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Re-Shaping for Millennials & A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION RE-SHAPING FOR MILLENNIALS & SEPTEMBER 2018 PRIME RETAIL MARKETS ACROSS JAPAN · Hibiya redefining entertainment 5 · Shinjuku made a leap forward 6 · Luxury brands seeking out millenials 7 · Omotesando home to soaring rents and hide-and- 10 seek shops · “Sephorization” is vital to today’s cosmetics buyers 11 TABLE OF TABLE · New consumers redefining the physical store for 13 secondhand retail · Ginza turning into tourist hub 14 · Shibuya revitalized by new Japanese flagships 15 · Mass merchandise shops boosting rents in Osaka 16 · Retailers take on community-oriented hotel concept 17 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Japan’s retail landscape MAIN STREET is shifting as evident on this year’s rent ranking. What’s behind this change is the increasing JPY/TSUBO/MO significance of the rise of Millennials and TENJIN inbound tourism. SANNOMIYA TIER 1 TIER 2 TIER 3 AREA Q2 2018 2017 2016 JPY/TSUBO/MO USD/SF/YR Ginza, Tokyo 1 1 1 400,000 1,220 Shinjuku, Tokyo 2 3 2 320,000 976 Harajuku/Omotesando/Aoyama, Tokyo 3 2 2 300,000 915 Shinsaibashisuji/Midosuji, Osaka 3 4 5 300,000 915 PRIME RETAIL MARKETS PRIME RETAIL Shibuya, Tokyo 5 5 4 200,000 610 Umeda, Osaka 6 6 8 150,000 457 Ikebukuro, Tokyo 6 6 6 150,000 457 Sannomiya, Kobe 8 - - 140,000 427 Kichijoji, Tokyo 9 8 6 120,000 366 Shijo Dori, Kyoto 9 - - 120,000 366 Sakae, Nagoya 11 9 8 100,000 305 Marunouchi, Tokyo 11 10 12 100,000 305 Roppongi, Tokyo 11 10 8 100,000 305 Meieki (Nagoya Station), Nagoya 11 - - 100,000 305 Tenjin, Fukuoka 11 12 8 100,000 305 Daikanyama, Tokyo 16 13 14 80,000 244 Jiyugaoka, Tokyo 16 13 12 80,000 244 Sapporo, Hokkaido 18 15 17 75,000 229 Futakotamagawa, Tokyo 19 16 15 60,000 183 Sendai, Miyagi 19 16 15 60,000 183 4 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION HIBIYA SHINJUKU entertainment leap forward MIDTOWN HIBIYA Tokyo Midtown Hibiya opened Japan for the first time. The center Shinjuku’s prime retail rents rose conducting workshops and events. SHINJUKU’S WELCOMES beside the beautiful Hibiya Park, is connected via an underground 14.8% over the last 12 months, due Shinjuku used to be a place that PRIME RETAIL between Marunouchi and Ginza, food hall to Hibiya Station, in to continued demand from retailers. people passed through, but visitors RENTS ROSE in March 2018. Within two months keeping with the recent F&B The increase placed Shinjuku now see it as a place to enjoy of opening, more than 4 million trend. Hibiya is now a business ahead of Omotesando, Harajuku, new experiences. More street-side people had visited the building, district that used to be an area Aoyama, and Shinsaibashi, as the retailers will open on Shinjuku-dori, casting aside any doubt about where diplomats gathered to second most expensive prime retail between Shinjuku Station and the MORE VISITORS whether it would reach its annual socialize which symbolized the area in Japan. Shinjuku had long Shinjuku 3-chome intersection, THAN TARGETED target of 12 million people at a modernization of Japan. The area been in fierce competition with which is expected to further OVER THE LAST faster pace. More than half of the was home to the magnificent Omotesando, overtaking it for the boost rents in the area. Retailers 12 MONTHS tenants are cafes and restaurants, Imperial Hotel, designed by first time ever. relocating from older buildings into including ones that are opening in American architect Frank Lloyd the newly constructed buildings Wright, and many cultural facilities Shinjuku has always been in such as Gucci will also help such as Rokumeikan existed until demand among retailers, but revitalize the area. In addition, the mid 20th century. The neighboring traditionally it was home to a future redevelopment of building retail facility, Hibiya Chanter, also “melting pot” of all kinds of clusters adjacent to Shinjuku underwent large-scale renewal shops. However, more recently Station will further strengthen the to coincide with the opening of community oriented retailers that retail scene of the world’s busiest Midtown Hibiya. These changes focus on customer experiences and station. led to a 70% increase in visitors interactions have begun gathering to the renewed facility compared in the area. For example, Apple to a year ago, contributing to a opened a shop in Shinjuku focusing flourishing atmosphere. In addition, on this concept in April 2018. a new development project Community-oriented stores are initiative has already begun. 5 6 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Luxury brands MILLENNIALS Naoko Hongo Masahiro Tanaka Luxury retailers are Louis Vuitton launched a pop- TURNING TO LUXURY STREET For example, Balenciaga has up store at the former GAP E-COMMERCE WINNING YOUNG appointed Demna Gvasalia, redefining their brand image site in Shibuya during Golden PLATFORMS CONSUMERS co-founder of Vetements, to Week. It offered a limited edition PLATFORMS take the creative lead at the by hiring new designers who collection in a pop-up section, a The strategic development of fashion house. Leading street are well recognized in men’s floor for retail, and a second floor luxury e-commerce platforms The “Luxury Street” is well brands are also on the cusp of devoted to Millennials, with digital has been remarkable. Luxury known for offering a mix of joining the mainstream fashion street fashion. This vital installation tools to grab attention. brands used to focus on high luxury brands and streetwear. industry. Brands that were, until move together with a focus Millennial consumers value street retail and private online Many popular collaborations recently, only popular among Instagrammable experiences they stores. But they have recently have been introduced at pop-up skaters – such as Supreme, on digital communication is can share, and Luis Vuitton’s shop been expanding on Farfetch, events, which have developed Stussy, A Bathing Ape, and created waves within two weeks, a global online shopping mall into a social phenomenon. Palace Skateboards – are WHAT’S NEXT WHAT’S to attract Millenials. Retailers uccessfully using these elements. for designer clothes. The Successful collaborations now extending their reach as are turning to short-term partnership includes Gucci’s include those between Jimmy many Hollywood celebrities, Inclusive experiences, and surprise 90-minute delivery service in 10 Choo and Off-White, and fashionistas, and social media pop-up stores - in addition & discovery elements, stimulate cities globally, Burberry’s use of Louis Vuitton and Supreme. influencers become fans of to permanent shops - for buying intent. Shopping centers the Farfetch platform to allow Their popularity is exploding the brands. These brands and retailers are blurring the lines customers to check inventory among Millennials and post- stimulate sales by opening the launch of new collection between offline and online. The and buy online, and Chanel’s Millennial Generation Z. Luxury short-term pop-up stores that concept of “shopping” is no longer collaboration to develop digital Street incorporates elements offer a limited number of items. with limited items to just about buying products. It is content for Millennials. This of street culture into the luxury It is common to see queues boost sales and maintain also about researching products trend signifies luxury brands’ look, such as sneakers, large snaking in front of these stores, by communicating with store staff evolving approach to reach hoodies, and logo items. The sometimes overnight. There is relevance. – not just through shop visits but out to new generations of “Neo Street” movement, based no doubt that pop-up stores will through social networking sites – fashionistas while nurturing on monochromatic themes, is become mainstream for many to collect information about the brand heritage. also very popular. Many of these luxury street brands. merchandise they are seeking. designers have carved out a unique niche away from the mainstream. Then there is the new breed of designers who wear a variety of creative and career hats, such as DJ, who are referred to as WELL KNOWN “slashers.”. It is said that Marcelo FOR OFFERING A Burlon was one of the first of MIX OF LUXURY its kind. They are constantly BRANDS AND looking beyond fashion to STREETWEAR identify cultural links in activities such as sports and music. Some of these designers have recently been recognized by the big fashion houses and roped into design collaborations. 8 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION OMOTESANDO And Hide-and-Seek Shops From Harajuku to Omotesando, SEVERAL in addition to Korean natural REDEVELOPMENT cosmetics retailers, domestic PLANS ARE sneaker stores have opened. This UNDERWAY reflects increased acceptance for LOOKING AT THE relaxed dress code in Japan and inbound tourists favoring these brands. Several redevelopments are underway around Harajuku Station, ahead of the 2020 Summer Olympics. A well- OLYMPICS known public residential block GAMES in Aoyama will be redeveloped as a mixed-use site, in addition to other redevelopments that are improving the convenience of Omotesando Station. Strong demand is continuing for branding showrooms from Omotesando to Aoyama. However, the current high rents are deterring some retailers from opening. In main streets such as Meiji-dori and Omotesando, after tenants depart, sites are standing empty due to soaring rents. In addition, an increasing number of street brands are looking for “hide-and-seek” locations that customers enjoy discovering. 9 10 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION “Sephorization” COSMETICS BUYERS Yurie Niino The beauty industry’s Sephora reported a 25% increase capability, allowing them to test efforts are minimal, largely THE BRAND’S in buyer penetration and a 32% different lighting, make-up, and hair consisting of Jenner’s Instagram SUCCESS expansion is not limited increase in regular buyer purchases colors.
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