Kansai department stores refocus to survive

Kyodo

Two Kansai-based department store operators are closing some of their major stores in the region and will try instead to focus more of their business resources on their profitable flagship stores in downtown areas.

Industry analysts say department store operators may consolidate more stores nationwide after their sales dropped last year to around two-thirds of the peak in 1991.

Kintetsu Department Store Co. closed its store in Hirakata, Osaka Prefecture, on Wednesday. Sales at the store have halved in the past 10 years, according to store manager Masaru Haga.

Hankyu Hanshin Holdings Inc. meanwhile is closing on March 11 the Kobe Hankyu store, which opened in 1992. The operator closed another store in the Shijokawara district in central Kyoto in 2010.

“Rival shops, such as a major shopping mall, have recently opened in this neighborhood. That has impacted us a lot,” Kintestu’s Haga said.

Kintetsu is also cutting by half its floor space at the Kikyogaoka store in Nabari, Mie Prefecture, and will soon start accepting applications for voluntary retirement from the employees there.

In the meantime, Kintetsu is renovating its flagship store in Abeno, Osaka.

The refurbished store is scheduled to be ready in spring 2014 with expanded floor space of 10,000 sq. meters, which will make it one of Japan’s largest department stores.

“We need to strengthen the profitability of the flagship shop. For that purpose, we have no choice but to restructure unprofitable stores,” said Keiji Iida, president of Kintetsu Department Store.

Hankyu Hanshin is focusing on its flagship, the Hankyu Umeda store in central Osaka. The shop, with more sales space, will be fully opened in fall or later.

“The economy is stagnating and the business environment is severe even for flagship stores,” said Hideyuki Araki, chief researcher at Resona Research Institute Co.

Araki said that if department store operators hope to survive, they will try to strengthen business tieups with specialty shops and online shops to attract more young customers.