Retailers Invest in Toyoku for Recovery from the Japan Disaster

Osaka - Monday, July 18, 2011




Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that leading Japanese retailers are heavily investing in Tohoku area, the most hard hit regions by the earthquake and tsunami that broke out on March 11 such as opening new shops and reforming current shops.



Population of Tohoku region has been on the decrease and recovery plan of local government from the disaster has not been proceeding quickly; however, the retailers believe that recovery consumption from the disaster to rebuild everyday lives of the victims would be sustainable and therefore they have started to heavily invest in the area.



1. How has been the recent business trend of retailers in the Tohoku area?



According to sales trend of large retailers recently announced by Ministry of Economy, Trade and Industry (METI), sales of department stores and supermarkets for May in the 6 Tohoku prefectures (Aomori, Akita, Iwate, Miyagi, Yamagata and Fukushim) was 1.5% increase from May 2010 when it was 1.3% decrease from Ma 2010 for nationwide. Similarly, it was 10.9% increase for convenience stores in six Tohoku prefectures when it was 7.3% increase for nationwide.



This partly attributes to the fact that large franchise retailers have been investing to cover up for the local shops that went out of business immediately after the disaster.



Consumer electronics mass merchandisers and others follow the very similar trend as well.



2. How are retailers aggressively opening new shops in Tohoku?






1) Convenience Stores



Mini Stop (under the umbrella of Aeon, the leading supermarket in Japan), is to open 100 new shops in Miyagi and Fukushima in three years starting 2011. This is three times more new shops to be opened from the original plan made before the outbreak of the disaster. The locations of the new shops are concentrated in such cities as Imaki in Miyagi and coastal areas of Sendai where the recovery and rebuilt of the area is needed the most. The company plans to employ victims as contract workers and support relocation and housing.



Family Mart plans to open 85 new stores in Iwate, Miyagi and Fukushima including temporary ones, which is five times that of the original plan made before the disaster outbreak.



Seven Eleven Japan and Lawson have not changed their plan of new store opening but they are to proactively open temporal stores in the devastated area according the local needs.



2) Others



K’s Holdings, a consumer electronics mass merchandiser, say that their sales for June in the six Tohoku prefectures were 50% increase from June 2010, when it was 40% increase nationwide. The chairman of the company commented that the recovery consumption is estimated to continue for the next two or three years and therefore the company is to increase the number of new stores to be opened from its original plan of one to four.



Yamada, the consumer electronics mass merchandiser leader in Japan, also plans to open 15 to 20 stores in the six Tohoku prefectures this year.



Tsuruha Holdigs, a leading drug store in Japan, plans to open 34 new stores in 2011. This is 60% increase from the previous year.



3. How retailers plan to meet recovery demand by reviewing their current shops?



Aeon is to invest 12 – 13 billion yen in reforming their current supermarket stores in Tohoku, in addition to their regular reform investment. The company also plans to expand shop floors of housing related products and services and so forth to meet the local needs that are to go through recovery from the disaster.



Itoyokado, supermarket franchise company under the umbrella of Seven and i Holdings, originally planned to close seven stores nationwide in 2012 but revised to close two stores because the recent consumption is strong. The five stores that are now to continue their business seem to include those located in Tohoku. The top executive of the company commented that their plan revision is also to support the recovery of the devastated area.



4. Is it only retailers that are proactively investing in Tohoku?



No, because the recovery consumption is expected to range not only in other sectors as well.



For example, Kohnan, a leader in Do It Yourself (DIY) industry in Japan, is to open new stores specialized BtoB in selling building materials and industrial tools for construction companies operating in Tohoku in order to benefit from increase in construction demand in the area. The company plans to open the first store in October in Sendai City and five or six more stores in Miyagi by the end of this year.





Resources:-

When many factories etc. are being relocated away from Tohoku and eastern Japan, retailers are proactively investing in Tohoku, especially in the devastated area, in order to benefit from recovery consumption from the disaster and also to support the recovery and reconstruction of the devastated area. The recovery consumption is likely to be not limited to retailers (products and services related to everyday lives of people) but also to other sectors such as BtoB of construction related industries.