Japan's Takashimaya outlet in Shanghai to down shutters

Imaginechina

Japanese department store Takashimaya is pulling out of China citing competition and shifting consumer market trends.

The Osaka-based company will be liquidating its China affiliate and closing its Shanghai store on August 25 after negotiations on rent reduction failed. The decision was made at a Takashimaya board meeting on Tuesday.

Shanghai Takashimaya’s shareholders will vote on the proposal to dissolve and liquidate the China affiliate on August 25.

According to an official notice on Shanghai Takashimaya Co’s official website on Tuesday, the future operation of the store would be very hard despite diligence and therefore it was closing the business after entering the China market in December 2012.

The Shanghai store in Changning District has a floor space of about 40,000 square meters and mostly targets well-off Chinese shoppers with luxury items and catering.

With a registration capital of 490 million yuan (US$71 million), the Shanghai store has been suffering from net losses for the past three years. In the fiscal year ended in February 2019, it reported a net loss of 8.6 million yuan.

The liquidation process under local laws is expected to be completed by 2021. 

Both multinational and local department store operators are striving to gain foot traffic as offline retail comes under pressure from the booming online shopping. 

The city has also released an action plan to encourage local shopping spaces and stores to embrace the latest trend and revive business under the digital era. 

In comparison of Takashimaya's withdrawal, French department store chain Galeries Lafayette said it may open about 10 new stores in selective China cities by 2025, with new formats to attract consumers.

Galeries Lafayette opened a new outlet in Shanghai in March, a big move after establishing its first store on the Chinese mainland in Beijing in 2013. 

"We expect to achieve sales of 1 billion euros (US$1.13 billion) in China, which makes it our largest market outside of France," said Chief Executive Nicolas Houzé in an earlier interview.