This year’s “Prime Retail Markets Across Japan” report reveals changes in retailers’ main street strategy as they respond to changing millennial behaviors and the increased volume of inbound tourists. Some of the key takeaways featured within the report include:
1. Ginza is poised for transformation – from “tourist destination” to “tourist hub.” Ongoing hotel developments and mixed use projects are fueling this transformation, uniting retailers and boutique and luxury hotels along the high streets. The vision is for tourists to stay and use Ginza as a base for their trips.
2. Shinjuku’s prime retail rents rose 14.8% annually, due to continued demand from retailers opening new stores. Shinjuku is now the second most expensive prime retail area after Ginza.
3. Community is the key for millennials. In response to this trend, more retailers are trying to create communities around their business, focusing on customer experiences and interactions that millennials will respond to.
4. Retailers are extending their short-term pop-up store strategy – in addition to permanent locations – partially because of soaring rent but also to boost sales and maintain relevance.
5. Increasing numbers of inbound tourists are shifting their tastes from luxury goods to mass merchandise items. Their destinations extend beyond airport duty-free stores to include drugstores and convenience stores on main street.
6. Retailers are starting to participate in community-oriented hotel concepts. The expected growth of hotel supply is making brand differentiation key, with art and comfort starting to assuming the same importance as price points. This matches with the interests of domestic apparel companies who are focusing on building communities, creating many potential collaborations between hotel developers and retailers.