Yamada Denki has agreed to tie-up with Otsuka Kagu.
Otsuka was the second largest furniture retailer in the country until IKEA landed in 2006, but with its fortunes flagging and following an internal battle for control among the founding family, the chain has suffered more than a decade of decline.
Otsuka incurred a net loss of ¥3.24 billion in the year to December, the third in a row, although the loss was half of the one in 2017. Sales fell another 9% to just ¥37.39 billion, making the chain a little over half the size of IKEA, despite a much larger and more expensive store portfolio. The tie-up with Yamada Denki has real potential.
Last year, Yamada began converting key stores away from purely consumer electronics and more into general home retailing, including a large range of furniture.
This backs up its strategy of supplying all forms of hardware for the home, as well as building and equipping energy efficient housing. By January, it had converted 59 stores to the new format called Kaden Smile-Kan. Yamada wants to tap into Otsuka’s experience with furniture.
Otsuka will help train Yamada staff and develop and expand interior merchandise ranges. It will also provide help with overseas suppliers and is looking at options to wholesale items from its own ranges in Yamada stores.
As well as Yamada, last month Otsuka completed a deal to sell in China, working with Beijing Easyhome Yundi Huixin Retail. The two companies will develop product for sale online in China.
Michael Causton is the co-founder and partner at JapanConsuming, a specialist research firm on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market to help subscribers keep up to date with the latest trends and data. JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and consulting on market strategies and future trends.