Takashimaya's store in Shanghai.
Japanese department store chain Takashimaya will halt its operations in China, paving the way for opening another outlet in Vietnam, Nikkei Asian Review reported.
The store has been losing money and the Osaka-based company decided it would be difficult to turn the business around as private consumption has slowed in China amid the trade war with the US.
The retailer will hold talks with local authorities on the closure of its flagship store in Shanghai. The focus of Takashimaya's overseas operations will shift to Southeast Asia, a region the company sees as more promising.
The Shanghai store, which opened in 2012, has a floor space of 40,000 square meters, about the size of a big outlet in Japan. It caters mostly to wealthy residents of Shanghai, offering a range of luxury brand items.
The Shanghai store got off to a bumpy start the year after violent anti-Japanese demonstrations swept China in 2011. The store's opening also coincided with the takeoff of online shopping, further denting business.
For the year to February, the Shanghai store reported sales of US$29.6 million, up 0.7%, and an operating loss of 900 million yen, its seventh straight year of red ink.
Despite the stumble in China, Takashimaya will continue its overseas push.
Takashimaya entered the Vietnamese market in 2016 by setting up its first store in Ho Chi Minh City with the capital of more than $25 million. As reported by VIR in early 2019, Shigeru Kimoto, Takashimaya’s chairman, affirmed that retail is still a potential business line and the corporation will expand in Southeast Asia in spite of the challenges, with Vietnam, Singapore, and Thailand in the focus of their plans. The company is planning to increase sales by expanding daily family services and expects to turn a profit by 2022.
Currently, Takashimaya has three overseas stores, one each in Ho Chi Minh City (Vietnam), Singapore, and Bangkok (Thailand). The company's goal is to turn shoppers into repeat customers at the three Southeast Asia locations.
Japanese retailer Takashimaya is planning opening another store in Vietnam. (Photo: Takashimaya's first and only store in Ho Chi Minh City)
The Ho Chi Minh City store, which opened in 2016, will be expanded to carry more items for families.
Takashimaya is also considering opening another outlet in Vietnam. The store in Singapore is doing well, generating some 20% of the company's operating profit. The Bangkok outlet opened in the fall of 2018.
After three years in Vietnam, the Japan-based department store chain plans to open another outlet in the country, but it has yet to disclose the specific location of this outlet. In Singapore, Takashimaya already generates around 20 per cent of its operating profit.
Meanwhile, in Thailand Takashimaya is relatively new, having opened its first store in August 2018, less than a year ago.
In China, the flagship store caters mostly to the wealthy residents of Shanghai, offering a range of luxury brand items. However, the anti-Japanese demonstrations sweeping across China in 2011 may still be hampering the retailer's activities.
