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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.
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.3
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.4
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.5
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.
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.6
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.7
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.8
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
2. Consumption structure in Japan to 2020.1) Fragmental consumption potential
Item
Area
Consumers attribution
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.9
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
2. Consumption structure in Japan to 2020.1) Fragmental consumption potential
Item
Area
Consumers attribution
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.10
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)
(出所)NRI
2. Consumption structure in Japan to 2020.1) Fragmental consumption potential
Item
Area
Consumers attribution
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.11
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)
(出所)NRI
2. Consumption structure in Japan to 2020.1) Fragmental consumption potential Item
Area
Consumers attribution
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.12
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.13
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
2. Consumption structure in Japan to 2020 1) Consumers arming with information
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.14
2. Consumption structure in Japan to 2020 1) Consumers arming with information
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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.15
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
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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)
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.17
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
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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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.19
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.
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.20
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
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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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.22
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
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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
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.24
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.
Copyright©2006 Nomura Research Institute, Ltd. All rights reserved.25
Thank you!
t-tsuji@nri.co.jp
k-kudou@nri.co.jp