The events of March 11, 2011 affected the operations of the Japanese Retail Food industry, but even with the resulting consumer restraint, the Japanese market experienced growth in 2011.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: JA2522
Retail Food Sector Report
Steve Shnitzler, Director, ATO Japan
Sumio Thomas Aoki,
Radosti, Intern, Alan
The events of March 11, 2011 affected the operations of the Japanese Retail Food industry, but even with the
resulting consumer restraint, the Japanese market experienced growth in 2011. Convenience stores were first
responders in the Northeast portion of Japan and developed mobile stores. Supermarkets continued to expand
with AEON and Ito Yokado looking to develop city-style stores. Department stores unveiled new and renovated
locations to reach customers. Overall market consolidation, mergers, and alliances continued in 2011. The
growth of smartphone users for making purchases increased greatly in 2011, and is expected to remain a
growing force for Japanese consumers in the years to come.
SECTION I: JAPAN RETAIL FOOD SUMMARY
In 2011 the Japanese retail market had to cope with the March 11, 2011 shock and then compensate for the
various after effects. Initially consumption spiked with the mass purchases of emergency items such as bottled
water and batteries, followed by corresponding declines in purchases like party items and non-essential goods.
The economy shifted from a rocky footing onto a more stable pathway by summer and consumer behavior
The post March 11 consumer adapted to new preferences in reaction to the events, changing retail market
demands significantly. First, Japanese consumers began eating out less, while having meals at home more. This
has led to an increase in the Home Meal Replacement (HMR) sector, as well as the frozen food sector. Second,
Japanese consumers are more attentive to products with longer shelf life, in case of future emergency
The Japanese retail market is dominated by two demographics: Young career seeking individuals in single
person households, and the fast growing elderly population referred to as Generation M.
Within this report, unless stated otherwise, the following average annual exchange rates were used:
Yearly Average 2009 2010 2011
JPY¥ per USD$ 94.57 88.81 80.84
B. Market Breakdown
Total retail sales including food, beverages, general merchandise, fabrics, apparel, and accessories in Japan
amounted to $832.6 billion in 2011. Of this figure the total food and beverage retail sales amount was $527.4
billion. Total retail sales have increased each year since 2008. In 2007, there were total retail sales of $614.6
billion and food & beverages sales of $370.6 billion. Below are the total sales figures:
FIGURE 1: Total Retail Sales (Million USD$)
Year Total Food & Beverage General Merchandise Fabrics, Apparel, & Accessories
2009 701,766 437,940 155,123 108,703
2010 752,573 472,638 160,095 119,840
2011 832,608 527,375 171,747 133,486
The following chart displays the segments of the retail market.
FIGURE 2: Bar Graph of Total Retail Sales (Million USD$)
C. Food Sales in 2011
The Japanese retail food industry in 2011 experienced growth across all three categories of large and
conventional supermarkets, department stores, and convenience stores (FIGURE 3). As stated previously the
resilience of the industry and its ability to quickly adapt to the market changes along with economic growth in
the latter half of the year helped spur on the retail food industry growth.
Food sales increased from 2009 to 2011 for the three retail categories, according to the Current Survey of
Commerce conducted by The Ministry of Economic, Trade and Industry (METI). A consolidated explanation of
the Current Survey of Commerce is in the table and full details can be found at the METI website.
FIGURE 3: Food Retail Sales of Three Categories for 2009-2011 (Million USD$)
Large-scale Supermarket & Conventional Department Convenience
Supermarkets Stores Store
2009 84,919 21,579 53,687
2010 92,567 22,174 58,119
2011 104,626 23,945 66,226
SOURCE: METI Part 3-1, 4-1 http://www.meti.go.jp/english/statistics/tyo/syoudou_kakuho/index.html
D. Food and Beverage Sales
While food sales grew across all segments, overall sales growth was observed in most regions of Japan as many
households spent more time and money purchasing food items to consume at home rather than spending
money at restaurants in 2011. Restaurant spending did increase in 2011, but food purchases for home
consumption were the larger portion of spending.
Six out of eight prefectures showed positive sale growth rates from 2009 to 2011; even Northeast Japan
(Tohoku) showed a 0.5% increase despite the March 11 disaster. Also, in each prefecture, the number of large-
scale retail stores increased. Japanese real economic growth rate for 2011 was estimated at minus 0.7% by
EuroStat and minus 0.4% by the Bank of Japan. The negative growth rate was expected due to the hardships
that had to be overcome, but it is important to keep in mind that even in an environment of stagnant sales;
geographic markets in Japan are quite sizable - often exceeding that of entire countries. For example, the
Kyushu Fukuoka region alone has a GDP that exceeds that of Norway or Taiwan (Kyushu Bureau of Economy,
Trade and Industry, 2011).
FIGURE 4: Regional Sales and Population
Overall Food N Food Purchasing Sales umber of 2010
Year & Beverage Power per Growth
Sales (JPY Mil) Household (Yen) '09-'11
2009 554,309 283
Hokkaido 2010 563,196 313 5,506,419 681,430 4.08%
2011 577,914 316
M 2009 244,972 135 iyagi
2010 241,704 139 2,348,165 747,818 0.47%
2011 246,119 138
2009 1,260,387 346
2010 1,260,243 360 13,159,388 803,107 -0.82%
2011 1,250,190 368
2009 718,871 302
2010 726,741 313 7,410,719 * 1.89%
2011 732,697 318
2009 836,003 294
2010 817,535 297 8,865,245 800,702 -1.14%
2011 826,593 305
2009 202,869 91
2010 208,919 100 2,860,750 709,465 5.17%
2011 213,940 101
2009 110,981 70
2010 112,734 72 1,431,493 862,357 4.54%
2011 116,254 73
2009 264,166 144
2010 269,333 161 5,071,968 793,021 8.29%
2011 288,035 170
Source: http://www.meti.go.jp/english/statistics/tyo/syoudou_nenpo/index.html Part 3-Table 2
2010 Census MIC Statistics
*Data not currently available from Japan Ministry of Internal Affairs and Communications (MIC)
SECTION II: RETAIL MARKET INDUSTRY
A. Establishment Trends
In 2011, supermarkets and convenience stores continued to be the primary distribution channel for food in
Japan. The market has been relatively stable over the last 3 years with the only notable trend that department
stores are losing ground slightly, but this corresponds with the decline of department store sales in general.
Regional and national supermarkets are vying for market share, and in order to compete against AEON and Ito
Yokado, regional supermarkets such as ARCS in Hokkaido and Universe in Northern Japan are merging. The
breakdown of Japan Retail Food market data for 2011 is:
FIGURE 5: Japan Retail Food Market Percentages for 2011
Large-scale Supermarket & Conventional Department Convenience
Supermarkets Stores Store
2009 53.0% 13.5% 33.5%
2010 53.6% 12.8% 33.6%
2011 53.7% 12.3% 34.0%
SOURCE: Figure 2.1 & METI Part 3-1, 4-1
B. Large Scale and Conventional Supermarkets
Supermarkets in Japan represent the largest provider of food and within the supermarket sector the top 5
companies (AEON, Ito Yokado, Uny, Daiei, and Life Corp.) represent 65% of all sales. The two main players,
AEON & Ito Yokado, account for 42.5% of all supermarket sales. These companies are the driving force behind
innovation and expansion.
The supermarket business in Japan is a mature market which is at full saturation levels for standard large-scale
and conventional supermarkets. As in 2010, the status quo changed very little. A few supermarkets closed, but
others emerged in Western Japan. The greatest change to how supermarket retailers perceived their business
model was in response to the disaster in Northeast Japan and how best to provide the support. This can be seen
in the development of city-style stores.
2. City-style Stores
One key finding from March 11 was that convenience stores were better suited to quickly re-establish their
stores and support the local consumers in an emergency situation. Convenience stores were the first ones to
deliver products using small vans and to open their stores in affected areas. Taking the lessons learned to
compete with convenience stores, large supermarkets are developing small “City-style stores”. Store sizes
measure about 1800 square yards of floor space. Tokyo and other cities are major targets for these city-style
3. Target Market
As the Japanese market continues to mature, supermarket giants AEON and Ito Yokado have strengthened their
networks to reach single adults and Generation M. The older generation especially has wealth to spend and
AEON is targeting this group by changing store hours to open 2 hours early. In addition to opening early, AEON
has special promotions related to these early bird specials – resulting in more foot traffic especially among the
4. Price Competition
Price competition has become more intense and is a major feature of the supermarket business in Japan.
Supermarkets are reducing costs and improving their infrastructures through restructuring and closing
unprofitable stores in an effort to improve efficiency. The companies which have succeeded to reduce
management cost and to prevent losses have regained their profit. One strategy has been the creation of
Private Brands (PB), such as AEON TopValu or Ito Yokado store brands. Seiyu, acquired in full by Wal-Mart in
2008, has finally leveraged their 10 years of experience and vast global network to more efficiently bring
products to the Japanese market, such as U.S. beef for 30% less than standard outlets. Notably, on June 13,
2012, Wal-Mart announced plans to slash prices on 1400 products by the end of the year.
5. Company Highlights
The following table highlights the Japanese supermarket industry food sales, and the percentage component
those sales represent. The general trend has been greater food sales in 2011.
FIGURE 6: Top Supermarkets by Total Sales in 2011
Company Ratio of Food Number of Location of HQ &
Rank* N (USD (USD ame M Outlets Stores il.) M Sales il.)
1 AEON Retail 27,214 13,751 51% 500 Chiba
2 Ito-Yokado 16,505 8,022 49% 173 Tokyo
3 Uny 9,280 6,174 67% 227 Aichi
4 Daiei 8,127 4,985 61% 211 Hyogo
5 Life Corp. 6,040 4,960 82% 224 Tokyo
6 Izumi 5,821 1,942 33% 80 Hiroshima
7 York 4,242 3,179 75% 176 Fukushima
8 Arcs 4,307 3,768 87% 253 Sapporo
9 Heiwado 3,868 2,591 67% 131 Shiga
10 Maruetsu 3,910 3,653 93% 262 Tokyo
11 Fuji 3,645 1,537 42% 96 Ehime
12 Izumiya 3,671 2,171 59% 86 Osaka
13 Okuwa 3,152 2,375 75% 156 Wakayama
14 MV West 3,084 2,839 92% 161 Hiroshima
15 AEON 2,893 1,349 47% 104 Fukuoka
Source: FY2011 Annual Statements (various) & Tokei Geppou May 2012 pp 79 & 81
*Original rankings based on Total Operating Revenue
Specialty supermarkets are important for export products because these stores carry products with higher
prices. Here is a list and some background information for these specialty supermarkets.
Kinokuniya: First self-service supermarket in Japan.
Meidi-ya: First supermarket to specialize in imported products.
Seijo Ishii: Combination of specialty products and convenience store.
Dean & Deluca: Premium product and prices. Emphasis on delicatessen.
Queens Isetan: Special shelf space for imported products.
Kaldi Coffee: Specializes in premium imported products.
C. Convenience Stores (CVS)
In 2011 convenience stores were proactive and were one of the first retailers to move into the Northeast Japan
area. The mobility of convenience store operations, smaller size, and less SKUs allowed convenience stores to
play a vital role in supplying the region. One way convenience stores helped after the disaster was by releasing
“Mobile Convenience Stores”. These are small 3 ton trucks which can hold up to 300 items of bento boxes, rice
balls, drinks, and snacks. These trucks were used in areas where stores were destroyed or where evacuees had
trouble accessing food.
Convenience stores in 2011 continued strategies to develop and maintain efficient networks. Convenience
stores for the top 7 operators in 2010 numbered 41,663 and in 2011 the total number of convenience stores in
Japan increased by 13.4% to 48,139 according to the Nikkei fiscal 2011 convenience store survey. This expansion
and competitive trend will continue in 2012 as the top 5 convenience stores plan on opening over 3,700 new
2. Company Highlights
The following table (Figure 7) summarizes the top convenience stores in Japan 2011. Food sales grew again in
2011 by an additional $8 billion and three of the top 4 convenience store chains broke their records for
operating profit. Profits were boosted by female and elderly customers buying fresh food, desserts, and ready
to eat meals in the aftermath of the quake. Seven & i* became the first Japanese retailer to achieve more than
¥3 trillion ($37.1 billion) in annual sales. With the earnings in 2011, convenience stores are set to once again
expand outlets and network capabilities in 2012.
*Note: Seven & i is the parent company of Ito Yokado, Seven Eleven Japan, and others.
FIGURE 7: Top Convenient Stores in 2011 (Sales & Outlets)
Rank N ber of Outlets Location ame (USD Mi Numl.)
1 Seven Eleven 26,337 14005 Nationwide
2 Lawson 17,870 9065 Nationwide
3 Family Mart 10,897 8164 Nationwide
4 Circle K Sunkus 6,144 5084 Nationwide
5 Mini Stop 2,727 2046 Tokyo/Nagoya
6 Three F 789 639 Tokyo Area
7 Poplar 654 700 Nationwide
Source: Tokei Geppou May 2012 pp 52
D. Department Stores
Since the 1980s Japanese department stores have faced steeper competition from the growth of supermarkets,
malls, and convenience stores. Department stores generally have a variety of shops and services, with the
basement level having a grocery or eatery shops.
Significant restructuring among major department stores has increased. For example, the major department
store Sogo filed for bankruptcy and merged with Seibu Department Store, which is now Millennium Retailing Co.
The second largest department store, Isetan, merged with the third largest department store Mitsukoshi. The
Kansai region’s large department store Hankyu merged with its strongest competitor, Hanshin Department
Store. They now operate under the name, H2O Retailing. Daimaru Department Store merged with Matsuzakaya
and established J Front Retailing.
Various retailers renovated and reopened stores; Isetan Mitsukoshi updated their stores and are targeting
consumers with better promotions; H2O Retailing has been renovating a flagship store that will reopen in
In 2011 department store food sales amounted to $23.9 billion, representing 12.3% of the Retail Food market in
Japan. Over the last decade total department store sales of non-food products have declined. However, food
sales at department stores have grown because of premium products, location, and the use of the depachika.
Depachika means the basement floor of the department store where fresh food halls are traditionally located.
Traditionally, depachika was a quiet retail food location. This changed when shops introduced high-quality HMR,
creating a new niche food market in Japan. In addition, famous restaurants became tenants and lent their brand
names to popularize depachika. The depachika phenomenon turned the basement floor into an attractive place
and a means of bringing customers to department stores.
Department stores are often attached to large train stations (such as the newly opened Shibuya Hikarie owned
and operated by Tokyu Corp). Because of the proximity to the stations, pedestrians can easily access depachika
eateries; Tokyu Corp’s Hikarie location is estimated to attract 14 million visitors a year, with 200 shops, and
many of the eateries staying open until 4am on weekends.
4. Pricing, Quality and Premium
Department stores usually carry imported branded products, but they are typically in low quantities. Many of
the items are packaged as take-and-go products due to the proximity to stations and the premium nature of the
products for use as gifts.
5. Company Highlights
Listed below are the top 10 department stores and their food sales for Japan in 2011.
FIGURE 8: Top Department Stores by Total Sales in 2011
Rank* Compa otal Food ny Name T io of Food Sales Number of Outlets
(USD Mil.) (USD Mi Ratl.)
1 Takashimaya 9,436 2,793 30% 20
2 Sogo & Seibu 10,118 2,112 21% 26
3 J Front 9,116 2,035 22% 22
4 Mitsukoshi 7,890 1,831 23% 15
5 Marui 4,118 653 16% 26
6 H2O Retailing 4,643 1,545 33% 15
7 Kintetsu 3,332 1,140 34% 12
8 Tokyu 2,425 * * 11
9 Tobu 2,499 * * 4
10 Odakyu 1,838 * * 3
Source: 2012年食品マケテｲング使覧 (2012 Shokuhin Marketing), FY2011 Annual Statements (various)
*Original rankings based on Total Operating Revenue
**Note: not all department stores list food as separate sales figures
Section III: Consumer Trends and Changes
Japanese consumers are a sophisticated clientele with tastes and preferences instilled via cultural, societal, and
environmental drivers. If you are considering developing products or searching for products to export to Japan,
please consider these following historical characteristics of the Japanese market that still have relevance today.
An abundance of literature abounds on the topic of Japanese demographics and rightly so – Japan’s baby boom
generation of 1947-1949 is now retiring. The roughly 6.6 million citizens are expanding the silver demographic
market. Japan has the fastest growing elderly population (over 65) or Generation M, in the world. In 2010,
Generation M represents 23% of the entire population in Japan. By the year 2020, it is estimated to increase to
29% and then 36% by the year 2040. Of course the total population is estimated to decline from 127 million in
2010 to approximately 105 million in 2040. The Japanese National Institute of Population and Social Security
Research estimate the demographic change as:
FIGURE 5: Forecast for Japanese Demographics
Population (Thousand) by Age Group
Total 0-14 15-64 65+
2005 127,768 17,585 84,422 25,761
2010 127,176 16,479 81,285 29,412
2015 125,430 14,841 76,807 33,781
2020 122,735 13,201 73,635 35,899
2025 119,270 11,956 70,960 36,354
2030 115,224 11,150 67,404 36,670
2035 110,679 10,512 62,919 37,249
2040 105,695 9,833 57,335 38,527
2045 100,443 9,036 53,000 38,407
2050 95,152 8,214 49,297 37,641
2055 89,930 7,516 45,951 36,463
Source: National Institute of Population and Social Security Research
FIGURE 6: Forecast Population Percentage by Age Group
Source: National Institute of Population and Social Security Research
2. Seasons and Holidays
Japan prides itself for the four distinct seasons that they experience – and this is reflected in the changes in
consumer purchasing habits and patterns of gift giving throughout the year. A quick breakdown for reference is:
Month Sales, Promotions, Events, and Holidays
Spring – March High School & University Graduation events
White Day (another Valentine’s Day)
Sakura (cherry blossom) travel
Fiscal Year begins – job rotation
April New school year begin events
Entrance ceremony for companies – sales, promotions
May Mother’s Day
Golden Week – holiday sales, travel, events
Summer – June/July Father’s Day
Ochu-gen, summer gift giving
August Obon holiday promotions
Fall – September Respect for the Aged day
October/November Oseibo, gift giving
Winter – December Christmas sales
New Years & end of year sales campaigns
January Coming of Age holiday
February Valentine’s Day
Fiscal Year ending promotions by companies
Christmas, New Years, and winter sales are very common. For Valentine’s Day, Japan has embraced the
purchasing of gifts and notably chocolate, but only women give presents to men. Men then give presents to
women on White Day in March. As reported by The Japan Times, Bloomberg, and by Isetan Mitsukoshi Holdings
Ltd. in Tokyo, Valentine’s Day accounts for over 20% of total annual chocolate sales in Japan. For exporting to
Japan or bringing a product to the retail market, please keep in mind the Japanese holidays, promotions, and
Japanese consumers have some general historic preferences that one should consider. Japan is a nation that
prefers convenience, quality, and single-serving sizes. Returning to the latter item, an estimated 3.23 million
people commute into Tokyo every day according to Tokyo Metropolitan government. The commute is mostly
done via train and then on foot. Therefore convenience and accessibility are highly valued by Japanese
B. Recent Trends
There are recent trends of burgeoning growth for Private Brands, Healthy Foods, Eco-friendly or Energy saving
foods (typically as frozen foods), market consolidation for greater efficiency, and new retail ideas to meet new
demands. Energy efficient foods (frozen foods - bento dashi), prepared foods (Home Meal Replacements –
HMR), and desserts have all seen a strong market growth. Healthy or Functional foods continue to be important.
1. Healthy or Functional Foods
The demand for healthy and nutritionally balanced foods has increased with interest strongest among those
aged 50 and above and adult women.
The healthy food category (or functional foods) has been growing steadily since the mid 1990’s. In Japan,
functional food can be divided into “Foods for Specific Health Use,” or FOSHU, and health enhanced food.
Among the numerous attributes that serve to distinguish one from the other, the most important is that FOSHU
products require government approval, while health-enhanced food products do not. What motivates
companies to pursue the FOSHU designation, rather than avoid the often-lengthy approval process, is that they
can affix the FOSHU seal on the product in question should it meet the Minster of Health Labor and Welfare
FOSHU Seal, Source: MHLW
In 2005 the Japanese government eased regulations, blurring the line between the two categories, but receiving
the FOSHU logo on a product still requires approval. For comparison a product in the U.S. that has health claims
such as a diet that consists of more fiber may reduce cholesterol must receive approval from the FDA – the same
applies to the FOSHU logo from the MHLW in Japan.
2. Home Meal Replacements (HMR)
“Prepared Meals Sold at Retail Stores” are increasing in sales in every retail area. The foods are ready-to eat,
Home Meal Replacement (HMR) type products (obento lunch boxes at the office are one example). It is
estimated that 22% of all meals in Japan are HMR.
The growth in HMR is driven by the increase of Japanese households eating at home and two demographic
sectors. Japan’s population is aging faster than any in the world, and many elderly do not have the ability to
drive or travel far to buy groceries. As a result, many get their daily meals from the local convenience stores.
Likewise, young professionals who live alone or with roommates often don’t cook and almost exclusively eat
The expanding retail presence of “delicatessen” in supermarkets, department stores, and convenience stores
attests to the popularity of the HMR market. Frozen foods have also gained a large presence in the HMR
market. “Thaw and Serve Bento” are lunches that are bought frozen in the morning, and by lunchtime are
thawed and ready to eat. At home frozen noodle dishes, okonomiyaki (a savory Japanese style pancake or
pizza), and cooked rice dishes are meals that can be brought home frozen, reheated, and consumed.
3. Private Brands (PB)
The majority of major food retailers now feature their own private brands. Studies conclude that PB products
will continue to gain more shelf space. A 2009 survey by the Japan Finance Corporation found that 67.8% of all
food manufacturers produce PB products and that 23.2% of those companies would like to increase the number
of PB products; and 9.8% of all manufacturers wished to introduce PB products to their line-up. In another
survey performed in 2010 on consumer response toward PB products; the survey found that even if the
economy improves consumers will continue to purchase PB products.
4. Frozen Foods
Frozen food sales in Japan have steadily increased since 2010. This rise drastically increased in 2011 after March
11, because Japanese consumers are dining in and valuing products with longer shelf-lives which can be stored
in case of future disasters. Many versions of home meal replacement frozen foods are trending in Japan now
with prepared foods composing 56.8% of the frozen food market. Some examples of these foods include cooked
rice dishes, Asian and Western noodles, breads, and fish.
Overall, Japanese frozen food imports have experienced a large increase in 2011. Total frozen food imports to
Japan rose 17.6% from the previous year. Of those, frozen vegetable imports increased to ¥120.1 billion ($1.49
billion), a 7.6% increase from 2010.
Sweets are an important section of convenience stores. Recently they have been marketing their dessert brands
through advertising campaigns with the goal of distinguishing themselves from the competition. Lawson’s
series’ called “Uchi Café Sweets” (Our Café Sweets) is famous for their roll cakes and cookies. Family Mart’s
“Sweets +” has shown positive sales since 2007. Finally, Circle K Sunkus’ brand “Cherie Dolce” released a crème
tiramisu that is very popular.
Male consumers are increasingly consuming more sweets. To prepare for this, new sweets products targeted at
men are being released. In 2010 Family Mart introduced “Ore no suitsu” or “Manly sweets” with the emphasis
on being a masculine product. These sweets are labeled with blue text instead of pink, and are larger than the
female targeted products.
Japan is a nation fueled by consumption, a key component to economic recovery. In 2010 the World Bank
reported consumption in Japan as 58.58% of GDP and 23% of household expenditures in Japan go towards food
according to Japanese Ministry of Internal Affairs and Communications 2009 Survey. There are two main
consumer groups in Japan: Generation M and Youth.
Generation M Consumption
Just like in the United States with the Baby Boom Generation retiring, Japanese of Generation M (roughly 6.6
million citizens currently) are expanding the silver demographic market. Last year Japanese age 60+ spent $1.18
trillion (¥101 trillion) and these silver spenders account for 44% of the consumer spending in Japan. Of the $1.18
trillion, 70% was from the 65+ age bracket.
The retail response has come in the form of delivery services, mobile operations, expanded internet shopping,
smart phone market integration, specific oriented promotions, and products developed with Generation M in
mind. Seniors will continue to play an integral role in the Japanese market and projections show the 60+ age
category will expand worldwide from 800 million in 2010 to 2 billion in 2050. Researchers expect spending by
seniors worldwide to double to $15 trillion (the 2011 size of the U.S. GDP) and see Japan’s rich aging consumers
as a dynamic testing ground.
With such a large senior market, the youth in Japan are often overlooked. But recent indicators show
consumption spending increases among Japanese youth. The Ministry of Internal Affairs and Communication
showed a December 2011 improvement of 12.5% in spending within the lower income bracket where 20 year
olds tend to be. A survey of businessmen in their 20s showed a return to the 2009 level of average spending of
$42.50 (¥3600) on nights out. Finally, there is a growing trend in groups –youth (20s-30s) whom prefer going
out as a group of three; restaurants, movies, events.
7. Market Consolidation
Market consolidation highlights from 2011 were:
On February 18, 2011 Mitsubishi wholesale company was established with the merger of Mitsubishi Shokuhin
(food), RyoShoku, Meidi-ya, San-Esu, and Food Service Network. Ryoshoku was one of the strongest beverage
distributors and was the second largest wholesale company after Kokubu. Meidi-ya ranked eighth and Food
Service Network ranked ninth. The press release states the reason for the merger was to protect the safety of
food quality and food supply by creating a new wholesale distribution model capable of adapting to changing
consumer demands and diversification and to withstand long term deflation.
On October 21, 2011, Universe supermarkets, headquartered in Aomori, the most northern prefecture on
mainland Japan joined ARCS, creating a group that includes 47 stores located in three northern prefectures,
(Aomori prefecture 30 stores, Iwate prefecture 16 stores, and Akita prefecture 1 store) adding $1.3 billion in
value to the ARCS group.
Recently AEON acquired a 50% stake for ¥1 ($0.01) in Tesco Japan as Tesco is leaving the Japanese market after
9 years of trying to gain a foothold. Tesco Japan currently operates 117 small supermarkets in Tokyo and
surrounding areas and hired Goldman Sachs last year for advice on the sale of its stores. These stores are larger
than convenience stores, but smaller than typical supermarkets and fill the new “city-style” stores that AEON
has been looking to expand into.
Section IV: Road Map for Market Entry
A. Food Distribution System in Japan
There are no magic formulas for new–to market exporters to enter the Japanese retail food market. Strategies
will vary depending on the type of food product being introduced and the current competitive environment.
However, looking into the differences in distribution systems and structure can also help you formulate a
feasible market entry into Japan, for example:
1. Overall, traditional entry points via importers are beginning to make way for other more diverse avenues. For
example, even within one food retail organization (i.e., large-scale supermarket, regional supermarket chain,
convenience store chain, etc.), there may be several routes for procurement – including importers, wholesalers,
2. Large-scale supermarkets still rely primarily on importers and wholesalers. Most are engaged to some degree
in developing and maintaining private labels, which they tend to outsource to food processors.
3. Conventional supermarkets tend to depend more on wholesalers. They usually procure from a number of
regional/local and national wholesalers who buy imported food products from trading houses and importers.
Wholesalers and big trading houses are generally interested in handling high volume products, not niche-
B. Supermarket Store Structure
Giant nationwide supermarket chains including AEON and Ito Yokado mainly purchase their foods through three
1. Direct from the importers
2. Direct from the manufacturers and processors
3.Wholesalers and distributors
Conventional supermarkets purchase through similar distribution channels, although they mainly purchase from
wholesalers, whereas the major national chains rely more on direct routes.
C. Department Store Structure
Food items at department stores are procured almost entirely through wholesalers and tenant merchants.
Imported products reaching department store “tenant merchant” shelves is dependent upon the wholesaler
purchasing these products from importers or trading companies. Tenant merchant companies mainly purchase
the ingredients for their products from wholesalers and then manufacture the products to be sold.
D. Convenience Store Structure
Convenience store chains utilize trading companies and wholesalers, depending on the type of product. Due to
limited space, convenience stores can only handle a few brands per category. Product performance is reviewed
continuously, and slow moving products are replaced quickly, ensuring the highest turnover possible. Their
management systems present the most significant challenges for imported packaged processed foods, since
they require that U.S. exporters:
1. Modify product taste/specifications to fit the tastes of Japanese consumers
2. Shorten delivery time to ensure freshness
3. Update and introduce new products frequently
E. Specialty and Other Stores
The remainder of the Japanese Retail Food industry is made up of a small, but energetic group of stores ranging
the gamut of co-ops, traditional shops, specialty shops, and the online marketplace.
1. Co-Ops and Voluntary Chains
These use a variety of sources, including importers, wholesalers and direct importing. Serving voluntary chains,
there are several major joint procurement organizations: CGC Japan, Nichiryu, All Japan Supermarket
Association (AJS) and Consumer Cooperatives (Co-ops). Their major role is to develop private brand products
with Japanese food processors and overseas sources to sell to member retailers. Some of these organizations
directly import non-branded food products that are “volume” oriented in nature.
2. Traditional Stores
These are Mom & Pop or “one category” stores that typically depend on wholesalers. Penetration of imported
foods into these shops and stores is relatively low.
3. Specialty Shops
These shops (i.e., foreign foods, discount foods, etc.) also primarily depend on wholesalers. Selected coffee shop
chains, discount stores and natural food specialty stores with chain operations may be worth development for
U.S. food exporters.
Finally, online sales including TV, mail order offers yet another possible channel that U.S. exporters can consider
for retail food distribution. Majority of the sales are still non foods, but food and beverage sales are increasingly
being purchased online.
The Japan Direct Marketing Association in August 2011 reported that total online sales in Japan of ¥4.67 trillion
($57.8 billion). Over the past decade consumer purchases online have doubled and the annual growth from
2010 to 2011 was 8.4%. This illustrates the power of the internet for consumers in Japan. In a July 2012 White
Paper released by the Communications Ministry, smartphones will play a huge role in the future market.
Smartphones are expected to generate ¥7.2 trillion ($89.1 billion) in economic revenue and currently represent
10% of the domestic e-market.
Rakuten, a virtual mall powerhouse in Japan, reported that roughly 10% of all transactions are received via
smartphones. And for the Jan-June 2012 period enjoyed double-digit growth and consolidated operating profit
of ¥36 billion ($450 million), making it the 4th largest retailer in all of Japan. The report attributes the gain to
sustained strength in online food and drink purchases. Food and groceries are also cheaper on the Amazon site;
Cup of Noodles by Nissin are ¥126 when purchasing a pack of 20 in comparison to the AEON Koto store of ¥138.
Amazon Japan allows e-tailers to sell commerce through their portal site more efficiently and with greater profit
margins and Amazon Japan generates an estimated ¥500 billion ($5.86 billion) in yearly sales. By using
warehouses and IT-based inventory control these retailers are increasing the share of food purchases online by
It is worth noting that as Japan continues to embrace e-money, point cards, smart phone technology (NFC
payment systems, store apps, and web based purchasing), and discount or promotions accessed via the web –
this market will continue to grow. AEON Shop is an online store that continues to expand; KFC has launched an
online only store with 20-30 internet only products, and Dominos Japan smart phone app allows you to deliver
to a specific GPS location (such as a gathering at a park). Seven & i plans on consolidating its subsidiaries (Ito
Yokado, Seven-Eleven Japan, etc) into a joint online store called Seven Net Shopping in 2012 and expand
F. International Competition of Food Exports to Japan
The United States is by and far the largest exporter of food products to the Japanese market, representing
26.68% of all imported value in 2011. China’s export has remained stable over the last three years. Thailand and
Brazil represent the fasting growing exporters to the Japanese Retail Food market.
FIGURE 11: Major Food Exporters to Japan
USD (millions) % Share % Change
Rank Partner Country
2009 2010 2011 2009 2010 2011 2011/2010
World 44,353 50,652 62,986 100.00 100.00 100.00 24.35
1 United States 12,974 13,862 16,803 29.25 27.37 26.68 21.22
2 China 5,160 6,022 7,071 11.63 11.89 11.23 17.42
3 Thailand 2,959 3,785 5,290 6.67 7.47 8.40 39.74
4 Australia 3,806 4,232 4,954 8.58 8.36 7.87 17.07
5 Canada 3,165 3,503 4,510 7.14 6.92 7.16 28.77
6 Brazil 1,809 2,380 3,451 4.08 4.70 5.48 44.99
7 Indonesia 861 1,547 2,492 1.94 3.05 3.96 61.12
8 France 1,228 1,307 1,516 2.77 2.58 2.41 16.03
9 New Zealand 1,142 1,287 1,467 2.57 2.54 2.33 14.01
10 Malaysia 849 1,029 1,424 1.91 2.03 2.26 38.36
Source: Global Trade Atlas (Agriculture Total, Group 2)
Using the same data presented as a pie chart, one can see the commanding lead of U.S. food exports to Japan
and conversely the preference and liking of U.S. goods by the Japanese consumer.
Figure 12: Food Exporters to Japan
Source: Global Trade Atlas (Agriculture Total, Group 2)
Key factors affecting food exports to Japan are: imported food products are often less expensive than their
domestic counterparts, Japanese consumers now tend to show tolerance with imported food after the
Fukushima incident, and the strong yen exchange rate of the last few years has driven up food imports from
foreign countries to Japan. In particular, dairy products from the U.S. to Japan increased by 56.7% in value in
2011 from the previous year. Japanese importers have shifted sourcing natural cheese from Oceania countries
to the U.S. due to favorable exchange rates. U.S. exports of red meats, chicken, fresh vegetables, and tree nuts
to Japan experienced the double digit increases in 2011 over 2010 (Global Trade Atlas).
G. Summary of U.S. Food Product Advantages in the Japanese Market
Key Words Advantages Current Position
Quality U.S. specialty food products attract Have a good story to educate customers
Japanese consumers. U.S. products usually have a about the quality of your product.
good story to tell. Emphasize quality.
Cultural Japanese consumers are strongly influenced by U.S. Be able to explain how your product relates
Influences food culture. to American culture.
Health Health related food market in the U.S. is advanced. Address health related benefits but be
Consciousness Even though your product may not be a health careful you don’t make claims unless you
product, make sure to emphasize any health have Japanese government approval.
Food Safety U.S. agriculture can successfully Educating your customer about safety issues
differentiate itself from Japan and third countries on helps to facilitate communication and
food safety issues by HACCP, GAP, ISO, etc. provides your customer transferable
Stable Supply The U.S. is the largest exporter of food products to Japan’s food self sufficiency rate is only 39%
Japan. As a largest supplier of food products in the and it has been declining due to aging
world, the U.S. has a great opportunity to expand population and the declining farm
exports to Japan. population.
SECTION V: CONTACT AND FURTHER INFORMATION
If you have any questions or comments regarding this report or need assistance with exporting to Japan, please
contact the U.S. Agricultural Trade Offices in Tokyo or Osaka at the following addresses:
U.S. Agricultural Trade Office U.S. Agricultural Trade Office
U.S. Embassy, Tokyo U.S. Consulate General, Osaka-Kobe
1-10-5 Akasaka, Minato-ku 2-11-5, Nishi-tenma, Kita-ku,
Tokyo 107-8420 Osaka 530-8543
Tel: 81-3-3224-5115 Tel: 81-6-6315-5904
Fax: 81-3-3582-6429 Fax: 81-6-6315-5906
E-mail: firstname.lastname@example.org E-mail: email@example.com
ATO Japan has begun a series of regional reports to provide specific information on major regions in Japan.
Please go to http://www.usdajapan.org/ and click on “Regional Briefs”. To date, the ATO has reports on the
Kansai region (Osaka/Kobe), and the Chugoku region (Hiroshima). Reports on Hokkaido (Sapporo), and Kyushu
(Fukuoka/Kagoshima) will be available soon.
Other websites: http://www.myfood.jp http://www.us-ato.jp
Reports from Japan’s ATOs, in addition to those from the Agricultural Affairs Office in Japan, can be found using
the links provided or by searching from the FAS Japan Reports website at: