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Retailing, in. Japan
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[ About this report :

This market report provides market trend and market growth analysis of the Retailing channel in Japan . With this market report, you l be able to explore in detail the changing shape and potential of the channel. You will now be able to plan and build strategy on real industry data and projections .

The Retailing in Japan market research report includes:

§ ; Analysis of key supply-side and demand trends

§ Detailed segmentation of international and local products

§ Historic number of stores, selling space and values, company and brand market shares

§ Five year forecasts of market trends and market growth

§ ; Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

§ How big is the grocery / non-grocery / non-store channel in Japan ?

§ Who are the leading retailers in Japan ?

§ How is retailing performing in Japan ?

§ What is the retailing environment like in Japan ?

§ Which channels are winning or losing in the fight for consumers money?

Why buy this report?

§ Gain competitive intelligence about market leaders

§ Track key industry trends, opportunities and threats

§ Inform your marketing , brand, strategy and market development, sales and supply functions

§
Report: PDF and Word
Market statistics: Excel workbook

Sample Analysis

KEY TRENDS AND DEVELOPMENTS

The 2011 Tohoku earthquake

On 11 March 2011, the Tohoku region of Japan experienced a massive earthquake which then set off a tsunami. Both these acts of God wrought widespread destruction. The three affected prefectures are Miyagi (population: 2.3 million people), Iwate ( 1.3 million) and Fukushima (2 million). Together, these three prefectures represent over 4% of Japan total population. The twin disasters brought about damages that triggered off a nuclear crisis in the country as a result of parts of the Fukushima < / st1: place> power plant being destroyed. In the weeks after what is now known as the igashi Nihon Daishinsai (Eastern Japan Great Earthquake Disaster), workers raced to contain and prevent a nuclear fallout.

Over the course of close to 1.5 months, the world kept a close eye on how the nuclear crisis panned out. Anxiety rose over radiation leaks from the damaged plant to the surrounds and the subsequent contamination of food supplies. Countries ranging from China , Taiwan and Singapore to Russia , US and Egypt moved to ban imports of fresh food from Japan in response to fears of tainted food supplies. These bans ranged from a blanket ban to more restrictive bans on only food supplies coming from the affected prefectures. Towards the end of April 2011, the situation at the Fukushima < / st1: city> power plant appears to have stabilised. Japan focus is shifting to rebuilding efforts.

Current impact
< p class = "MsoNormal" align = "left" style = "background: white; margin: 6pt 0pt; line-height: 13.4pt; text-align: left; mso-pagination: widow-orphan"> In terms of impact on the country, the destructive nature of the earthquake and tsunami left damages in their wake that will take time, effort and money to rebuild. Japan economy, already faltering prior to the 11 March disaster, has been dealt a severe blow. The Organisation for Economic Cooperation and Development (OECD) estimates that Japan GDP will grow 0.8% in 2011, down from its original expectations of 1.7%. Logistics and supply chain operations in the Sendai area have been affected, especially in March and April 2011.

Overall, the mood in the country remains sombre. This is partly because of the aftershocks that continue to rock the country, including Tokyo . Also, given that the damaged Fukushima plant supplies up to one-third of the nation power needs, in a bid to conserve energy, the country is less lit up than before the twin disasters. While the initial knee-jerk reaction to higher than usual radiation levels in the air were to stay home and therefore avoid going out and eating out, this has since tapered down. Regardless, fears and concerns over radiation that continues to leak into the environment from the damaged Fukushima plant still remain. All these taken together have served to dampen consumer sentiment with people spending less overall. National statistics further placed the number of foreign arrivals to Japan to be down by 50% in March 2011. The fall in tourism spending is a further dampener on the Japanese economy.

Outlook

Japanese authorities and experts are working towards a full and complete shutdown of the Fukushima plant by the end of 2011. Economic experts generally concur that the setback in Japan would not have an impact on the global economy . Barring any further unforeseen circumstances, Japan s focus will shift fully to rebuilding the country. Timing-wise, experts estimates have ranged from 5 years to 10 years. Survivors of the earthquake and tsunami will not only have to cope with the loss of loved ones but also material belongings and will have to find their footing in life again. World Bank estimates further place the financial costs of the twin disasters as potentially running up to US $ 235 billion. Press reports at the end of April 2011 have Bank of Japan Governor warning of a very severe conomic outlook for the country.

That said, at the time of writing, Japan has already embarked on an exercise to reassure her citizens as well as to restore global consumers confidence in the food supplies originating from Japan and also in visiting Japan . Travel suppliers ranging from airlines to travel agencies have all worked to help Japan to this end by rallying together and offering attractive discounts on travel packages to Tokyo and other parts of Japan . These efforts are expected to ramp up over the remainder of 2011 and into 2012.

Future impact

As research for retailing was completed prior to 11 March 2011, Euromonitor International forecasts of -3.3% in constant value CAGR terms has not taken into consideration the impact of the Tohoku earthquake and resulting tsunami. With the situation continuing to develop, it remains to be seen whether our projections will be materialised fully as they stand. Therefore, this forecast will warrant revisiting when Euromonitor International publishes our next update in November 2011.

In the immediate aftermath of the twin disasters, the Japanese economy was pushed back into recession and with rolling blackouts encountered in the north have seen consumer confidence taking a battering and many deciding to stay indoors more often than would normally be the case. Although reports of panic buying boosted grocery through March, the onset of April saw sales slide with major groups such as Lawson reporting same store sales down on a month earlier. This general downturn has been reported across many areas of the Japanese retail sector although internet orders at least anecdotally have appeared to have benefited from the uncertain and somewhat hazardous situation since the disaster. Although the damage to retail infrastructure was less impactful due the rural nature of the Tohoku region, Japan as a whole is suffering from supply issues for all manner of products as a result with everything from tobacco, electronic components to fresh fruit and vegetables all suffering from the disruption. Gaining reliable supply, most notably from abroad will be the key medium term challenge for Japanese retailers though 2011.

Economic conditions

Since the end of 2008 the biggest story in retail and < st1: place w: st = "on"> Japan in general has been the performance of the domestic economy, which went into freefall through 2009 in the wake of the Lehman shock . Although the tentative recovery of the world economy and the re-emergence of production growth in China did see 2010 as a more stable year economically for Japan , it continued to suffer from the strength of the yen against major world currencies as well as a return to deflation in some key areas, including retail. The sight of China overtaking Japan as the world second largest economy in 2010, although having been on the horizon for a number of years , was yet more evidence that an economically weakened and sociodemographically aged population was perhaps entering the twilight of its life as an economic superpower.

Although the economic statistics speak for themselves, the latest recession to hit Japan possibly affected Japanese consumers more directly and more quickly than those in the recent past. Japanese companies spent most of the 1990s and 2000s restructuring, which resulted in many Japanese workers being placed on temporary contracts or working through agencies. The onset of the most recent recession saw many of these workers laid off, especially in the auto industry, with widespread unemployment and general job insecurity affecting consumer confidence. Even for workers on permanent contacts, the recession saw twice yearly bonuses radically cut. Many workers reported that wages were either frozen or reduced, as companies made cutbacks in order to maintain profitability.

Current Impact

One of the most notable impacts of the recession was growing consumer demand for lower pricing. This was notable across retailing, but perhaps most keenly felt in grocery retailers. The recession also resulted in the rapid development of budget non-grocery retailers with buoyant second-hand sales as well as a mend-and-repair culture, with brands such as Book Off becoming destination stores for those looking to grab a cheap book, DVD or video game. Where as little as 20 years ago the second-hand market was almost non-existent in Japan, 2010 saw it as a major player in Japanese retail with dedicated recycling stores for household as well as designer fashion brands now commonplace on the high street. The reversal of the way Japanese consumers look at second-hand goods is nothing short of astounding as the stigma once attached to "hand me downs" has been replaced with something approaching reverence for those able to hunt down a bargain.

In grocery retailing there is a similar story, although the use of promotional flyers to advertise the latest in-store bargains is not new, the growth of the internet and specifically mobile internet communications has allowed consumers to compare prices. Price-comparison websites such as kakaku.com, which were once reserved for bigger-ticket items, have now evolved into grocery shopping companion sites where even the price of sundries can be compared between stores. A trend that was common among younger consumers in 2008 and 2009 broadened in appeal through 2010 with older female shoppers also picking up on this trend, making frugal the word for many both up and down the income ladder.

Japanese consumers therefore become more open to different formats as they sought to gain the best deal. This resulted in the rapid expansion of private label in grocery and even electrical appliance retail. Private label was underdeveloped in Japan at the start of the review period, with consumers largely preferring or trusting brands. Meanwhile, manufacturers were seldom keen to cooperate with retailers in the production of private label. However, the recession seen at the end of the review period reduced resistance to private label among both customers and producers and also saw the emergence of private label and in convenience stores with leaders 7-Eleven, Lawson and Family Mart all broadening their range of budget items in a bid to tempt higher-spending grocery shoppers into stores.
< p class = "MsoNormal" align = "left" style = "background: white; margin: 6pt 0pt; line-height: 13.4pt; text-align: left; mso-pagination: widow-orphan"> At least through the summer and the end-of-year holiday seasons there was some evidence to suggest that middle-class consumers were being tempted back into higher spending patterns with department stores reporting some month-on-month sales upturn through the year, although this growth was not consistent it was warmly welcomed by an industry that had suffered badly during the recession. Many department stores had taken the chance to restructure during the recession, Isetan for example, looking to expand its appeal with the appearance of the popular low-priced clothing chain Uniqlo in many of its stores in 2010. The clothing chain owner Fast Retail was also doing great business with its ￥ 1,000 jeans offer and the rapid expansion of its even cheaper gu brand name.

Outlook < o: p>

Japan economic future will continue to be impacted by the health or otherwise of the global economy, as the days of the bubble economy are now well and truly over. As the threat of double-dip recession appears to recede in the West, < st1: country-region w: st = "on"> Japan is likely to benefit from increased demand for Japanese machinery and finished goods from Chinese factories looking to retool and restock following the recession. The high value of the yen, which appears set to continue for the medium term with the Bank of Japan seemingly unable to bring its value down without risking the stability of the broader economy, is likely to prove a brake on this recovery as Japanese goods are overpriced on the world market because of this.

Consumer confidence is likely to remain fragile in Japan during the forecast period, as short-term contracts and lower wages look likely to persist, as does the pain of the last lurch into recession, which came out of the blue and shattered much of the confidence that had returned to the economy through 2003-2007. Matters are unlikely to be helped by the likely increase in sales tax from its current level of 5% to perhaps close to 10% in the future. The Japanese government faces a huge spending gap, especially in healthcare. A rapidly ageing population and underdeveloped health and social services network means that Japan will have to embark upon a protracted period of spending in healthcare, which is likely to be paid for by increased taxation on consumers. Increased taxation is likely to further constrain consumer confidence and spending over the medium term.

In addition, older consumers were largely responsible for spending and driving the country back into economic growth from 2000 onwards. However, these consumers appear unlikely to do the same in the new decade. The older consumers who benefited most financially from the boom years had either largely spent their savings by the end of the review period or are focused on funding their retirement and healthcare. A growing number of Japanese recognise that the state will be largely incapable of supporting them in their old age.

Future Impact

The changes that took place in Japanese retailing towards the end of the review period are expected to be the foundation for the development of Japanese retailing over the next decade. Retailers are expected to face a challenging time, as Japanese consumers appear to be following trends in Germany and other countries. For many retail channels, especially grocery retailing, price is increasingly consumers only consideration when making purchasing decisions. Consequently, prices are likely to continue to fall across retailing during the forecast period. With little indication that the current strength of the yen will subside during the forecast period , meanwhile, Japanese retailers and consumers will continue to benefit from cheap imports of fast-moving consumer goods, including commodities, personal computers and clothes, in the first year or two of the forecast period.

[report name] : Retailing, in. Japan

[keywords]:

Retailing / h3>

[Release Date]: Jun/2011
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