Japanese Supermarket

Tesco announced that they decided to retreat from Japan market last August.

They will focus more on China, India and Malaysia areas.

Tesco is the biggest retailer in U.K which has 5400 stores around the world and their sales reached 8 trillion yen. They also have 129 stores predominately in Tokyo area and they entered Japan in 2003 as a discount super market chain.

Carrefour, the French supermarket chain retreated from Japan in 2005 after just  five years of running business and sold their stores to Aeon group which is Japan's largest supermarket group. Walmart has also faced difficulty raising profitability of Seiyu group that Walmart acquired in 2002. Even Seiyu is much better known brand than Tesco.

Why foreign supermarkets were rejected by Japanese people?

I found a lot of opinions on the internet.

For instance,

1, Japanese consumers are strict in quality.

2, The refrigerator size is small and there is no space to stock huge stuff.

3, Too much quantity in each item.

4, The food culture is completely different from Western style.

As you know, Japanese people are looking for safety, delicious, fresh and cheaper price food in their daily life. Also, Japanese people don't have a big storage in their house. In addition, there are a lot of seasonal foods and local foods like sanma(Brevoort fish) in autumn and natto in eastern area.

So, if foreign supermarkets want to enter Japanese supermarket world, they have to adjust their business style to fit Japanese customers.

I can imagine that Tesco and Carrefour researched and bought some Japanese retailers to learn Japanese food culture and Japanese customers.

However, they were rejected finally.

I think Tesco and Carrefour's biggest mistake was that they changed their business style too much. As a result, they lost their own advantages and they became just one of the low level Japanese style supermarket.

Japanese customer don't want to go to such kind of foreign supermarkets.

Walmart should have changed Seiyu brand name to "Walmart"

Meanwhile, Costco is making their root in Japanese market.

Why did they succeed in Japanese strict retail world?

I think it's easy to say.

They didn't change American style business concept such as value for money and bulk buying. Then Japanese customers realized another value compared to Japanese style supermarkets.

Also, keeping their concept gave the emotional aspect(foreign atmosphere) to Japanese customers.

Japanese customers are looking for something new all the time.

They are fed up with ordinary Japanese style supermarkets.

The emotional aspect(foreign atmosphere) is key to success in Japanese supermarket world like Costco is doing now.

I'm sure that Trader Joe's could succesed in Japanese market if they wouldn't change their concept.

Too much learning about Japanese market and too much change in their business style must lead to the failure.

Written in 26 Mar and revised 4 April.

Trader Joe's

http://www.traderjoes.com/