Today: November 27, 2015, 11:04 am

Japan retail market: Facing increased saturation
Expansion Strategies and Opportunities for Japanese Retailers in Asia - a new market research report on 2014-03-10 19:30:04
Disparities remain vast across Asia in terms of the maturity of modern grocery retailing formats. The Japan retail market has by far the highest sales per capita in Asia, but is facing increasing saturation.

Having already established a strong presence in China, Indonesia and Thailand, Japanese retailers have scope for further growth in these markets, notably by entering new cities among second-tier and lower-tier

By contrast, Japanese retailers have little or no presence in some of Asias least developed markets with high growth forecast for modern grocery retailers, such as India, Kazakhstan and Vietnam. Hence, new market entries are likely to fuel additional expansion

Key Findings

- Japanese convenience store chains, such as 7-Eleven and FamilyMart, are well positioned to continue expanding rapidly in emerging markets with a growing young urban population and where modern grocery retailing formats remain underdeveloped. Convenience store operators are exploiting their operational and supply chain expertise, alongside high quality products and services, in order to make inroads against other formats and be more valuable partners for local franchise operators.

- In most other channels, Japanese retailers often lack a strong competitive advantage against local players, although several department stores operators have well-established brands with a premium positioning. Other retailers such as Uniqlo and Ryohin Keikaku (Muji) are also focusing on expansion in Asia as part of a wider strategy to become global brands and offset the saturation of their domestic market.

- The strength of the yen gives an added short-term impetus to encourage Japanese retailers to invest abroad as part of their longer term international growth strategies, notably through acquisitions, with AEON, for example, purchasing Carrefours hypermarkets in Malaysia in 2012.

- The growing political tensions between China and Japan should not significantly undermine Japanese retailers expansion in China, which remains their key Asian market. However, it may give them a greater incentive to accelerate growth in other markets, such as Indonesia, the Philippines, Thailand and Vietnam, which in some cases are less mature and increasingly receptive to modern retail formats. Some retailers may also benefit from an early entrant advantage, especially within grocery retailing.

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