Management:
Tesco, the world’s third largest retail chain in Great Britain, decided to withdraw from the Japanese market. Carrefour, the world’s second largest retail chain in France, already left in 2005. That is, the world’s second and third largest retail chains said and will say goodbye to Japan. As a result, Walmart, the largest retail chain in the U.S., alone is doing business in Japan in alliance with Seiyu that is a medium-sized retail chain. Given the above situation, people say that the withdrawal of the two giant retail chains is because of the idiosyncrasy of Japanese consumers. In Japan, consumers’ requirements for product quality are too high, and their shopping behavior is different from those in other countries, etc. However, they are part of the problems of their failures.
Tesco, the world’s third largest retail chain in Great Britain, decided to withdraw from the Japanese market. Carrefour, the world’s second largest retail chain in France, already left in 2005. That is, the world’s second and third largest retail chains said and will say goodbye to Japan. As a result, Walmart, the largest retail chain in the U.S., alone is doing business in Japan in alliance with Seiyu that is a medium-sized retail chain. Given the above situation, people say that the withdrawal of the two giant retail chains is because of the idiosyncrasy of Japanese consumers. In Japan, consumers’ requirements for product quality are too high, and their shopping behavior is different from those in other countries, etc. However, they are part of the problems of their failures.
It is true that Japan is a
homogeneous country. More than 95% of people living in Japan are Japanese.
However, the market is highly segmentalized. It is basically segmentalized in
accordance with nearly 50 prefectures. But the market is segmentalized further
inside the same prefecture. For example, two major markets exist in Aomori
Prefecture, the northernmost prefecture in the Honshu Island, and each market
has a different history and culture. This is because of the transformation of
the old system conducted by the Meiji government. In the transformation, it was
not unusual that two or three clans set up by the Tokugawa government were
integrated in a prefecture. Paradoxically, the Japanese market is highly segmentalized
because Japan is homogeneous. From the business viewpoint, Japan is not a homogeneous
country even if most people are Japanese.
When you see lots of varieties
of beer, coffee, and green tea on the Japanese market, you can realize how much
in detail products and markets are segmentalized and differentiated. Each of
the four breweries has a wide variety of brands segmentalized according to
geography, purpose (health-conscious or not, alcohol-free or not, sugarless or
not, noncaloric or not), age group, gender, etc. The same is true of magazines
and snacks. Let’s take a chocolate for example. Westerners may be surprised to
learn there are more than 100 varieties of the KitKat chocolate in Japan, in
different package sizes, in different contents, with different package designs,
etc. This is the point.
It is true that Toys R Us
scored a success in Japan, but it is partly because Japan did not have a big
retail chain of toys when Toys R Us came to Japan. Office Depot and Virgin
Megastores left the Japanese market because of stagnant sales. That is, the
strategy to underprice products by virtue of economies of scale hardly worked. Whether
it is in a foreign market or in the domestic market, the most critical issue for
a company to develop the market is how to differentiate and segmentalize the
product and market, and how to establish the distribution channel that allows
for the differentiation and segmentation. Simply put, each of 10,000 stores
needs to have its own distinctive face.
That is, every company has
to study how to operate a store and how to market products best suitable to the
respective markets and customers. In this sense, understanding the history and
culture of the target market is vital to marketers active in the world market.
