Kansai department store shake-up

Kansai, Japan’s second largest commercial district after Tokyo, will be home to fewer department stores after two shut down.

Department stores Kintetsu and Hankyu are to close their Kansai outlets and to switch focus to their profitable stores into more lucrative downtown areas instead.

Kintetsu Department Store in Hirakata, Osaka Prefecture, finally closed after 10 years of reduced sales growth which was blamed by manager Masaru Haga on the recently opened major shopping mall in the neighborhood.

Kintetsu in Kikyogaoka in Nabari, Mie Prefecture is halving its retail floor space and now accepting voluntary retirement applications from employees.

On the other hand, as part of its refocusing, Kintetsu is refurbishing its store in Abeno, Osaka. With an additional 10,000sqm space, Kintetsu will make it to be one of Japan’s largest department stores. The renovation is expected to completed by spring 2014.

“We need to strengthen the profitability of the flagship shop. For that purpose, we have no choice but to restructure unprofitable stores,” said Keiji Iida, president of Kintetsu Department Store.

Meanwhile, Hankyu in Kobe which opened in 1992 will shut down on March 11, its second closure after Shijokawara store in central Kyoto in 2010. Its focus will be shifted to its store in Umeda in central Osaka which is expected to be fully operational in fall or later.

“The economy is stagnating and the business environment is severe even for flagship stores,” said Hideyuki Araki, chief researcher at Resona Research Institute.

Araki suggested department store operators should consider collaborations with online shops and specialty shops to draw more customers and thereby make their businesses survive.

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