Westfield Retail Study Tour 2010 - Part 2 (Japan)

HOW LONG BEFORE THESE JAPANESE RETAIL TRENDS COME TO AUSTRALIA? 

With rock melons selling at A$94 each, and watermelons A$67, shopping at supermarket giant J. Front was an eye opener. The frequency of shopper visits is increasing, while unit sizes are getting smaller - you can buy 2 slices of bread pre-packaged. But the biggest shock was when I saw an old lady pull out her I-phone to photograph the barcode on a bag of carrots. But this was no ordinary barcode, as shown, it contains a caricature of the grower and with the right  I-phone application reveals the name of the farmer, where the crop was grown, when it was harvested and what pesticides were used. Apparently there is a premium of about 10% to know the history of your vegetables, but the cost isn’t worrying the Japanese and sales are soaring.

A visit to Japan’s biggest “eco shopping centre - Aeon Lake Town shopping mall was also a tour highlight. The concept for the centre translates as “people and nature feeling good together.  Lake Town uses solar panels and a hybrid gas eco system (the first of its kind in Japan), and while not useful for the majority of drivers at this point, Lake Town also features Japan’s first consumer-ready charging station for electric vehicles. 30 minutes charging while you’re shopping is good for 120 kilometres!  With 220,000 square metres, the shopping mall comprises two wings – Kaze, meaning “wind,” and Mori, meaning “forest”. They house department, supermarket and over 500 specialty stores. If you’re interested in hairdressing or pets, there were two stores that really stood out. 

Chokkin’s is a hairdresser just for kids (2 – 7 years old) and is truly a shopping experience to remember. Surrounded by colourful walls decorated with Disney characters, you wait in custom built child size lounges and colour in some drawings which are displayed on the store window for all to admire as you exit. Your child then climbs into an elevated toy car and tunes into a dashboard style TV screen (you can bring your own DVD or watch one of the many animated ones available). Finally you get to pin up a photo of your new look hairdo onto the “celebrity board”.  Prices range from $A50 to $A175! 

But even more over the top was the Pecos (Pet City) store which, with a floor space of 20 times your average Pet’s Paradise, is more like a small department store. Street signs within the store point you in the right direction (you’d get lost without them in this pet shop).  First up there is the Life house section where you’ll find a selection of older ‘recycled’ dogs who have possibly been traded in for something in the  Premium Dog section. With 76 puppies of all shapes & sizes on offer (priced from A$2,000 to $4,500 each) you may want to take your time while selecting and enjoy the comfort of the Chesterfield lounges while sipping on a beverage from the Pet Cafe. The Pet Clinic & Spa, the Trimming Centre and on-site vet, provide additional onsite services. With small items of striped and polka dot clothing in reds and pinks the ‘Fashion Town’ looked more like a lingerie store until I realised I was looking at a  huge range of hats, bibs, coats and even little pants – all for dogs!

The accessories area was bigger than a Diva store and ranged from diamond studded colours to gold plated leads, hair clips, broaches and ‘Pandora’ style charms. Next I thought I was in a travel goods store but realised these fashion style bags are to carry your dog, not your luggage. Don’t worry if your dog is too heavy to carry, there is also a range of strollers and prams, again specifically designed for dogs.  As expected, the ‘Food Plaza’ was huge and seemed to have pre-packaged food to suit the ‘special needs’ of every ‘special dog’. Finally, just when I thought I’d seen it all, I came across a birthday cake for your dog with an iced footprint and “Happy Birthday” written onto a bone shaped decoration. It’s definitely “a dog’s life” in Japan!

Have you heard of Uniqlo? You will! In 1984, Mr. Tadashi Yanai, opened a store called the "Unique Clothing Warehouse”.  By the mid 90’s, they had a 100 Japanese stores, and started designing and producing their own low cost brand of casual clothing and selling it exclusively.  Renamed  Uniqlo (a contraction of "unique clothing”) the company is now the major part of  Fast Retailing – the 5th largest retailer in the world, and has made Mr. Yanai, now aged 60,  Japan’s richest man (worth US$6.1billion).    With the major lines being T-shirts and denim they now have over 800 stores in 10 countries, and aim to have 5000 stores worldwide by 2020, 1000 of which will be in China. Last month they opened a 3500 square metre store in Shanghai which covers 3 floors has 320 mannequins and had a queue of over 1000 customers on opening day.

Their new store marketing strategy revolves around massive staged promotions which heavily feature the name UNIQLO and include advertising blitzes on buses, subways, billboards, flyers, even paper bags used by sandwich shops. Stage 1 show posters of just the product with emphasis on colour and design – the aim to highlight the quality and fashionability of the product.  Stage 2 shows the exact same product, but with the addition of price (jeans at $A23 and T-shirts A$10), shocking the customer at the low prices after admiring the quality. The 3rd stage then shows the same product along with the price, but this time worn by international celebrities, with the caption “from Tokyo to Shanghai”.   Interestingly their growth strategy was to first dominate their local turf – to be number 1 in Tokyo! This achieved, next was to be number 1 in Japan, and then Asia and now they want to be the number 1 retailer in the world, with Australia in their sights. Other interesting facts: They don’t have a loyalty program as they want all customers to feel special, their website has had over 500 million viewers over the last 6 months and their culture encourages every Manager to constantly ask his or her team “tell me something you did this week that was good for a customer”?

Think your land lord is charging you too much? Rakuten is deemed the world’s first on-line “shopping mall”. Founded only 13 years ago with 5 staff in one room, today they employ over 10,000 staff and have a US market capitalisation of US$8.86billion. Their strategy is to help their 32,000 merchant’s display their products on the Rakuten website, and with over 35 million products there is plenty to choose from. Rakuten carries no inventory but collects the funds from the 8.5 millions buyers they “serve” and then take their “rental” component before passing on the balance to the merchant. With no cost to customers, they are extremely price competitive. Their huge customer rewards program fuels an ever expanding group of cross promotional products such as banking, travel, telecoms, credit cards and even securities such as stocks and bonds. With 7 million hotels rooms sold in 2009 they are the number 1 travel site, while their on-line bank now has 3.3 million accounts.  Rakutens penetration, in just 13 years is amazing. Out of the 90 million internet users in Japan, 62 million are Rakuten members!  

But not every merchant can sell through the Rakuten machine as they have a solid screening process to access quality and credibility.  For those that pass the test, the Rakuten University for Members has consultants that help them, create, build and develop their own website followed by has an easy to use system that allows the merchants to create their own “shop” within the Rakuten “mall”. Supplying models, conducting product photo shoots, email newsletters, and ongoing marketing campaigns are all part of the Rakuten service. With sales increasing at a rate of 19.8% per annum, it appears the sky is the limit. International expansion into China, Taiwan, the UK, Canada, Singapore and YES, Australia is already underway.

Our final night in Japan was a team dinner at Gonpachi (the restaurant where they filmed the movie “Kill Bill”), followed by some very ordinary Karaoke! Next stop – off to L.A. and Rodeo Drive.