Superstore boss lists challenges

By IRENE CHAPPLE

Kazumasa Koshiba is the chairman of Isetan, Japan's so-called god of department stores, and yesterday he opened the 11th Asian Retailers Conference with an early reference to such higher powers.

Even the Lord, said Koshiba, would find it difficult to predict what the future held for department stores.

But Koshiba's 25 years' experience suggest his predictions are the next-best thing.

Isetan, which was established in 1930 and has sales of $10 billion a year - equivalent to just under a tenth of New Zealand's GDP - is the only department store that continued to make a profit during Japan's slump.

Koshiba's message to the delegates who gathered in Christchurch was clear.

In a speech that ran for more than an hour, he said department stores were being squeezed top and bottom by mass retailers and specialist shops.

"If department stores are to keep growing over the long term, they must offer enjoyment and a dream that cannot be found in everyday shopping," he said.

"They must create a shopping environment that causes the heart to race in anticipation.

"They must present new ideas that result in new kinds of consumption. And they must offer high-quality service."

Koshiba was concerned about the standard "low-margin constitution" in department stores, saying it must change.

This could be done through adapting to the changing desires of consumers.

"If we look at the overall retail market we see a total pie that is not growing. To survive in this environment, retailers will have to sell small amounts of a great many items because consumer values are diversifying."

Department stores would need to link with a large retail group or develop a speciality niche in sectors such as clothing or food.

"As happens with living organisms, department stores must change and evolve as their environment changes."

Koshiba's speech, given on a stage decorated with native flora and flanked by two Maori carvings, was well-received by the several hundred attendees, with local delegates commenting on its relevance to New Zealand.

Koshiba, who speaks little English and is in New Zealand for the first time, was not giving interviews but Peri Drysdale of Untouched World - the only New Zealand retailer stocked at Isetan - took time out from her exhibition to talk to the Herald.

Drysdale, who is hosting the Isetan group, said sales made through the department stores, where Untouched World had been stocked since 1998, were "significant".

She said stocking with a retailer of such buying clout could be extremely difficult.

A supplier must meet stringent requirements to avoid being bumped in favour of thousands of rivals.

If a product was out of stock at 10am it had be back in stock by 3pm.

Despite the demanding trading requirements, Drysdale said Isetan's ability to open doors worldwide was invaluable.

Drysdale was helping to promote other New Zealand retailers to Isetan and was prepared to be a go-between. The conference "will help, definitely".