and Sweden’s H&M.
To survive the competition, other department stores in Ginza are also trying to promote their advantages.
The Matsuzakaya store in Ginza has been trying to cultivate a new style as well, although it may be quite different from Mitsukoshi’s.
The store took a symbolic step in April when it opened Los Angeles-based fast-fashion brand Forever 21 over five floors. The decision was necessary to draw a wider range of customers, the store said in a statement released in April.
Matsuya, another big department store in Ginza, is also trying to reinforce its brand by strengthening its flagship store.
According to its midterm management plan, it will improve its sales strategy and focus on its main customers — who range in age from their late 20s to 30s as well as middle-aged — with quality products at reasonable prices.
A Matsuya spokesman said the store has no plan to have fast-fashion brands at this point.
Matsuya also runs fashion outlets at other locations in Ginza where they sell relatively reasonable items, and the company will strengthen lineups in those stores to get customers’ flow toward the flagship Ginza store.
It also says the store will target more foreign customers by providing various shopping support services.
Ishizuka of Isetan Mitsukoshi stressed that the department store’s role has not died.
“People say department stores no longer have a role to play and their business models will disappear. Questions have been brought to us,” Ishizuka said, adding his company will provide an “answer” to those questions with its Mitsukoshi project. Some industry observers said the renewal is likely to be a plus overall, citing its location in the heart of Ginza.
“I think Ginza’s potential as a market is big for department stores as they try to boost sales. Ginza Mitsukoshi has about ¥40 billion in annual sales, and this can really be boosted, as its location is good,” said Tanaka of SMBC Friend Research Center.
“So, I think the floor space increase at this time is a good move,” he said.