One of the most popular areas on the food floor at Isetan’s Tachikawa branch offers not groceries, but quick recipes for breakfast, lunch and dinner.
|Satsuki Nakabayashi shows a sample dish and its recipe at the Today’s Recipe corner in Isetan Department Store’s Tachikawa branch in western Tokyo.|
At the Today’s Recipe corner, employees demonstrate how to cook dishes and offer free recipes to customers. The new feature in the western Tokyo department store, now a customer favorite, appeared with the store’s expansion and reopening in January.
“In this neighborhood, large-scale stores, including Takashimaya and Lumine, as well as local grocers, are in cutthroat competition,” said Tetsu Tanaka, sales manager of Isetan Tachikawa’s food market. “As a latecomer here, we needed to do something different.”
About 20 percent of the branch’s 4,000 visitors to the food floor flock to the corner each day, he said.
But such fierce competition is not unique. With the influx of specialty stores such as Muji and Uniqlo offering inexpensive but high-quality merchandise amid an economic slump, department stores across the country are struggling with declining sales.
According to the Japan Department Stores Association, annual sales of 297 member stores nationwide declined 1.93 percent from the previous year to 8.82 trillion yen last year, down for the fourth consecutive year.
The raison d’etre of Japanese department stores is now being questioned, said Yukihiro Moroe, an industrial analyst at Goldman Sachs (Japan) Ltd., noting that more and more consumers are shopping elsewhere.
To regain customers, he said, department stores must re-establish their identity vis-a-vis other types of retailers, and distinguish themselves from rival emporiums.
After restructuring unprofitable stores and reducing the number of employees in the past few years, however, some department stores are gradually regaining their strength.
Takashimaya Co. President Ichiro Masukura said his firm’s sales have almost bottomed out after suffering consecutive declines for three years. Recognizing that they have virtually no chance to win in a price war with other retailers, Takashimaya has refocused on value-added services.
In April 2000, Takashimaya introduced a concierge service in its Nihonbashi flagship store in Tokyo’s Chuo Ward.
The store has posted greeters — usually middle-aged employees in dark blue jackets — at the front and the south gates of the store to help customers find specific items they are looking for.
“If Takashimaya doesn’t carry brand items that customers look for, we check with nearby department stores like Mitsukoshi and Daimaru and tell them where to go,” said Masanori Shikita, one of the greeters.
On the surface, sending customers to a rival store may look absurd. But Takashimaya is betting that the new service will pay off in the long run.
Shikita describes his job as one making “customers feel like visiting again.” Aside from that, he said, this method also gives the store a better idea of the brands that customers want.
Likewise, Isetan’s Tanaka also said the Today’s Recipe corner, another form of reinforced customer service, may pay off.
By offering various recipes — ranging from menus for anniversaries and other special occasions to easy cooking for men and children — together with a package of food materials for each recipe, Isetan can capture more regular customers, he said.
Mitsukoshi Ltd. is meanwhile trying to establish a clear identity for each of its stores as it proceeds on a rationalization of overall operations.
It has turned some of its stores into commercial buildings, leasing space out to tenants like Otsuka Kagu Ltd., a major furniture retailer, which moved in when Mitsukoshi closed its Shinjuku store’s annex in July 1999.
In September, Mitsukoshi’s eight-story Yokohama store leased four floors to Otsuka Kagu and space on other floors to popular retailers like a Uniqlo shop and a Boots cosmetics shop. As a result, Mitsukoshi Yokohama’s floor space was reduced by 40 percent but its sales during the October-January period went up by 7.5 percent from a year earlier.
“We would never think about allowing a Uniqlo shop in our Nihonbashi flagship store, which is targeted at high-end consumers. But Uniqlo suits Yokohama and some other stores that we characterized as specialty complexes,” said Tatsuhiko Adachi, general manager of Mitsukoshi’s store identity promotion division.
While giving credit for a series of efforts to lure back consumers, however, Moroe of Goldman Sachs said, department store chains must, first and foremost, reinforce their merchandising ability if they want to stand out.
Indeed, as it stands today, department store chains have little control over how and what they sell as they typically make concessions to apparel makers and other vendors, thereby entrusting them to send sales staff and manage an assortment of goods.
Mitsukoshi, which had only 1.8 percent of its total floor space under its own merchandising strategy in 2000, plans to increase the portion of such space to 25 percent in the next three years or so by creating and promoting private brands, Adachi said.
With other department stores also advancing in that direction, Moroe said it would make a lot of sense for those not in direct competition to form a consortium for joint merchandising.
For example, three major department stores in Tokyo — Isetan in Shinjuku, Matsuya in Ginza and Tobu in Ikebukuro — could achieve greater efficiency and better risk control by cooperating with each other, he said.
But before moving to such a joint project, he said, “Each store chain had better establish its identity and obtain technology for merchandising.”
Only when they achieve two key important factors — differentiation from others and cost efficiency — can department stores elevate their status, he said.
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