Department stores nationwide go into full swing this weekend for the all-important yearend gift-shopping season, hoping to finish on a high note a year marked by battered sales.
“Oseibo,” literally meaning yearend, has historically been the big gift-giving occasion along with the summer gift season. Unlike the Western notion of giving Christmas presents, it is a much more formal and less personal affair, with presents sent to a large pool of people with business and family ties.
For major operators, the occasion means more than boosted revenue. Their prestige as upscale retailers hinges on how many gifts are wrapped in their packaging, and they are placing greater marketing focus on general shoppers today as once-generous corporate clients cut back on expenses.
Mitsukoshi Ltd. hopes to achieve a 2.2 percent year-on-year sales growth this season by attracting frugal consumers with price and other incentives.
Since last year’s summer gift season, Mitsukoshi has been offering free shipping for 500 selected items as well as a 5 percent discount for its membership card carriers. It has also started handing out freebies — Peter Rabbit bags this year — for those spending 10,000 yen or more.
Amid the continuing slump in consumer spending, Mitsukoshi, which traditionally prides itself as a leader in the gift market thanks to its high-end brand image, is not immune to price pressures, according to Ichiro Fujii, the chain spokesman.
“Twenty years ago, maybe people were even willing to pay for our wrapping paper alone, but it’s not the case anymore,” he said. “And as customers reduce the number of gifts they buy, our task is to attract new clients.”
As an effort to reach out to untapped clients, Mitsukoshi launched a sales tieup three years ago with the convenience store chain operator FamilyMart Co., under which customers can pick up Mitsukoshi’s gift catalog and place orders at FamilyMart stores nationwide.
In its drive to widen its net for a larger catch, Seibu Department Stores Ltd. is starting its yearend gift sales campaign early. Since four years ago, Seibu has started its campaign on Nov. 1, and has offered 15 percent discounts for the first two weeks.
The front-loading strategy has proved popular, with sales during the two-week period growing nearly 20 percent every year, according to department store officials.
“Traditionally, the peak of the gift shopping came during the first week of December, and it was a very stressful experience for our customers, who had to wait for nearly an hour to make shipping orders,” said Seibu spokesman Kazuhiro Nakajima.
However, amid the contracting gift market, these innovations by Mitsukoshi and Seibu may add to their hardship in the end as rivals copy their moves, further thinning their profit margins amid falling sales.
According to the Japan Department Stores Association, October sales for stores in the Tokyo area fell 3.9 percent from a year ago, the 11th straight month of decline.
For department stores, winning the gift market is imperative because it is the measure of customer prestige, said Hiroyasu Kitagawa, manager of merchandising management division at Matsuzakaya Co.
“Profit margins have been declining (due to discounts and other services), but we will secure the profits by increasing sales,” he said, stressing that his store has been successful in differentiating itself from rivals by introducing gift items not available in other stores.
According to Kazunori Tsuda, senior analyst at Daiwa Institute of Research Ltd., most oseibo market leaders like Mitsukoshi make just 10 percent of their annual revenues during the gift-giving season. Nonetheless, the chains bring to bear their full marketing resources to maintain prestige and attract new patrons, he said.
Meanwhile, Takashimaya Co., the nation’s largest department store chain in terms of sales, has been holding fast to its most loyal customers — 3.2 million Takashimaya card holders and half a million shoppers’ club members — by courting them with special gift discounts.
“Our strategy is to encourage loyal clients to do more shopping at our stores by giving them preferential treatment,” said Norihiko Ito, Kanto area manager of Takashimaya’s planning section.
According to the department stores, beer has been the most popular yearend gift choice for years, but the pick-your-own-gift system has been growing rapidly.
Under this system, gift-recipients are sent a catalog from which they can choose an item within a given price range.
“It’s popular because this is the closest to what a gift certificate does,” said Yuji Onuki, a Takashimaya spokesman. “Gift certificates are actually the most popular presents among recipients, but for senders, it’s too close to giving money, which is unseemly.”
While major department store chains have bullish outlooks for this year’s gift sales, Masafumi Shoda, retail sector analyst at Nomura Securities Co., is skeptical, saying the “survivors’ merit” seen following the collapse of the Sogo Co. department store chain in summer 2000 is rapidly losing its effect.
The prospect is especially bleak for those who enjoyed the merit most, namely Mitsukoshi and Takashimaya, where sales have been hurt in recent months due to the strong re-emergence of Sogo, which is now rehabilitating under an operational tieup with Seibu, he said.
“It’s like a zombie grabbing their ankles and pulling them down into the grave,” Shoda said.
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