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The nation’s largest rental video chain hopes to stay ahead of its rivals by diversifying, inaugurating a point-card system in tieups with off-industry partners and offering its customers more convenience and comfort.

As part of this effort, Culture Convenience Club Co., the parent firm of the Tsutaya rental chain, in April debuted its 630 million yen Tsutaya Tokyo Roppongi outlet in the popular new Roppongi Hills commercial-residential complex, in which it shares the first floor with a Starbucks Coffee shop.

Open daily from 7 a.m. to 4 a.m., the Tsutaya outlet boasts some 60,000 books, including many written in English, 10,000 DVDs and 30,000 CDs, as well as 50,000 rental videos and DVDs and 25,000 CDs.

“The store’s interior is a drastic departure from our usual stores,” Culture Convenience spokeswoman Ayako Kobori said. “Not only do we share the space with Starbucks, but we display Japanese and English books on the same shelves based on themes.” The store also features English-speaking staff and gift-wrapping.

In July, the firm opened one of its largest rental and retail stores, in Osaka’s Ebisubashi district, at the cost of 850 million yen. Open from 10 a.m. to 4 a.m., the store has about 30,000 CDs and 20,000 DVDs for sale and about 70,000 rental videos and DVDs and 70,000 rental CDs.

The outlet also provides sofas for shoppers to relax in.

Although widely known as a rental video chain, Tsutaya is also the nation’s largest CD retailer, Kobori said. “Our Roppongi and Ebisubashi stores demonstrate Tsutaya’s diversity.”

As of the end of June, Culture Convenience had 1,136 stores nationwide, compared with 1,066 stores in March 2002. Taking into account store closures, the firm actually opened more than 70 outlets during the period, Kobori explained.

Listed last March on the first section of the Tokyo Stock Exchange, Culture Convenience logged annual sales of 122 billion yen in 2002, up 13.8 percent from the previous year. However, net profits slipped to 1.2 billion yen, down by 46.8 percent from the previous year. The firm attributed the drop to store closures and appraisal losses on its stock holdings.

Although rental video and CD stores generally offer similar products, Kobori said her firm hopes to stand out among its rivals by opening stores that cater to niche markets and thus meet particular customer demands.

Culture Convenience will increase its products catering to women, for example, if it finds that female customers make up a large percentage of the clientele, Kobori explained, noting the firm also plans to boost its DVD stocks.

The firm is also looking into a card tieup with the Lawson convenience store chain and Nippon Oil Corp. gasoline stations. The arrangement will allow Tsutaya to tap into the others’ nationwide customer networks, Kobori said, noting that since Tsutaya debuted in 1985, it has amassed 18 million members.

Lawson and Nippon Oil customers, for example, would be able to use discount point cards at Tsutaya stores, Kobori said.

“The tieups with Lawson and Nippon Oil would make a large number of their customers aware of Tsutaya,” she said.

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