NRI Papers
No.110 October 1, 2006
  Adaptive Strategies for Japan's Retail Industry Facing a Turning Point
— Rebuilding corporate strength to respond to change with agility —
Hirokazu TAKEI, Ken-ichi KUDO, Tomoaki MIYATA, Yoshifumi ITO
   Since the Meiji Restoration, the structure of Japan's retail business had been changed substantially four times. At these turning points, major changes always occurred in the following aspects: "population," "income," "competition," "technology" and "legal framework," which led to the emergence of new retail formats. Japan's retail industry has grown by following such processes. Looking at the current situation, we find that Japan's retail industry is just now facing the fifth turning point.
   While overall real consumption expenditure in Japan is expected to remain at the same level from the mid- and long-term perspective, increases or decreases in real consumption expenditure will become apparent by area, products and age bracket, accelerating mosaic patterns of consumption expenditure in the market.
   According to our survey, the consumption behavior of seniors who will be important target consumers in the future can be characterized by their preference for relatively short travel times to stores and a relatively strong inclination towards one-stop shopping. It is also possible to measure the strengths and weaknesses of each type of retailer based on consumer ratings of each retail format.
   New retail formats that are assumed to emerge during the fifth turning point include the neighborhood shopping center (NSC) that can respond to the consumption characteristics of seniors. Another possibility is the emergence of new retail businesses in the blank fields on the map of retail formats that have been created because of competition among different retail formats in recent years. Nevertheless, at this turning point, the retail industry faces major but uncertain changes in the competitive environment. Accordingly, retail companies must not only focus on the development of new formats, but also promote restructuring within their company to increase the probability of growth, thereby rebuilding corporate capabilities to meet any possible changes with agility.

I Japan's Retail Business Meets a Turning Point
II Zero-Growth in Real Consumption Causes Major Changes in Consumption Patterns
III Direction of Changes in Consumption Behavior
IV Consumer Evaluation of Each Retail Format
V New Retail Formats at a Turning Point and Adaptive Strategies


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