The Japanese retail food industry in 2014 experienced growth in all of the three major categories: largescale and conventional supermarkets, department stores, and convenience stores. Read more...
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: JA 5016
Japan Retail Industry
Rachel Nelson, ATO Director
Sumio Thomas Aoki, Senior Marketing Specialist
Anne Oakley, Intern
The Japanese retail food industry in 2014 experienced growth in all of the three major categories: large-
scale and conventional supermarkets, department stores, and convenience stores. Total retail sales
including food, beverages, general merchandise, fabrics, apparel and accessories amounted to 69,911
billion yen in 2014 with food & beverage seeing a significant increase.
SECTION I: JAPAN RETAIL FOOD SUMMARY
The Japanese yen weakened in the year 2014, averaging 106.85 yen to the dollar. Consumer
Confidence rose, leading to higher spending. On April 1st of 2014, the consumption tax increased
from 5% to 8%. This caused an early shopping spike in February and March of 2014 before the
new tax took effect and a sharp drop after its implementation. Some sectors struggled to maintain
profits under the combination of the weak yen and the tax hike. A second tax hike scheduled for
the latter half of the year would have raised the consumption tax to 10% but was postponed until
2017. The market stabilized during the latter half of 2014 as the yen continued to weaken (the
rate in December 2014 was 119.58 yen to the dollar), leading to more spending among foreigners
Japanese Yen to U.S. Dollar Average Exchange Rates
Yearly average 2011 2012 2013 2014
JPY per USD 80.84 80.82 98.65 106.85
B. Market Breakdown
Total retail sales including food, beverages, general merchandise, fabrics, apparel and accessories
amounted to 69,911 billion yen in 2014 with food & beverage seeing a significant increase.
Below are the total retail sales figures:
FIGURE 1: Total Retail Sales (Billion JPY)
Year Total Food & Beverage General Merchandise Fabrics, Apparel & Accessories
2012 67,649 44,026 12,681 10,942
2013 68,516 44,619 12,710 11,187
2014 69,911 45,590 12,821 11,500
Source: METI, Part1 Commercial sales Monthly, Table 1, Report on the Current Survey of
C. Food Sales in 2014
The Japanese retail food industry in 2014 experienced growth in all of the three major categories:
large-scale and conventional supermarkets, department stores, and convenience stores.
Convenience stores are striving to develop online offerings in order to accommodate their young
customers who are always on the go, create ready-to-eat meals for working mothers, and provide
delivery services for the fast growing elderly population (60 and above) which will be referred to
in this report as “Generation M.”
FIGURE 2: Food Retail Sales of Three Categories for 2012-2014 (Million JPY)
Year Large-scale Supermarkets & Conventional Convenience Department
Supermarkets Stores Stores
2012 8,535,260 5,817,844 1,916,244
2013 8,734,942 6,138,738 1,911,969
2014 9,071,134 6,581,894 1,928,884
Source: METI, Part 3 Large-scale retail sales trade, Table 1, Report on the Current Survey of
Source: METI, Part 4 Convenience store, Table 1, Report on the Current Survey of Commerce.
D. Food and Beverage Sales by Region
FIGURE 3: Regional Sales and Population
Region Year Overall Number of 2014 Food Sales
Food & Establishments Population Purchasing Growth
Beverage Power per ‘13-‘14
Sales (JPY Household
Hokkaido 2012 576,949 319
2013 585,642 319 5,463,045 681,430 2.84
2014 602,298 319
Miyagi 2012 264,811 143
(Tohoku) 2013 266,699 149 2,329,439 747,818 4.00
2014 277,363 153
Tokyo 2012 1,252,308 369
2013 1,246,110 372 13,202,037 803,107 2.86
2014 1,282,803 372
Aichi 2012 725,354 317
(Chubu) 2013 732,253 318 7,478,606 * 3.57
2014 759,346 329
Osaka 2012 824,956 306
2013 834,360 317 8,878,694 800,702 2.45
2014 854,775 323
Hiroshima 2012 212,074 100
(Chugoku) 2013 217,672 111 2,876,300 709,465 4.96
2014 228,473 110
Ehime 2012 117,291 74
(Shikoku) 2013 120,883 85 1,436,527 862,357 3.47
2014 125,080 86
Fukuoka 2012 289,843 176
(Kyushu) 2013 299,599 177 5,118,813 793,021 2.11
2014 305,922 176
Source: http://www.meti.go.jp/english/statistics/tyo/syoudou_nenpo/index.html (Part 3, Table 2)
SECTION II: RETAIL MARKET INDUSTRY
A. Establishment Trends
In 2014, the tax hike resulted in an initial decrease in spending which stabilized by the fourth
quarter. Convenience stores have continued to remain profitable. In order to compete with
convenience stores, larger supermarket chains have launched smaller, neighborhood stores.
These city-style stores provide convenient access within neighborhoods and offer an alternative
to convenience stores. Online shopping continues to be a lucrative market for grocery stores with
some offering home delivery for little to no charge. This option has become popular with the
mature population (65 and above), called Generation M in this report. Many hard-to-find items
can be delivered to the closest supermarket outlet near a customer’s home.
FIGURE 4: Japan Retail Food Market Percentage for 2014
Year Large-scale Supermarkets & Convenience Stores Department Stores
2012 52.5% 35.8% 11.8%
2013 52.0% 36.6% 11.4%
2014 51.6% 37.4% 11.0%
Source: METI, Part 3 Large-scale retail sales trade, Table 1 & Part 4 Convenience Store,
B. Large-scale and Conventional Supermarkets
The supermarket business in Japan is mature and considered to be at full saturation levels for
standard large-scale and conventional supermarkets. Many major supermarket chains are
investing in city-center stores which allow easier access.
2. City-style Stores
City- style stores (smaller versions of supermarkets located in city centers) are becoming
increasingly popular. Originally created by large retailers to better compete with convenience
stores, these stores offer a variety of goods and are generally twice the size of convenience
stores but not as large as supermarkets. City-style stores are usually located in urban areas in
order to provide convenient access to residents or workers in the area so that they will not have
to travel far. These stores have been a hit with the elderly population, mothers, and value-
In June 2014, AEON announced that it was going to triple the number of its “Akore” city-style
stores in Tokyo, Saitama, and Chiba from 90 to 250 by 2016. Overall, city-style stores have
seen a 5% gain within the past year.
3. Target Market
As the Japanese market continues to mature, the two national brands AEON and Seven & I
Holdings have strived to appeal to the aging population. AEON specifically is offering more
flexible opening and closing hours while Ito-Yokado has introduced prepaid cards as well as a
Senior Nanako point card which offers an additional 5% discount on the 15th of every month.
In October 2014, AEON’s private brand TopValu expanded to include organic products.
Consumers now have healthier alternatives at a reasonable price. This story was featured in
AEON magazine which has been in publication since 2008. AEON has recently taken to
promoting healthy food and local community activities in order to appeal to the rapidly
evolving mature and health-conscious market.
4. Price Competition
Store brands, known in Japan as private brands (PB), have increased. AEON’s Top Valu PB,
which is sold at Maruetsu and AEON stores, and Ito-Yokado’s PB have been very successful.
According an article in the Nikkei Asian Review, sales increased 0.9% in 2014.
5. Company Highlights
On May 20, 2014, Aeon Co. consolidated three of its partners (Maruetsu, Kasumi, and their own
subsidiary Maxvalu Kanto) under the trading house Marubeni. The new holding company
became public, and both Maruetsu and Kasumi were delisted. This merger included
approximately 470 supermarkets within Tokyo and surrounding prefectures.
In early October 2014, Aeon Co. announced its intention to fully acquire its main competitor,
Daiei Inc., by December 26, 2014 after making the company a subsidiary in 2013. Aeon
announced that it would buy out the chain and accelerate restructuring. Aeon has already taken
major steps such as renovating aging structures and introducing new market strategies.
Below is a figure showing sales of the top supermarkets in 2014.
FIGURE 5: Top Supermarkets by Total Sales in 2014
Nam (JPY (JPY
Ratio of Number of Location of HQ
e M Food Sales Outlets il) M & Stores il)
1 AEON Retail 2,117,231 1,088,100 51.3% 563 Chiba
Seven & I 1,285,942 592,913 46.1% 181 Tokyo
3 Uny 745,647 484,962 65.0% 226 Aichi
4 Daiei * * * 468 Osaka-Kobe
5 Izumi 557,074 185,984 21.7% 103 Hiroshima
6 Life 585,770 476,927 81.4% 245 Tokyo
7 Arcs 470,310 421,565 89.6% 319 Hokkaido
York 396,930 298,136 75.1% 200 Fukushima
9 Heiwado 347,835 231,722 66.6% 142 Shiga
10 Kasumi 250,098 232,231 92.9% 159 Tsukuba
11 Maruetsu 346,199 317,175 85.1% 276 Tokyo
12 Fuji 305,364 123,922 40.6% 98 Ehime
13 Aqua 269,029 197,940 73.6% 157 Wakayama
14 Max Valu 990,247 903,570 91.2% 737 Hiroshima
AEON 242,164 110,152 45.5% 128 Fukuoka
Source: Tokei Geppou May 2015 pp 72, 76-77
*Daiei became a fully acquired subsidiary of AEON on January 1, 2015.
C. Specialty Supermarkets
Specialty supermarkets are important for imported food products because these stores carry
products with higher prices. Here is a list of these stores with background information provided
in the links.
Kinokuniya: First self-service super-market in Japan.
Meidi-ya: First supermarket to specialize in imported products.
Seijo Ishii: Provides combination of specialty products and a general store model.
Dean & Deluca: Offers premium products and prices with an emphasis on delicatessen
Queens Isetan: Supermarket built inside train stations with a special shelf space for imported goods.
Kaldi Coffee: Specializes in premium imported products, particularly coffee and chocolates.
National: A favorite of ex-pats due to its emphasis on and variety of imported products.
D. Convenience Stores (CVS)
Convenience stores continued to increase their market share due to the number of locations and
wide variety of products being offered. A major contributing factor to the success of
convenience stores is the proximity to consumers’ homes, creating a sense of community since
customers can get to know their neighborhood staff- a factor which is important to the elderly
population. Some convenience stores offer home delivery such as Seven-Eleven’s Seven Meal
bento delivery service. Family Mart’s delivery staff even checks up on its senior customers’
well-being. Despite the growth of online shopping and the tax hike of 2014, convenience
stores continue to be a major retail competitor.
2. Company Highlights
Seven& I Holdings acquired the majority of Nissen Holdings’ shares (50.71%) through its
subsidiary Seven & Net Media in January 2014. Nissen is known for their mail-order delivery
of goods such as clothing and gift items. This acquisition allowed Seven & I to diversify their
market opportunities and increase revenue by utilizing Nissen’s experience in catalogues,
mail-order, and internet shopping.
In July 2014, Seven & I Holdings struck a deal with the brand Coca-Cola to produce a limited-
time, exclusive lemon-flavored soda for the chain with a designated run of about three months.
Seven and I Holdings is Coca-Cola’s biggest retail customer in Japan.
In August 2014, Lawson acquired Japan’s 3rd largest operator of movie theatres- United Cinemas.
Utilizing its 12,000 store locations, Lawson hoped to expand is exclusive movie-related
merchandise and plans to offer ticket discount and free passes through the Ponta rewards program.
Lawson acquired Seijo-Ishii Co., Ltd. in September 2014. With the slogan of “Quality food
for a quality life,” the Seijo-Ishii company had expanded to 120 stores, mostly within the
Kanto area, by the time of the acquisition. Lawson expected that this acquisition would provide
them with the means to compete with other convenience stores including their top competitor,
Seven & I Holdings, by combining great quality with broad reach.
The following table (Figure 6) summarizes the top convenience stores in Japan 2014.
FIGURE 6: Top Convenience Stores in 2014
Rank Company Name Food Sales (JPY Mil) Number of Outlets Location
1 Seven & I Holdings 2,737,641 17,491 Nationwide
2 Lawson 1,581,100 11,900 Nationwide
3 Family Mart 1,093,790 10,514 Nationwide
4 Circle K Sunkus 517,936 5,990 Nationwide
5 Mini Stop 217,184 2,151 Nationwide
6 Three-F 50,643 558 Tokyo Area
7 Poplar 42,606 525 Nationwide
Source: Tokei Geppou May 2015 pp 81
E. Department Stores
The past three years have seen positive changes for department stores. Mitsukoshi-Isetan has
participated in revitalizing an industry that had been on the decline since the 1980s. In
September 2014, the Mitsukoshi-Isetan Group announced that it would expand its hospitality
services targeted at foreigners who wish to purchase duty-free items by enlarging counters,
installing currency exchange machines, and introducing new systems to expedite check-out.
Other department stores have started to follow their example and generally offer a variety of
shops and services with a basement level reserved for food-related shops and restaurants.
With the dominating force of convenience stores, supermarkets, and online shopping,
department stores have had to employ new techniques and strategies to stay on top. For example,
in December 2014, Matsuya president Masaki Akita announced that stores would be hiring more
foreign language speakers in order to draw in visitors from abroad.
Tourists make up a large percentage of department store customers, and department stores line
up gifts and souvenirs for tourists. The number of foreign tourists visiting Japan doubled in
each of the last two years, reaching record numbers due to favorable exchange rates and changes
to the Japanese laws regarding visas and duty-free shopping. Mitsukoshi-Isetan announced in
July 2014 that it would be offering duty-free shopping after partnering with the operators of
Narita and Haneda airports. In June 2014, Nikkei Asian Review reported that Mitsukoshi-Isetan
has been focusing their efforts on private-label goods, cutting production costs while increasing
In April 2014, UNIQLO announced a decision to open a store in China by 2018. Takashimaya
has been placing a considerable amount of effort into expanding into the Southeast Asian market
with plans to open more department stores as early as 2017. This shows that expanding globally
is not off the table for Japanese department stores.
Over the last decade, department stores have seen a significant drop in profits for non-food
products. However, food products have actually seen a growth in department stores due to their
premium nature and the presence of depachika (basement level with food stores). According to
the Food Industry Newspaper, 2013 was the first time in sixteen years that department store
total sales had increased. In 2014, their sales rose 11% for the first quarter but had decreased
to 0.7% by October. This may be due to the tax hike. Stores such as Seiko Mart saw a 4%
decrease in profits, and Aeon Retail saw an approximate 3% decrease in profits.
Because department stores often stock their stores with premium products, they have become a
popular spot for gift purchasers and tourists.
Depachika means basement floor of the department store where fresh food stalls are located.
Traditionally, a depachika was a quiet food retail location, but this changed when shops
introduced high quality Home Meal Replacements (HMR), creating a new and very popular
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, bringing additional customers to department stores.
4. Pricing, Quantity and Premium
Department stores usually carry imported, branded food products though typically in small
quantities. Many of the items are packaged as take-out products due to the proximity to train
stations and the premium nature of the products means they are often used as gifts. Also,
because these stores generally do not have tables and chairs, the food needs to be eaten off site.
5. Company Highlights
Listed below are the top 10 department store establishments and their total sales for Japan in
FIGURE 7: Top 10 Department Stores & Total Sales
Rank Company Name Location Food Sales (Billion Yen)
1 Mitsukoshi-Isetan Shinjuku-ku, Tokyo 13,215
2 J. Front Retailing (Daimaru) Chuo-ku, Tokyo 11,463
3 Takashimaya Co. Chuo-ku, Osaka 9,041
4 Seven&I (Sogo Seibu) Chiyoda-ku, Tokyo 8,691
5 H2O Retailing (Hankyu Hanshin) Kita-ku, Osaka 5,768
6 Tokyu Corp. Shibuya, Tokyo 5,162
7 Marui Group Nakano-ku, Tokyo 4,164
8 Kintetsu Abeno-ku, Osaka 2,770
9 Parco Shibuya-ku, Tokyo 2,643
10 Odakyu Shinjuku-ku, Tokyo 2,223
SECTION III: CONSUMER TRENDS AND CHANGES
Japanese customers are a sophisticated clientele with tastes and preferences instilled via strong
cultural, societal and environmental drivers. If you are considering developing products for the
Japanese market, please consider the following historical characteristics of the Japanese market
that still have relevance today.
An abundance of literature is available on the topic of Japanese demographics. Japan’s
Generation M is the fastest growing senior population (over 65) in the world. The roughly
35 million citizens in this generation are expanding the influence of the silver demographic.
Recent demographic reports have claimed that Generation M represented 27% of the entire
Japanese population. It is predicted to reach 29% by the year 2020 and 36% by 2040.
Consequently, the total population is estimated to decline from 127 million in 2014 to 105
million in 2040.
FIGURE 8: Population Breakdown & Projection
Year Population (Thousands) by Age Group
- Total 0-14 15-64 65+
2015 126,597 15,827 76,818 33,952
2020 124,100 14,568 73408 36,124
2025 120,659 13,240 70,845 36,573
2030 116,618 12,039 67,730 36,849
2035 112,124 11,287 63,430 37,407
2040 107,276 10,732 57,866 38,678
2045 102,210 10,116 53,531 38,564
2050 97,076 9,387 50,013 37,676
2055 91,933 8,614 47,063 36,257
2060 86,737 7,912 44,183 34,642
Source: National Institute of Population and Social Research
2. Seasons and Holidays
Japanese culture places a heavy emphasis on the four distinct seasons - 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:
FIGURE 9: Seasonal Holidays in Japan
Season Month Sales, Promotions, Events & Holidays
High School & University Graduation events
Mar White Day (Valentine’s Day for women) ch
Sakura (cherry blossoms) travel
Fiscal Year begins – job rotation
Ap New school year begin events ril Entrance ceremonies for companies – sales, promotions
Ma Mother’s Day y Golden Week – holiday sales, travel, events
June – July
Summer Ochu-gen, summer gift giving
August Obon holiday promotions
September Respect for the Aged day
Fall October - November Oseibo, years’ end gift giving
inter New Year’s & end of year sales campaigns
January Coming of Age holiday
Setsubun (end of winter) promotions
Valentine’s Day (for men)
Fiscal Year ending promotions by companies
Japanese consumers have some general historic preferences that should be considered. Japan is
a nation that prefers convenience, quality, and single-serving sizes. An estimated 3.23 million
people commute via a combination of train and walking into Tokyo every day according to the
Tokyo Metropolitan government. Therefore, convenience and accessibility are highly valued
by Japanese consumers who tend to drive less than many other developed country citizens.
B. Recent Trends
As mentioned already in this report, recent trends indicate a burgeoning growth of Private
Brands, healthy foods, time-saving foods (i.e. frozen foods), market consolidation for greater
efficiency and new retail ideas to meet new demands. Prepared foods (Home Meal Replacements
- HMR) and desserts have seen strong growth in the past few years. Interest in healthy or
functional foods has continued to increase.
1. Healthy or Functional Foods
There has been growing demand for healthy and balanced meals with demand led by women
and adults over the age of fifty. This trend has been growing since the mid-1990’s and continues
to grow. This has led to healthy foods being split into two categories: Foods for Specific Health
Use (FOSHU) and health-enhanced food. While there are several distinguishing factors between
the two, the most important one is that products marketed as FOSHU require government
approval before entering the market while health enhanced food does not.
2. Home Meal Replacement (HMR)
Home Meal Replacement (HMR) offerings have been increasing in every retail area. These
foods are ready-to-eat such as obento boxes which are popular for school and office lunches.
Since 2012, there has been a 13% increase in the consumption of HMR.
The growth in HMR is primarily driven by the increase of two distinct demographic sectors that
eat at home. 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 adults who live alone or with roommates
do not cook and almost exclusively eat out.
The expanding retail presence of delicatessens 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 out and ready to eat. Frozen noodle dishes,
okonomiyaki (a Japanese-style pancake with meat and vegetables), and cooked rice dishes are
examples of traditional Japanese meals that can be brought home frozen, reheated, and
3. Private Brands (PB)
The majority of major food retailers now feature their own private brands. Studies conclude that
PB products will continue to grow and gain more shelf space. A 2012 survey by Fuji-Keizai
(Nihonbashi, Chuo-ku, Tokyo) found that the value of all PB had reached 2.638 trillion yen.
This is 9.4% higher than the previous year. It was estimated that by the year 2017, the value of
PB will increase to 3.209 trillion yen.
FIGURE 10: Private Brand Projection
Year 2012 (Billion Yen) 2017 (Billion Yen) % Increase
General Merchandise Supermarket 445 569 127.87
Supermarket 779 931 119.51
Convenience Store 864 1,122 129.86
Co-op 453 462 101.99
Other 97 124 127.84
4. Frozen Foods
In response to an ever increasing desire for convenience and value-priced food, the sales of
frozen food in Japan have continued to increase at approximately 3.3% annually. Many new
varieties of HMR frozen foods continue to grow as well. As mentioned above, some examples
of these foods include pre-cooked rice dishes, Asian & Western noodles, breads, and fish.
Frozen vegetable imports have increased to reach a total of 142 billion yen in 2013.
Sweets are critical to convenience stores, which market their own dessert brands through
advertising campaigns with the goal of distinguishing themselves from the competition.
Lawson’s series called “Uchi Cafe Sweets” (Our Cafe Sweets) is famous for their roll cakes
and cookies, Family Mart’s “Sweets +” has shown strong sales since 2007, and Circle K
Sunkus’ brand “Cherie Dolce” crème tiramisu has become extremely popular.
Ice cream also remains a popular treat. In June 2014, Häagen-Dazs and Seven & I released
“Japonais” a four-layer cup which contains “kinako kuromitsu” (soybean flour and brown
sugar syrup), vanilla ice cream, sweet red bean paste, and condensed milk sorbet.
Doughnuts have also risen in popularity. Mr. Donut, Japan’s national doughnut store, has seen
an increase in profits. Krispy Kreme sells seasonal and regional items that are not available
outside of Japan such as doughnuts topped with “sakura” (cherry blossom) and “matcha”
(green tea) flavored icing. Seven & I announced in November 2014 that it would begin selling
six flavors of heated donuts for the low price of 100 yen to complement their self-service
Japan is a nation fueled by consumption— a key component towards economic growth.
Approximately 23% of household expenditure goes toward food, according to the Japanese
Statistics Bureau. The two main consumer groups in Japan are Generation M and Youth.
Generation M, Age 60 and above, Consumption
Generation M is rapidly expanding. The retail response has come in the form of delivery
services, mobile operations, expanded internet shopping, smart phone market integration,
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
from 800 million in 2010 to 2 billion in 2050. Researchers expect spending by seniors
worldwide to double to $15 trillion (the size of the U.S. GDP in 2011) and see Japan’s rich
aging consumers as a dynamic market.
With such a large senior market, the youth in Japan are often overlooked. But recent indicators
show consumption spending increased among Japanese youth. Young people (age 20-30) have
been delaying marriage and child-bearing in order to focus on their careers. Due to a busy
lifestyle, these young people want to avoid the hassle of cooking at home. The rise of the
working, single-person households is correlated to the rise in sales of ready-made, frozen,
take-out, delivery, and restaurant-prepared meals.
7. Market Consolidation
Market consolidation highlights:
Suntory Holdings Ltd. acquired Beam Inc. on April 30, 2014. After being renamed Beam
Suntory Inc., and as a result of the transaction, the company holds a strong position at number 3
in the Global Premium Alcohol Market. Beam Suntory Inc. will continue to operate in
Deerfield, Illinois under its current CEO despite Suntory Holdings Ltd. headquarters being
located in Osaka, Japan.
Mizkan Group entered an agreement with Conopco Inc., a subsidiary of Unilever, on May 22,
2014 in order to acquire Ragu and Bertolli pasta sauce brands. While both production facilities
will be located in the U.S., Mizkan hopes to continue the expansion of the product locally as
well as globally.
In May 2014, Aeon announced plans to consolidate three of its chains: alliance-partners
Maruetsu, Kasumi, and subsidiary Maxvalu Kanto to become Japan’s biggest supermarket
chain. United under a joint holding company, the chains debuted their new image by March
On June 1, 2014, H2O Retailing, parent company of Hankyu Hanshin department stores,
acquired supermarket operator Izumiya. Their projected sales totaled to 920 billion yen, ranking
them number 8 in the Japanese retail industry.
SECTION IV: ROAD MAP FOR MARKET ENTRY
A. Food Distribution System in Japan
There are no magic formulas to guarantee success. Strategies will vary depending on the type
of product and the current competitive environment.
1. Overall, traditional entry points via importers are diversifying. For example, even within
one retail chain organization (i.e., large-scale supermarket, regional supermarket chain,
convenience store chain, etc.), there may be several routes for procurement – including
importers, wholesalers, and more.
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 on wholesalers from which they usually procure
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-oriented ones.
B. Supermarket Store Structure
The giant, nationwide supermarket chains such as Aeon and Ito-Yokado purchase their food
primarily through three channels:
1. Directly from the importers
2. Directly 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 on more 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 are
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 use trading companies or wholesalers, depending on the type of
product. Due to limited shelf space, convenience stores can only hold a few brands per
category. Because of this, product performance is continuously reviewed, and products which
show little or declining progress are quickly replaced, ensuring the highest turnover possible.
Their management systems present the most significant challenges for imported packaged
processed foods because they require U.S. exporters to:
1. Modify product taste/specifications to Japanese consumer tastes
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, yet energetic group of
stores ranging from co-ops and specialty shops to online marketplaces.
1. Co-ops and Voluntary Chains
Co-ops and voluntary chains use a variety of sources which include: direct importing,
manufacturers, importers, and wholesalers. There are several major organizations serving
voluntary chains including 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. Locally-Owned Stores
These are mom & pop or “one category” stores that typically source from wholesalers.
Penetration of imported foods into these shops and stores is relatively low.
3. Specialty Shops
Specialty 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 present opportunities for some U.S. food exporters.
Online sales, include TV mail order advertising, offer yet another possible channel which
U.S. exporters can consider for food distribution. While the majority of sales are for non-food
items, food and beverage sales are increasingly being purchased online. On March 25, 2014,
the Osaka ATO released a report titled “E-Commerce Foods in Japan” stating that online sales
are still relatively small yet are now growing at double digit rates. This growth has dwarfed
the growth of the overall retail market. Large-scale retailers such as Ito-Yokado and AEON
were among the first to see growth in sales from e-commerce. Many major supermarkets
now offer online grocery services in most parts of Japan, including rural areas. The most
successful has been Ito-Yokado, whose sales grew 14.3% in 2012 with the introduction of
The e-commerce sales as a whole, according to Japan’s Ministry of Economy, Trade, and
Industry (METI), grew from 3.5 trillion yen in 2005 to 9.5 trillion yen by 2012. The food &
beverage sector makes up 13.7% of the market, but most sales are for non-food goods.
According to corporate data, Amazon Japan is the leading e-commerce site, followed by
Rakuten and Yahoo! Shopping. They are very competitive with each other, and use strategies
such as low-cost delivery, loyalty points, and special offers to try to attract more customers.
Many online vendors are offering m-commerce as a way to connect with mobile users, often
by offering mobile-friendly versions of their site, phone apps, and special downloads for
customers on-the-go. Rakuten is a big name in m-commerce, receiving as much as 52.2% of its
total value of transactions via mobile devices in the fourth quarter of 2013, while PC driven
sales fell by 8%. It is worth mentioning that food & beverage sales make up 49.2% of
Rakuten’s total sales. Popular items include heavy, bulky items that are hard to transport and
fresh produce. In 2013, one of Rakuten’s most popular food items was 1-2kg bags of local crabs.
E-commerce and m-commerce are both expected to grow in the coming years with same-day
delivery services and social media awareness. Seniors are some of the most active online
F. International Competition of Food Exports to Japan
FIGURE 11: Major Food Exporters to Japan
Rank USD (millions) % Share % Change Partner Country
2012 2013 2014 2012 2013 2014 2013/2014
World 61,569 57,779 55,570 100.00 100.00 100.00 -3.82
1 United States 15,756 13,740 14,618 25.59 23.78 26.31 6.39
2 China 7,919 7,286 7,194 12.86 12.61 12.95 -1.28
3 Australia 4,771 4,340 3,946 7.75 7.51 7.10 -9.10
4 Canada 4,653 4,223 3,782 7.56 7.31 6.81 -10.44
5 Thailand 4,401 4,009 3,777 7.15 6.94 6.80 -5.81
6 Brazil 3,428 3,993 2,761 5.57 6.91 4.97 -30.86
7 France 1,800 1,593 1,659 2.67 2.76 2.98 4.05
8 New Zealand 1,541 1,387 1,445 2.50 2.40 2.60 4.16
9 Indonesia 1,645 1,555 1,267 2.92 2.69 2.28 -18.53
10 Argentina 598 1,181 1,098 0.97 2.05 1.98 9.63
Source: Global Trade Atlas: Agricultural Total Group 2
Source: Global Trade Atlas
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 for U.S. goods by the Japanese consumer.
FIGURE 12: FOOD EXPORTERS TO JAPAN
Source: Global Trade Atlas
Key factors affecting food exports to Japan are: On the positive side, imported food products are
often less expensive than their domestic counterparts, and Japanese consumers now show
increased acceptance of imported food after the Fukushima nuclear reactor incident cast doubt
over the safety of some domestic products. On the negative side, the recent weak yen has driven
up imported food prices.
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
Japanese consumers. U.S. products customers about the quality of your
often have a good story to tell. product. Emphasize the quality.
Cultural Japanese consumers are strongly Be able to explain how your product
Influences influenced by U.S. food culture. relates to American culture.
Health The health related food market in the Address health related benefits but be
Consciousness U.S. is advanced. While your product careful not to make claims unless you
may not be a specialty health product, have Japanese government approval.
make sure to emphasize any health
Food Safety U.S. agriculture can successfully Educate your customer about safety
differentiate itself from Japan and other issues in order to help facilitate
countries with its food safety communication and provide your
assurances such as HACCP, GAP, customer with transferable
ISO, etc. knowledge.
Stable Supply As a major supplier of food products Japan’s food self-sufficiency rate is
around the world, the U.S. has a great only 39%. It has been declining due to
opportunity to expand exports to Japan. the aging farm 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
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: email@example.com E-mail: firstname.lastname@example.org
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: