The retail furniture industry in Japan is being divided between winners and losers. Ikea Japan K.K., which mainly operates big-box stores in suburban areas, has experienced sluggish growth, while Nitori Holdings Co. and Ryohin Keikaku Co., both focusing on small stores in urban areas, have maintained strong performances. With the furniture market shrinking due to the declining population, restructuring of store networks and industrial realignment is unavoidable.
During a business briefing in Tokyo on Wednesday, Ikea Japan President Helene von Reis announced that the company is revising its business strategy for Japan.
Specifically, the company plans to increase the number of small stores in urban areas by opening multiple stores near major stations in Tokyo's 23 wards as early as 2019, while considering the opening of similar stores in Osaka as well.
Since the company launched a full-scale entrance into the Japanese market in 2006, it has been enjoying popularity for its style of allowing customers to stock up on items that feature simple and stylish Scandinavian designs. However, its nine stores in Japan are all big-box stores located in suburban areas. The company's ability to attract customers has been declining for the past few years partly because many young people today do not have cars, according to a senior official of the company. Ikea Japan was slow to start its internet business and posted a consolidated net loss of nearly 1 billion yen (9 million dollars) for the business year ending in August 2017.
In contrast, Nitori, which originally had many suburban stores, changed course quickly to open small stores in urban areas.
Starting in Tokyo with a store in the Ginza district in 2015, Nitori successively opened stores in the Shinjuku district in 2016 and Ikebukuro and Shibuya districts in 2017. It also successively launched functional products such as bedding that is cool to the touch, which attracts customers across generations and leads them to buy relatively expensive products such as beds and sofas.
Ryohin Keikaku, which operates the Muji brand, attracts customers with a wide range of housewares while trying to increase sales of furniture.
The domestic furniture industry halved in 2017 compared to 1991, when it was over 6 trillion yen.
The demand for buying a full set of furniture when getting married or building a new home has declined, while more people are opting for low-priced products.
Otsuka Kagu, Ltd., whose forte is in luxurious large-size furniture, is facing the necessity of restructuring due to poor performance, mainly because the company has failed to understand such changes in consumer behavior.
"In order to survive, it is necessary to expand customer bases, so it is possible that some businesses will be consolidated into those with large investment capabilities," said Tomoichiro Kubota, a senior market analyst of Matsui Securities Co., indicating that industrial restructuring is unavoidable.
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