Xymax Real Estate Institute

RESEARCH REPORTSUMMARY
Repair of Retail Buildings Fact-Finding Study 2016
Findings from Retailer Survey and Interview

November 29, 2016
Xymax Real Estate Institute, together with the research team of Professor Yukio Komatsu of Department of*1

Architecture, Waseda University , conducted a survey and interviews. We asked multi-store retailers

*2

about

repair of their retail buildings. This report presents the result and summary.
Retail buildings are as important as office buildings but are different because they are visited by many
unspecified people and spaces are basically used for the purpose of selling goods or services. Therefore thepurpose of maintenance is also different from that of office buildings. Our study is to reveal the little-known
fact about how retailers repair their stores. We believe this study will improve the level of repair of commercialbuildings.
*1 Research team of Professor Yukio Komatsu; Department of Architecture; Waseda University: http://www.waseda.jp/sem-ykom/ (inJapanese only)*2 Intended respondents of this study: Of goods sellers, restaurants and service companies targeting individual customers, we pickedup companies that earned revenue of more than JPY 3 billion in FY2015. (See the information at the end of this report.)

Key Findings
1.

As their repair policy, retailers put priority on keeping the store open: the impact on customers isvery important.
 84% said satisfaction of customer is important in repair and 75% said safety of customer is important(Figure 1).
 32% said the highest priority goes to "keep the store open" (Figure 2).

2.

Approx. 90% said that sudden breakdowns are problems; 50% of them said because they fail topredict the breakdowns.
 25% said breakdowns and damages occurred frequently. 61% said they occurred sometimes (Figure 3).
 When asked why breakdowns are problems, the most popular answer, chosen by 62%, was that they areunable to know the sign of breakdowns in advance (Figure 4).

3.

Store managers have limited control over decision making of repairs. In companies operating
many stores, repairs of stores are often controlled by a small group of head office staff.
 Approx. 80% of the store managers are only allowed to go for a JPY50,000 repair per case (Figure 5).
 The more the number of directly-operated stores within the company, the more the number of storescontrolled by one head office manager (Figure 6).

4.

Less than 50% have a repair plan and budget. The more the number of directly-operated stores,
the more the percentage of having such plan.
 One third of companies have a repair plan for each store (Figure 7).
 The more the number of stores, the more the percentage of having such plan (Figure 8).

5.

Survey and interviews revealed interesting facts.
 The most popular response was that the retailers are facing problems and they wish to know theapproach taken by other companies.
 The executives of companies taking positive repair approach are highly aware of the importance ofrepairs.

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Copying, quoting, forwarding, distributing, reprinting or any other use of this report is not allowed without prior permission from Xymax Corporation.
Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

1RESEARCH REPORT｜Xymax Real Estate Institute1.

Policy of Repair

We asked the retail companies about their policy of repair. They responded that the satisfaction of customers(84%) and safety of customers (75%) are important; outstanding among other answers, indicating that thecompanies put high priority on customer satisfaction. (Figure 1)
Figure 1: What are important in repair of retail space (Multiple answer, n=657)

We asked the retail companies what is important in urgent repair. More than half of the respondents choose theanswers related to minimizing the subsequent damage: To be able to keep the store open (32%) and safety(25%) (Figure 2).
Repair 2: What is important in urgent repair (Single answer, n=602)

Compliance
6%

None
1%

Certainty
17%

Other0%Keep thestore open
32%

Cost
19%
Safety25%

2.

Problems in Sudden Breakdowns or Failures

We asked whether the retailers faced any problems when the facility was suddenly broken or failed.
Approximately 90% responded "yes" ("frequently" and "sometimes" combined) (Figure 3).
When asked about what were the original causes of the problems, 62% said they had not been aware of thepotential risk of breakdowns or troubles and that was the problem, which stood out among other answers(Figure 4). This was evident from our interview too. Many companies are trying to find a way to predict
potential risks. Some of the companies already introduced their own systems such as all-at-once inspections
prior to busy seasons or check of facilities considering the timing of replacement, or made manual books sothat the on-site staff can check.
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Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

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RESEARCH REPORT｜Xymax Real Estate Institute

Figure 3: Are there any problems with sudden
breakdowns or troubles?
(Single answer, n=657）

3.

Figure 4: What caused the problems?
(Multiple answer, n=551)

System of Repair

We roughly divided the persons in charge of retail space repair into three levels: the store manager, the regional
manager and the head office manager. Then we asked the maximum amount of repair cost the person in eachlevel is allowed to decide. The store manager has the smallest control over repair; 80% of the respondents said
the store manager is allowed to do a repair that is JPY50,000 or less (including "0 yen", meaning those who are
not allowed to do any). The regional manager is allowed to do more expensive repairs while the head officemanager is allowed to do even more expensive repairs (Figure 5).
Figure 5: Cost per Repair Allowed (Single answer, ｎ＝619)

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Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

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RESEARCH REPORT｜Xymax Real Estate InstituteWe asked the retailers how many stores are under each head office manager. The result was that the retailers
with many directly-operated stores tend to have many stores per person. This means that even when thecompany opens more stores, they do not add head office managers in line with the increase in the number ofstores; instead, a small group of people continue to take control of the store repairs (Figure 6).
Figure 6: Stores under Head Office Manager in Charge of Repair (n=623)

4.

Repair Plan

We asked whether the retail companies have a repair plan for each store. One third of the respondents said
"Yes" (Figure 7). The higher the number of directly-operated stores, the higher the possibility of having a repairplan (Figure 8). This is probably because efficient repairs in line with the life cycle and age of the facilities are
more important for multi-store retailers when controlling the budget and keeping the stores open.
Figure 7: Does the store have a repair plan?
(Single answer, n=657)

No
66%

Figure 8: Number of Stores per Companyand Repair Plan (Single answer, n＝649)

Yes
34%

All rights reserved. All the contents are as of the date of this report. Xymax Corporation does not guarantee the accuracy or completeness of the information herein. Copying,quoting, forwarding, distributing, reprinting or any other use of this report is not allowed without prior permission from Xymax Corporation.
Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

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RESEARCH REPORT｜Xymax Real Estate Institute5.

Findings from Survey and Interviews

Our retailer survey and interviews found problems related to retail space repairs. Figure 9 is the summary.
Figure 9: Problems related to Retail Space Repair(1) Head office
Many stores are under a small group of the head office managers. When they are busy,
some repairs may be left unfinished or postponed.
(2) Urgent repair
Urgent repair cost could be high, because it is urgent and arranging night-time repairs or
obtaining competitive estimates may not be possible. Gathering the required informationsuch as the product codes also takes time.
(3) Repair plan / Prevention
The importance of having a repair plan is recognized but it is difficult to see whether theprevention is reasonable because the facility registry and repair history have not beenrecorded properly. Therefore, making a repair plan and preventive repair is not possible.
(4) Lack of information
When managers think about how to optimize repairs, they fail to find good examples ofrepair plans or compare such plans.
When they were asked to write freely, a lack of information (the desire to know the approach taken by othercompanies) was the most popular reply among the respondents of the survey. Other answers were: Repairs areoften postponed considering the balance between the repair and sales; repair costs are included in the income
statement of the store therefore the repair is often performed later unless the impact on sales is great if notrepaired soon; and the corporate management does not understand the importance of the repair.
On the other hand, our interviews revealed that retail companies active in repairs share some common
awareness and policy. Ignoring a problem may risk further deterioration of the building and facilities and cause
a decrease in the value of the asset. If the value of the building decreases, the customer satisfaction may also
decrease and it affects the sales. Therefore, to avoid getting into downward spiral, such retail companies'
management team is engaged in understanding the importance of repair and implementing the repairs (Figure10). Although the details of the repairs differ company by company depending on the difference in the numberof facilities that may affect the operation of the store or the difference in the corporate policy, companies active
All rights reserved. All the contents are as of the date of this report. Xymax Corporation does not guarantee the accuracy or completeness of the information herein. Copying,quoting, forwarding, distributing, reprinting or any other use of this report is not allowed without prior permission from Xymax Corporation.
Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

5RESEARCH REPORT｜Xymax Real Estate Institutein repairs are taking actions including collaborations with outside professionals, separating the repair cost fromstore's income statement, deciding who is responsible for what, preparing a guide and giving training to ensure
the employees understand the repair policy and perform such repairs.
Figure 10: Downward Spiral of Repair

Study Overview
PeriodJuly – November 2016

IntendedRespondents

Of the goods sellers, restaurants and service companies targeting individual customers , those earned
the annual sales of more than JPY 3 billion in FY2015 were picked up.

*14,879 companies*2*1: The type of businesses in this survey is those occupying shopping centers, retail buildings or
stand-alone stores (roadside). They were based on the industrial classification by Ministry of Internal
Affairs and Communications of Japan.
*2: The companies were listed up from the data of Tokyo Shoko Research.
Response

663 companies responded to the survey. (Response rate: 13.6%)
13 companies were interviewed.

AreaAll across JapanMethod

Via postal mail, online survey and interview

ThemeI. Business and store
II. About repairs
III. How to perform repairs, more specifically

The full version of the report is available only in Japanese: https://soken.xymax.co.jp

For questions on this report, please contact us.
Xymax Real Estate Institute
PHONE: +81 3 3596 1477 FAX: +81 3 3596 1478 info-rei@xymax.co.jp

All rights reserved. All the contents are as of the date of this report. Xymax Corporation does not guarantee the accuracy or completeness of the information herein. Copying,quoting, forwarding, distributing, reprinting or any other use of this report is not allowed without prior permission from Xymax Corporation.
Copyright © 2016 Xymax Real Estate Institute Corporation. All rights reserved.

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