MATRADE TOKYO & OSAKA
MARKET ALERT 16/2009
Latest Trend in Japanese Retail Sector
Under the current economic situation, most of the retailers in Japan have undertaken immediate measures to boost consumer demand. While consumers nowadays are very selective in spending their money, retailers will do everything to ensure that they can attract consumers to spend.
One of the measures undertaken by the retailers is selling products at lower price with good quality products. To do this, many major retailers in Japan are selling certain products under their private brand.
For example, In July 2009, top 2 retail giants, AEON and SEVEN & I Holdings started sales of “third –category” beer-like alcoholic beverage (literally, beer – Liquor Law regulates the usage of term “beer” depending on the content of ingredients, etc) for retail price of 100 yen. Both products have been co-developed by one of the major brewers, Suntory as private brands. Another major retailer, Daiei, also sold imported beer under their private brand.
AEON also went in further to compete with giant in the apparel industry – Fast Retailing, known for its brand as UNIQLO. Quite recently, UNIQLO launched denim jeans for retail price of 990 yen, which wowed the market for its extremely low price while maintaining its product quality. The products are manufactured in China.
On 14 August, AEON launched denim jeans for retail price at 880 yen under the brand Topvalue. In recent years, AEON has succeeded in corporate branding building with consumers’ images are: trend-setting, fashionable, eco-friendly, etc. Thus, perception towards their low-price products is different from what Daiei did back in the 80’s during the bubble economy. Topvalue jeans are made in China, and AEON targets sales of 1 million jeans by February 2010.
Another action taken by the retailers in Japan to boost consumer demand is by joint venture in operating the outlets to cut cost and at the same time to offer a convenience environment for the consumers to do their shopping. For example, convenience store chain Lawson Inc. and drugstore chain Matsumotokiyoshi Holdings Co. announced recently that they will jointly launch a new type of outlet to boost consumer demand. This new stores are likely to be larger than conventional convenience stores.
The companies will jointly set up outlets combining the convenience store and drugstore format. They decided to use this format after the government deregulation to allow sales of medicines at convenience store or other store if certified sales clerks are present on behalf of pharmacists. The same concept also has been applied by Seven & I Holding and Ain Pharmaciez Inc.
Consumer spending is low at this difficult time and consumers are more towards low-price products without compromise the quality of the products. At the same time, they also look at convenience and more selection of products while doing their shopping.
For Malaysian suppliers, price requirement will become even much tighter, while quality has to be maintained when dealing with Japan, and continuing further efforts to reduce cost would be essential. Many of the importers/wholesalers are also struggling with price competition with their competitors, cutting profit margin at limit level. This is the time to really establish strong mutual trust by sharing the pain together; otherwise, if simply supplying the product, importers can shift to cheaper sources at any time in future.
Prepared by MATRADE TOKYO
August 2009
