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flag Japan Japan: Distributing a product

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Distribution

Types of Outlet

Department stores
Clothing, cosmetics, jewelry, food
Mitsukoshi, Isetan, Marui 0101 in Tokyo
Takashimaya,
Sogo in Kanagawa.
Supermarkets and hypermarkets
Food supermarkets and specialized department stores
Aeon, Itoyokado, Daiei, Uny, Izumi, Life corporation, Izumiya, 
Convenience stores
Open 24/24. General food, drink, everyday products
Seven Eleven, Lawson, Family Mart, Daily Yamazaki, Mini Stop, Seicomart, Poplar
Discount stores
Clothing (directly connected to well-known foreign brand names) miscellaneous goods
DonQuijote, Mr Max, Trial company, Takeya, Super Center Plant
Home centers
Gardening, decoration and other items for decorating and fitting out the home
Cainz, Kohnan Shji, Nafco, Homac, Keiyo D2, Komeri, Kahma, Shimachu, Daiki, Tokyu Hands
Cooperative
80% food products and 20% convenience goods and clothing.
Coop Kobe, Coop Sapporo
Drug Stores
Personal hygiene products, cosmetics, beauty products, detergents, sweets and drinks
Matsumoto Kiyoshi, CFS Corporation, Sun Drug, Turuha, Sugi Pharmacy, Create SDS, Kokumin
Specialized stores
Specialized by product or by type of customer targeted: clothing (including kimonos), gardening, alcohol...
Clothing: Aoyama Syouji, Aoki International, Haruyama Shoji
Women and children's clothing: Shimamura, Five Foxes, Akachan
Casual clothing: Fast retailing (Uniqlo), Right On,
Shoes: Chiyoda,
Alcohol :  Kakuyasu
Information technology: Yamada Denki, Yodobashi Camera, Kojima
Others
100 Yen shops: all sorts of products, sold for the one price of 100 JPY.
Daiso Sangyo, Seria, Ninety-nine plus, 
 

Evolution of the Retail Sector

Growth and Regulation
According to the latest USDA Foreign Agricultural Service report, in 2021, the total value of all retail food and beverage sales in Japan was $467.20 billion an overall decrease of 2.3% from the previous year. The food processing industry produced $216 billion in food and beverage products in 2021. Supermarkets account for the majority of food retail sales, at 74%, but the fast growing convenience shop sector now accounts for 14.4% of sales. Ready-to-eat (REM) or take-away food products represent a growing area. Although Japan is a huge market, it is highly fragmented. The Japanese Food and Beverage (F&B) retail industry includes supermarkets, general merchandise stores, department stores, convenience stores, drugstores, and the internet.

Japan's general merchandise stores (GMS), offer shoppers the convenience of one-stop shopping for groceries, perishables, clothing, household goods, furniture, and electrical goods. GMS's are operated by major national chains that have nationwide networks with hundreds of outlets and typically rely on centralised purchasing. They often purchase foreign products via trading companies.

Supermarkets (SM) stores are smaller in size than GMS's and are more specialised in food and household goods. Supermarkets are facing higher purchasing costs than GMSs. They are seeking ways to stay competitive through product/service differentiation, private brand development, and global sourcing. To gain economies of scale, regional supermarkets are forming alliances through joint merchandising companies with non-competing retailers.

Department store sales have been slowly declining in recent years due to increasing competition with other retailers.

Convenience stores (CVS) are an extremely important sales channel in Japan. They have limited floor space, about 100 m² on average, and typically stock about 3,000 products. Convenience stores derive their competitive advantage from high turnover and efficient supply chains. Convenience stores are notably competing strongly by offering attractive consumer food service options, particularly as fast food offers high potential profits.
Market share
Retailers with the highest food retail sales in 2021 (USDA, latest data available):
•    Supermarket: 345.59 billion dollars – 74% share of sales
•    Convenience Store: 67.18 billion dollars - 14.4% share of sales
•    General Merchandise Store: estimated at 24.78 billion dollars
•    Department Store: 13.98 billion dollars - 3% share of sales
•    Drugstore: 20.34 billion dollars - 4.4% share of sales
•    Internet: 20.70 billion dollars in 2020 (latest data available) - 4.3% share of sales
The largest retail outlet is Aeon Co. Ltd, leading player in supermarkets. The second largest retailer in terms of overall sales value is Seven & I Holdings, which operates Ito-Yokado, which is a convenience store business. The well-known U.S. brand retailers Costco and Walmart are also successful in Japan.
Retail Sector Organisations
Japan Retailers Association
Japan Department Store Association
Japan Council of Shopping Centres
Japanese Trade Union Confederation (JTUC - RENGO)
 

E-commerce

Internet access
Internet penetration in Japan is currently 82.1% and should reach 83.2% by 2021. Smartphone penetration is a lot less (47.8%) but is projected to grow to 54.4% in the next four years. There were 103.89 million internet users in Japan in 2017, and this figure is projected to reach 104.27 million by 2022. Japan has the 7th fastest internet connection speed in the world (20.2 Mbps) – average internet speeds are higher in developed Asian countries. Japan had the third largest rate of high broadband connectivity (73%) as of 2017. The most popular search engines are Google (69.79%), Yahoo! (25.92%), Bing (3.53%), Baidu (0.44%), Never (0.1%) and DuckDuckGo (0.08%).
E-commerce market
There were nearly 89 million online shoppers in Japan in 2017. That same year, the Japanese B2C e-commerce turnover grew by 16% to US$ 79,247 million. Japan had an online population of 116.8 million people who were aged 15 and older. While Japanese consumers have been rather reluctant to buy foreign products in the past, they have become progressively more open to them over time. Japanese consumers are highly diverse in their interests and tastes, which range from traditional needs to more westernised desires. User penetration is at 66.6% in 2018 and it is expected to hit 72.6% in 2022. Revenue in the e-commerce market is expected to amount to US$ 105.1 million in 2018. The market is expected to show an annual growth rate of 6.2% resulting in a market volume of US$ 133.6 in 2022.
E-commerce sales and customers
In 2017, 79.5% of the population in Japan had purchased products online. By the end of 2018, this figure is expected to grow to 80.3%. In 2017, retail e-commerce sales amounted to US$ 111.33 billion and are projected to grow to US$ 122.46 billion in 2018. In 2017, e-retail sales accounted for 8.2% of all retail sales in Japan, and this figure is expected to reach 9.7% in 2019. In 2018, 80.3 million people in Japan are expected to buy goods and services online. Electronics and media are currently the leading product category in Japan, accounting for US$ 23.73 billion market share, followed by fashion, which generates US$ 22.28 billion in sales. Japan’s e-commerce payment options are many: Credit card and debit card payments account for 66% of payments for e-commerce transactions. A variety of other “eWallet” and E-Payment options are also proliferating. In addition, cash payments for online purchases are accepted at convenience stores (Konbini). About 17% of such payments are made in cash at Konbini after products are delivered, a popular option for many teens without bank accounts or credit cards. 48% of consumers purchase online on a monthly basis. The preferred device to access online retailers is PCs (82%), followed by smartphones (43%), which have been gaining popularity when it comes to online shopping. Still, 92% of online shoppers in Japan buy using desktops, a stark contrast to the amount of smartphone (6%) and tablet (1%) shoppers.
Social media
52.56 million people in Japan are active monthly social network users, with the most popular ones being Facebook (39.32%), Twitter (29.08%), Pinterest (13.73%), YouTube (10.62%), Tumblr (2.58%) and Instagram (2.29%). Their growth is low and there are signs of little time being spent on the social networks. Facebook is showing stagnation in Japan. On the other hand, Instagram is taking off, pushing beyond 10 million users in Japan this year.

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Distance selling

Evolution of the Sector
The World Federation of Direct Selling Associations (WFDSA) 2017 report shows retail direct selling in Japan grew 0.4%, was valued at USD 15.329 billion, and involved 3,124,000 independent representatives.

Euromonitor International highlights Japan's direct selling market faces a decline due to recent fraudulent activities and scams. Direct selling companies are looking for alternative sales channels to compensate for sluggish performances (i.e. Avon sells its new Dual Face brand in drugstores and pharmacies). Amway remains the leading company with its nutritional supplements and cosmetic products while Yakult revised (and will continue to revise) its business structure and kept its place as the second largest direct selling company.

The Japanese Direct Selling Association and the National Association for Direct Selling and Distribution promote best practices in the industry.
 

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Latest Update: September 2022