furniture & interior in japan 2009 · in 2007, the furniture prices fell 1%, which looking from...

Furniture & Interior in Japan 2009

The Europe Japan Business Center Powered by: G&S INT LTD 6-4-13 Soshigaya, Amenity BuildingTokyo Setagaya-ku 157-0072 Japanwww.ej-bc.comContact: Mr. Gasch

Report Provider

Japan’s Retail Market slide 3 Housing Starts slide 4 Furniture Market slide 5 Trends in Furniture Imports slide 6 Furniture Imports by Year and Country slide 7 Furniture Distribution slide 8 Retail Localisation Furniture slide 9 Consumer Price Index Furniture slide 10 Key Customer Groups Furniture slide 11 Branding and Brand-Awareness slide 12 Important points prior entering Japan slide 13 Major furniture retail players slide 14 Successful Foreign Market Entries slide 15 A few key points in regards to Japan slide 16 Overview EJBC & GS INT LTD slide 17 References/ Testimonials slide 18

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Table of Content

Furniture & Interior Market Japan 2009

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Japan

Valued at over 108 trillion yen in 2003, Japan's retail market is the 2nd largest in the worldwith sales second only to those of the United States when compared to the world’s five largest retailmarkets. Japanese consumers are know to be most quality & service demanding around the globe.

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Japan’s Retail Market

Source: IGO Global Retailing, 2007

Total & per Capita Sales of Top 5 Retail Markets

Breakdown of Retailers by Business Classification

Source: JETRO and METI, 2007

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Housing startsDue to the introduction of new tougher regulations for new houses in June 2007, the new housingstarts plummeted dramatically in 2007. Lowest level in 30 years. Since the purchase of furniture istightly connected to building new houses or moving to a new house it have and will continue toaffect us.

Apartment salesApartment prices increased 10% in the Tokyo area in 2007.Sales of apartments dropped 30% in the Tokyo city center and 4.3% in Osaka.

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Housings Starts

Source: JETRO, 2008

New Housing Starts 1994-2007

”There is more than 1 million new houses built every year in Japan!”


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Japanese Market Tendencies

• Simple, sophisticate and modern designs are widely popular among Japanese consumers• Sofas, beds, dining sets, and cupboards are main items in imported furniture market• Regulations of chemicals and strength are relatively severer than in other countries• “Made in ~” is one of the important factors to the image of each product background• Correspondence to custom-made order is one of the terms of an attractive trade

Furniture Market

Source: JETRO, 2007

Total Furniture Market Japan (in billion yen)

Japan is the 2nd biggest

furniture market worldwide

behind the US


Source: METI (Ministry of Economy, Trade and Industry), 2006

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Trends in Furniture Imports

Drastic changes in general consumer’s furniture purchasing patterns

1. mind-set focused on restraining purchases2. Purchasing tendencies of consumers:

careful considered balance of price,quality, and taste

3. Diverse purchasing trends due to thediversification and individualization oflifestyles

Notable changes of Japanese consumer purchase patterns

Source: METI (Ministry of Economy, Trade and Industry) 2006

Trends in Wooden Furniture Shipments by Item

Total Furniture Imports Japan (CIF)


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Furniture Imports by Year and Country


Total Population: 127.74 millionSize of Land:377.907 km²

”Low-end products come from China, high-end and design from Europe ”

Although being a uniquely homogenoussociety (Japan has only 1% foreigners,2007) Japan’s market place today andits customers stand for great ...

Variety of Preferences Variety of Lifestyles Variety of Market Types

Variety of Business Possibilities

Total Furniture Imports by Year and Country


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Furniture Distribution

Source: G&S, 2006

Most foreign companies use, if not setting up an own sales offices, case 1 or case 3.As Japan’s distribution system is rapidly changing, most manufacturers, foreign asnational, increasingly prefer case 1, as this system ensures completive pricing, andquality sales and after-sales services to end-users (also in large scale distribution).General trading companies are continuously loosing influence in Japan.

Major Import Routes Japan – Furniture & Interior


35% of Japan: TMA , KANTO

(Tokyo Metropolitan Area)

35 million consumers

25% of Japan: KANSAI

Osaka, Kobe, Nagoya

24 million consumers

40% other Japan areas

In Japan, generally most retailturn-over is achieved in the areasof Kanto (Tokyo) and Kansai(Osaka). These areas have thebiggest share (combined upto2/3) of the buying power ofJapanese consumers.

• population: 127 million (2008)• Japan is the 2nd biggest retailmarket globally (Jetro andUnited Nations statistics, 2007)

Conclusion

Furniture & Interior Japan sales partners should be chosen in consideration of their main customers areas in Japan.

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Retail Localisation Furniture


Since the burst of the “Bubble Economy” around 1991 Japan has experienced general deflation or avery low inflation. In 2007 especially food and energy costs rose, but the picture of furniture andhouse-hold goods looks different. The expectation of FY 2008 is an increase of 0.5%.

“Japan was, and still is, a high-priced retail market”

From 2000 to 2007 furniture prices fell more than ten percent, but before 1995, Japan’s furnitureprices were up to double of those in Western markets, such as the US, UK, and Germany (and otherEU). In 2007, the furniture prices fell 1%, which looking from a positive angle was the lowest dropin the past 7 years. Today, furniture & interior in Japan is still costlier in retail than in the EU or US.

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Consumer Price Index Furniture

Consumer Price Index Development 1992-2007

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KEY Generations of Furniture Market: the two baby-boom generations and young families. These two generations are the groups spending most on house building, furniture and interior.

Key Customer Groups Furniture

Source: Ministry of Internal Affairs and Communications, Statistics Bureau, 200611

Population by Age (5 year groups)


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How to become attractive to Japanese consumers

• Provide appropriate products to Japanese customers through detailed market research and customers analysis some customisation might be needed

• Care for the balance of “size, price and quality”• Care for the image of your products and company• Build-up a reliable and certain export system

Keep the contract (specification, delivery term, etc.), try to shorten the delivery term

Outline on how to build up your “Brand”

• List-up the strong and good points of the national character, industry, and products

• Collaborate with national designers to show that you can offer original design

• Publicise the features and backgrounds of your product materials and functions

• Increase the exposure of your brand in Japanese market

Building up the “Brand” means building up “Image”(= good and right image)

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Branding and Brand-Awareness


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How To Find the Japanese Distributors: Stage 1

Decide the type of distribution channels Decide the target retailers/consumers Decide the starting range of export products Selection of right partner for each type of furniture

How To Find the Japanese Distributors: Stage 2

Frequently visit your customers/ partners in Japan Be patient in steadily building your market share Some product adaptations is often required Pay attentions to the details & after-sales in Japan

Important points of consideration when marketing to Japan

Understand the target market (characteristics of your customers in Japan) Send information about company and products frequently to Japan Train your Japanese employees /sales partners to understand your brand/ products well Find answers to “what can you do to actually improve live of your customers in Japan?”

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Important points prior entering Japan

G&S is providing professional sales partner search negotiations in Japan, contact us for details


mailto:[email protected]

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Major furniture retail players

The list below reflects only fraction of the most important retail stores chains in Japan, is notcomplete and only overviews the Japanese market.

Source: IDAFIJ, 2007

“There are more than 8500 POS for furniture & interior in the Japanese market place” (JETRO, 2008)


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Successful Foreign Market Entries


IKEA first came to Japan in the mid 1970s as part of anearly wave of expansion in Asia. Following a long struggle,IKEA pulled out in 1986. IKEA returned in 2006, nowoperating 6 stores in Japan successfully.

Lars Petersson, CEO of IKEA’s Japan, believes IKEA’s successin return is because of the special care they’ve taken to getto know the Japanese customers.” Petersson places littlecredence in the idea that Japan is more difficult for foreigncompanies than other markets. He feels that past failureshave been exaggerated and may have deterred some globalbrands from entering Japan. “Yes, there are difficulties inJapan but there are difficulties in Russia, there are difficultiesin Poland...” Some advice to international companies lookingto avoid our fate in the 70s, he says: “If planning to come toJapan (or Poland) thinking you are in just another country isthe start of the failure because there are a lot of local thingsyou need to understand in Japan, then you can achieve yourtargets in this giant market.”

Poggenpohl, German high-end kitchen makerwith 110 years tradition, is exporting to Japan for25 years with a Japanese retail partner. Themanufacturer with 75% export ratio decided in2008 to open its first own operated Asiashowroom in Tokyo, the store will open in 2009 inprestigious Tokyo Aoyama. Poggenpohl aims toincrease the number of own stores globally from35 in 2009 to 90 by 2013. “Japan is a key marketfor our brand in Asia and very potential in termsof sales volumes”, Martin Gill, Head of GlobalRetail, Poggenpohl Group.

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A few key points in regards to Japan

To succeed in Japan in a long-term view …

• Manufacturers need to show long-term commitment to Japan and customers

• Excellent distribution and service network is a must

• Some adaption to the Japanese market often required

• Extreme focus on quality and on customer service

• Need and request for detailed technical information and documentation

• Focus hard on hiring top people or professional partners (a pool of very talented

people/ companies is available if you screen carefully)

• Watch your brand image and install a well-working delivery/ after-sales-service

• OK to take a premium price, although the market is becoming more competitive


The EJBC and G&S INT LTD provide Japan Business Development: See and understand your market potentials in Japan Start and manage sales in Japan, restructure existing channels Increase market share in the 2nd biggest market worldwide - Japan

With external support the following can be realised: Fast project implementation through professional partner in Japan Offloading your export team via outsourcing projects Low project cost, efficient and effective use of export budgets Risk reduction by using reliable partner and market information

G&S International Japan offers:1.Identify market potentials for your products in Japan2.Seach & Negotiate with suitable importers/distributors/buyerso sales representaion, showrrom & office set-up & HR recruitingo PR & advertisement, legal, purchasing & technolgy transfer

„Do you target to increase sales in Japan?We are the place to start!“

Below a couple of references/ testimonials of G&S in Japan, please contact us for details (phone +8180-5519-1260)

Company global high-end kitchen brand, headquarters in GermanyProject Market Investigation, Management Set-up retail operation, HR recruiting, other

From 2007-2009 we’ve worked for a well-known German kitchen manufacturer on market analysis and management ofretail organisation set-up in Japan. Export Director “I have very seldom experienced such a high degree ofprofessionalism, accuracy and efficiency. You did an outstanding job for us in Japan!”

Company global design lighting manufacturer, headquarters in AustriaProject Market Investigation, Management Set-up sales office, HR recruiting, other

From 2006 – 2007 we’ve worked for a design lighting manufacturer on market investigation and set-up of its Japansubsidiary. Director International Sales: “The project with G&S in Japan was done in a professional way, straight, clearand quick; beside, it was also a very amicable cooperation, always in a cooperative, friendly atmosphere. We reachedour targets on time, which of course is the most important point in business. We recommend to use G&S as cost-efficient solution in Japan.”

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furniture & interior in japan 2009 · in 2007, the furniture prices fell 1%, which looking from...

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