prerequisites for japanese retailers to survive 8. june. 2006 nomura research institute. ken-ichi...

Prerequisites for Japanese Retailers to SurvivePrerequisites for Japanese Retailers to Survive

8. June. 2006Nomura Research Institute.

Ken-ichi Kudo, Tadashi Tsuji

Executive SummaryExecutive Summary

Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.2

Conclusion: Task for Japanese retailers to survive

Japanese population started to decrease in 2005: Therefore age composition and household composition will be fragmented.

In such situations, Japanese retailers need to make strategies to survive. Japan’s strategies to survive are different from United States’, where

population will increase for a while. Japanese retailers need to find their own strategies other than to copy United States’.

It is necessary to understand consumers’ behavioral change at all time and to continue to find out who will be customers and when and where they purchase.

Consumer behavior is always changing. Japanese retailers need to catch the changes agilely, and to sustain flexibly appeals and freshness of their store layouts, assortments and prices as contact points with customers, in each hierarchy of format, region, store and department.

Japanese retailers need to design and operate such internal functions that don’t lose efficiency even if contact points with customers flexibly change.


Content

1. Back ground and Objectives

2. Consumption structure in Japan

to 2020.

3. Retail formats with consumers

behavior in present-day Japan

4. Trend of major retail formats

5. Prerequisites for Japanese retailers to survive in 2010

6. Conclusion

Fact AnalysisFact Analysis

ProposalProposal

Fact up to date Proposalto the future

NRI’s view point


1. Back ground and objectives1) Aging society with a falling birthrate

Japanese population started to decrease in 2005, since then aging society with a falling birthrate has started seriously.

Population decrease and saturation of retail market will become selection pressure for innovation to survive.

Japanese Population

110112114116118120122124126128130

80年85年90年95年00年05年10年15年20年25年30年

百万

人

出所 : 国立社会保障・人口問題研究所


1. Back ground and objectives2) Objectives

Quantitative data of consumer market in Japanese aging society with a falling birthrate to 2020.

Analysis for prerequisites to survive in such situations.


2. Consumption structure in Japan to 2020.

Item

Area

Consumers attribution

In a period of population decrease, the amount of real consumption expenditure will stop growing. Information strategy to compete for fragmental potentials of consumers attribution, item, and area will become a matter of business survival.

‘”particular” consumer’, ‘smart consumer’, ‘safety-oriented consumer’ will arm with information and express their will by selecting items and formats. Companies which ensure information disclosure and obtain loyalty from consumers will survive.

Increase of smart consumersIncrease of smart consumers

Increase of “particular”consumersIncrease of “particular”consumers

Increase of safety-oriented consumersIncrease of safety-oriented consumers

1) Fragmental consumption potential 2) Consumers arming with information


エクセル：「都道府県支出年齢階層別」に掲載

2. Consumption structure in Japan to 2020.1) Fragmental consumption potential

Japan will not have a real consumption growth.Although Japanese population will decrease, the number of household will not decrease.

Aging people whose real consumption per household is large will increase, but the growth of real consumption expenditure is estimated to stop as a whole.

Forecast of real consumption expenditure in Japan（兆円）

→推計値

出所実績値：ＳＮＡ　内閣府推計値：人口問題研究所世帯数の推移をもとにＮＲＩ推計

0

50

100

150

200

250

300

350

85年 90年 95年 00年 05年 10年 15年 20年

推計値

実績値


Widen the gap each age segment, the consumers attribution will be fragmented.

Possible to overlook a growth target in case sticking to their past target.

The amount of consumption expenditure in 50s (baby boomer) decreases by 2.5 trillion yen.

In 70s, it increases 1.6 trillion yen.

Increase and Decrease of house hold from 2005 to 2010 ( more than one member of family)

（ 10億円）

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

25歳未満

25～

29歳

30～

34歳

35～

39歳

40～

44歳

45～

49歳

50～

54歳

55～

59歳

60～

64歳

65～

69歳

70～

74歳

75歳以上

（出所）ＮＲＩ


Item

Area



Items will be fragmented with increase of single household and

aging household.

‘food’ and ’housing’ will increase slightly and ‘clothing’ will decrease slightly.

商品分類別支出の増減額商品分類別支出の変化率（兆円 /年）

（％）

Segment Main Factor

Clothing　１％　↓ General household, which has huge expenditure for clothing will decrease. Male single household and aging household will increase.

Food　２％　↑ Male single household, which has huge expenditure for food, will much increase than population decrease.

Housing　３％　↑ Aging household, which has huge expenditure for housing, will increase.（出所）ＮＲＩ

96

98

100

102

104

2005年 2010年 2020年

衣食住-0.5

0

0.5

1

1.5

2005年 2010年 2020年

衣食住


Item

Area



Differentials in rapidity of population decrease and

age composition by region will be wider, and area distribution will be fragmented.

Widened differentials between

increase (red) and decrease (blue) more than 5%

：～ 0.95

： 0.95～1.00

： 1.00～1.05

： 1.05～

Changing rate of consumption expenditure

（ 2005 to 2020）



Item

Area



Urban edge in Kansai (around Osaka)

will become a growth area in 2020.

Niihama (9)

Kadoma (6)

Moriguchi (5)

Shimonoseki(10)

Ohmuta (4)

Nagasaki (8)

Kushiro (3)

Otaru (7)

Muroran (1)

Hakodate (2)

05⇒ 20上位下位草津市滋賀県 134%室蘭市北海道 77%三田市兵庫県 125%函館市北海道 83%浦添市沖縄県 122%釧路市北海道 83%つくば市茨城県 121%大牟田市福岡県 85%朝霞市埼玉県 118%守口市大阪府 86%八王子市東京都 117%門真市大阪府 88%刈谷市愛知県 116%小樽市北海道 88%大津市滋賀県 116%長崎市長崎県 89%春日市福岡県 116%下関市山口県 91%彦根市滋賀県 116%新居浜市愛媛県 91%

Tsukuba (４ )

Kariya (7)

Asaka (5)

Hachioji (6)Hikone(10)

Sanda (2)

Kasuga (9)

Urasoe(3)

Kusatsu (1)

Ohtsu (8)

※ランキングは 2000年の人口が 10万人以上　　の都市を対象に実施。※青箱はトップ 10、赤箱はワースト 10を示す※市町村名の後の数字は順位を示す

Changing rate of consumption

potential in 2020（ Top10／Worst10）


2. Consumption structure in Japan to 2020.1) Fragmental consumption potential Item

Area



Increase of "particular" consumers --"particular" in quality and lifestyle.

“Particular" consumers increase such as ‘choose cost-quality performance of items’, ’choose items that are best for my lifestyle’. 　（ source） NRI 「１万人アンケート」

Change in consumption values

2. Consumption structure in Japan to 2020 1) Consumers arming with information

52.4

50.2

40.0

32.9

22.9

22.3

16.1

9.2

58.5

46.9

40.9

34.1

31.2

28.4

17.9

12.8

choose cost-quality performance of items

choose most inexpensive items

choose quality items excluding the price

choose brand items

choose items that is best for my lifestyle

gathering advanced information

choose expensive items even save money

following the trends

20 40 600

（％）

2000年2003年2000年2003年

（出所）「 1万人アンケート」　野村総合研究所


Smart consumers –gathering detailed information in advance

Consumers gather information from internet or the like in advance.

Smart consumers increase due to disruption of information asymmetry between consumers and retailers.

（出所）「 1万人アンケート」　野村総合研究所

Q: information in advance to confirm cost-quality performance（％）

Status of gathering advanced information

0 20 40 60 80

店頭

ﾒｰｶｰやｻｰﾋｽ提供会社のｳｪﾌｻｲﾄ

価格比較ｻｲﾄ商品・ｻｰﾋｽ提供会社からのﾒｰﾙﾏｶｼﾝ

友人、知人、家族などの話

テレビ

雑誌

新聞

ﾒｰﾘﾝｸﾘｽﾄ、掲示板、ﾌﾛｸからの口コミ

その他

特になし

Information sources for shopping

出所　「ｲﾝﾀｰﾈｯﾄ白書 2005」　Ｉｍｐｒｅｓｓ




Increase of safety-oriented consumers -- reconsider corporate ethics and customer orientation

Several major food companies lost the trust from customers due to milk product poisoning and false labeling of beef.

Consumers who need precise labels increase with increase of allergic patients.

Health promoting food is also accepted by females and middle ages as a fashion trend.

Market scale of food for specified health use

（出所）財団法人日本健康・栄養食品協会

1,315

2,269

4,121

5,669

0

1,000

2,000

3,000

4,000

5,000

6,000

1997 1999 2001 2003 年

/億

円年

（出所）京都大学医学研究科白川・渡邉

Ratio of allergic patients


3. Retail formats with consumers’ behavior in present-day Japan.

Clarified inter-area competition, inter-format competition, and blank space without competition as a result of repositioning retail formats based on consumers behavior.

[Questionnaire Survey]

Target 　： 20s to 40s of Female, 50s and 60s of Male and Female. 3500 in 6 Prefectures, Tohoku region, 500 in Tokyo.

Method 　： internet questionnaire

　　　　　（ reference ） aging people are mainly active seniors.

[Group Interview Survey]

Target 　： 3 groups （ housewife in 20s 、 30s ～ 40s 、 and 50s ～ 60s ）

Place 　： Izumi-ku, Sendai city, Miyagi Prefecture


Japanese consumers’ behavior is beyond prefectures.

Department stores in Miyagi take demands out of Yamagata, Fukushima and south Iwate.

3. Retail formats with consumers’ behavior in present-day Japan. 1) Inter-area competition beyond prefectures

Department store users beyond prefectures

州都１次圏：宮城州都２次圏：山形、福島州都３次圏：青森、岩手、秋田大都市　　：東京 23区

4 regional groups regarding purchase behavior（ Tohoku region＋ Tokyo）

８．６％

５．６％

２．６％

青森県岩手県宮城県秋田県山形県福島県青森県 98.8% 0.5% 0.0% 0.0% 0.0% 0.0%岩手県 3.9% 92.4% 2.6% 0.3% 0.0% 0.0%宮城県 0.1% 0.2% 98.7% 0.0% 0.0% 0.1%秋田県 3.4% 0.7% 0.0% 93.4% 0.0% 0.0%山形県 0.0% 0.0% 8.6% 0.7% 87.9% 0.4%福島県 0.0% 0.0% 5.6% 0.0% 0.0% 89.7%

在住地

主に利用する百貨店の所在地

NRI「お買い物に関するアンケート」 (2005)


Hopeful market 4

Hopeful market 3

Hopeful market 1

3. Retail formats with consumers’ behavior in present-day Japan. 2) Inter-format competition and blank space

Pricin

g image

Food (short) Food (long) Staple DrugConsumerelectronics

Interior Fashion

GMSsmall store

GMS一般商店

GMS

small store

HC

Dpt DptDpt

GMS

SuCSuC SuC

SMSM

SM

HCCategory killer

Category killer

DgS DgS DgS

Variety store

Variety store

CVS CVS CVS

Catalog/E-retail

Dpt

DgS

Variety store

Catalog/E-retail

small store

High

slightly high

Normal

slightly low

Low

NRI「お買い物に関するアンケート」 (2005)format map : Tokyo


HCSM

SuC

DgS DgS DgSDgS

Variety store

SM

SM

Food (short) Food (long) Staple DrugConsumerelectronics

Interior Fashion

DptDpt

Dpt

GMS GMSGMS

GMS

SuCSuC

HC

Specialty

Category Killer

HC

Category killer

CVSCVS CVS

Catalog/E-retail

Pricin

g image

High

slightly high

Normal

slightly low

Low

Variety store

Hopeful market 2

Hopeful market 1

Hopeful market 3

Hopeful market 4

3. Retail formats with consumers' behavior in present-day Japan. 2) Inter-format competition and blank space

NRI「お買い物に関するアンケート」 (2005)format map : Tohoku


4. Trend of major retail formats1) Latest topics

GMS in a tough game. Industrial Revitalization Corporation Japan is revitalizing Daiei. Apparel innovation of Ito Yokado is in a difficult voyage. Aeon changes its policy from GMS to Shopping Center and large-scale food SM.

Shopping Center is increasing. Law is being revised to regulate stores larger than 10,000m2.

Super Center is not distinguished from SM or GMS. SuC retailers can not sell national brands at lower prices so sell unpopular private brands at low prices.

Sales of Department Stores re-increase by “particular” consumers. Some Dpt stores are redecorated with clear targets and amenity.

The merger of 7 Eleven, Ito Yokado, Seibu dpt and Sogo dpt bore a conglomerate 7&i group.

Perishable CVS, selling vegetables and fish at 99 yen in 24 hours, is rapidly increasing.

Category Killers of electronics are rapidly increasing.

Small format of Specialty food SM is located in rail stations

Drug Store starts selling daily food, and actually changes to combo store.


4. Trend of major retail formats 2) Format share

High share of GMS and Department store in Japan. Both sell much food unlike ones in USA.

CVS grew into the 3rd rank format in Japan.

0%0%0%0%0%

0%

1%1%

0%

1%

5%

1%

0%

2%

0%

3%

9%

19%

16%

10%

17%

18%

5%

28%

6%6%6%

11%

10%

8%

4%

9%

2%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

J apan USA

GMS

Department Store

Convenience Store

Category Killer

Supermarket

Home Center

Drug Store

CO-OP

Auto Center (Car goods)

Apparel Super

One Price Store

Discount Store

Variety Store

Supercenter

Warehouse Club

Catalog/ e- tailer

othersJapan Retailing Center, NRI, Rocky Iwashima,

Top 107, 2005 Top 100, 2004


4. Trend of major retail formats 3) Top retailers ranking

At the end of December 2005, 7&i Holdings, including 7 Eleven and Ito Yokado merged with Millennium group, including Seibu Department and Sogo Department, and a mega retailer with sales of 6 trillion yen was born.

Daiei in bankruptcy is still the 3rd rank retailer.

At the head of Yamada Denki at rank 5, many Category Killers rank in the list.

Japan Retailing Center, Nikkei, NRI

Top 31, 2005

Grouprank Group name Format Sales

(incl. FC)1 7&i Group (incl. Seibu & Sogo) CVS, GMS, Dpt, SM 61,7622 Aeon Group GMS, CVS, SM 43,2313 Daiei Group GMS, SM 19,1684 Uny Group (incl. Circle K Sunkus) CVS, GMS, SM 18,5705 Yamada Denki (incl. Daikuma) CK 11,0246 Takashimaya Group Dpt 10,2367 Seiyu Group (Wal-Mart) GMS 9,7868 Mitsukoshi Group Dpt 8,2419 Isetan Group Dpt 7,62210 Tokyu Group Dpt, SM 6,96911 Daimaru Group Dpt, SM 6,70012 Yodobashi Camera CK 5,80913 Beisia Group HC, GMS 5,65514 Kintetsu Group Dpt 4,99115 Kojima CK 4,90016 Bic Camera CK 4,56617 Edion CK 4,38018 Marui Dpt 4,34119 DCMJ apan Group HC 3,74720 Life Corporation SM 3,64721 Izumiya Group GMS 3,52322 First Retailing (Uniqlo) CK 3,51823 Heiwado Group GMS 3,49124 Gigas K's Denki CK 3,43425 Best Denki CK 3,39226 Matsuzakaya Group Dpt 3,37227 Hankyu Group Dpt 3,33528 Shimamura Group Apparel SM 3,22729 Izumi Group GMS 3,06230 Matsumoto Kiyoshi DgS 3,02431 Tobu Group Dpt 3,020


5. Prerequisites of Japanese retailers to survive in 2010

TechnologyPopulationEnvironmental Change

Income RegulationCompetitor

Customer

Assortment

Innovation

Location

Scene

Store layoutPric

e

Target Contact point Internal function

2. Fragmental

targeting4. Scalable modular

operation

3. Hierarchical

flexibility

Selection Pressure（ affection）retailers（ form

at）

Strategy of retailers

1. Clarify adaptive strategies to survive.

2. Fragmental targeting based on consumer behavior.

3. Maintain appeals of contact point with consumers and hierarchical flexibilities.

4. Construct scalable modular operation

1.Adaptive

strategies


5. Prerequisites of Japanese retailers or survival in 2010supplement) hierarchical flexibility

Maintaining appeals and hierarchical flexibilities will become key points to survive.

Only testing hypotheses in whole hierarchy enables retailers to maintain their appeals.

It is possible that whole lower hierarchy would be removed from market if even a class freezes.

Control

department

Advance marketable, Remove unmarketable by SKU

Store Advance marketable, Remove unmarketable by department unit

Area/formatAdvance marketable,

Remove unmarketable by store unit

Head office/

Holding company

※depend on strategies

Advance marketable,

Remove Unmarketable

by area/format unit


6. Conclusion

Fragmentation of area, item, and consumer attribution is rapidly progressed.

Market area expands from prefecture to “state” with deep motorization.

General format is difficult to survive because consumers select different formats depending on their life scene.

Less differentials in department store, GMS, large scale SM, SC and SuC in countryside in Japan.

Blank space without competition for potential newcomers.

Flexibility in each hierarchy of department, store, format and area is required.

Shopping Center is an answer for large market area. However, the format of shopping center is not static. It has to continue to change and hierarchize.


Thank you!

[email protected]

[email protected]

prerequisites for japanese retailers to survive 8. june. 2006 nomura research institute. ken-ichi...

Documents

japanese retailers

japanese aging society

information slide

oriented consumers

smart consumers

consumers behavioral

consumer behavior

period of population