Market Characteristics Mkt

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  I.   Market characteristics 1.   Country 2.   Details on the Japan retail industry Back to year 2002, Japan had been targeted by Wal-Mart as a key piece in its international expansion strategy. With the fact that Wal-Mart is among the world's largest retailers, our report seeks to point out unique features of the Japanese retail industry, in two aspects. We first look at general description and typical characteristics of this sector then focus on analyzing the Japan’s retail scenario at the point Wal –   Mart jumped into the Japanese market. The retail industry in Japan has continuously changed years after years. Various factors including  population, income, integration, technology and legal reforms have contributed to the emergence and competition of different retail formats (department store, regional shopping center, ..). The retail sector still maintains its momentum, driven by rising disposable income, consumer confidence and rising  purchasing power. However, the retailing operation in Japan faces the main obstacles from low availability of land, high operating costs, high cost of land and ageing population. Although Japan is characterised by a tough market with high demanding consumers and high bargaining power of suppliers, its more than ¥130 trillion retail market will still be a tempting prize, attracting lots of foreign large names to jump into the game.  Nevertheless, Japan’s retail market has its own culture -specific quirks that are often difficult for outsiders to fully grasp. There are two outstanding  points worth noting to capture Japan retailing’s most typical  picture, including: its unique distribution channels and its consumer behaviour toward various retail formats. The first major challenges to the foreign players is its multi-layered distribution systems. Despite the fact that the market is getting more and more open, the distribution channels still act as the outstanding differences regarding cultural patterns. Japanese retail culture consists of a very close knit network among members in the supply chain called “keiretsu” . This is a complicated network dominated by middlemen. The density of middlemen, retailers, and wholesalers in the Japanese market is a totally different story compared to US market. International retailers who are not members of the “ keiretsu ”  system, will lack ability to compete because of the price differential that exists between them.The members are entitled to various benefits such as information sharing, financial support and constant supply of merchandise. Therefore, it is quite popular in Japan for consumer goods to go through three or four intermediaries  before reaching the consumers, instead of through direct retailer to consumers, which makes selling merchandise more expensive for retailers. Futhermore, in terms of customer behavior, in Japan, consumers often equate bad quality with low prices; they prefer to shop on small convenience and  specialty stores, which would be discussed deeper in the next part. Small retailers accounted for a large  per-centage of total retail sales. Meanwhile, the American distribution system puts a greater emphasis on hypermarkets like Walmart.  Now, we come to take a closer look on Japan’s retail scenario at the point Wal –   Mart firstly entered the Japanese retail market. The timing seemed right for Wal- Mart’s expansion to Japan. The Japanese economy was showing some signs of recovery after a long recession. The country seemed ready for a discount retailer who could provide lower-priced goods for cash-strapped consumers. In 200 2,the nation’s economy grew just 1.6 percent while household income dropped. Wal-Mart sensed an opportunity to strike in Japan. However, the retail market at that time was filled with a high degree of competitiveness, from both foreign brands finding way to enter Japan and well- known traditional domestic retailer (Aeon, Uniqlo, Ito-Yokado,...). We can take an example, Archrival Carrefour, also the world’s second -largest retail chain, entered Japan about a month before Wal-Mart with its first store in Makuhari. Ostensibly, Carrefour’s move was designed to steal market share before the U.S. retail giant had a chance to start with Seiyu. Walmart also confronted to a long and multi-layered distribution system, which make it difficult control of supply for conducting its low  –   cost product strategy. Changing the nature of the supply chain process in Japan would not be so easy with hundred obstacles. This is unfamiliar territory for Wal-Mart, which  demands supplier accreditation before. In addition, Wal- mart had to pursuade Japanese consumers that everyday low price does not translate into bad quality, while its competitor Ito-Yokado - Japan’s leading supermarket retailer launched an aggressive marketing campaign called “Made in Japan” to convey  the message of Japanese national pride to the surface, that quality is what sells in Japan. Source: 1.  2.   Hodgetts−Luthans−Doh: International Management, Sixth Edition, “ The Role of Culture In−Depth Case 2: Wal−Mart´s Japan Strategy”, © The McGraw−Hill Companies, 2005  3.   “ Wal-Mart in Japan: Survival and Future of Its Japanese Business ”, Doris Rajakumari John; M Anita; Pasupuleti Girija Swaraj Published by: IBS Research Center (2008) 4. _hmiqXT1rmBx_wLXeROD4BnYyIZkQGEeGewj484m7GUPGd7jhn40  

(Jurnal Alergi)

Sep 22, 2019


Sep 22, 2019
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