Wal-Mart in Japan
Topic: Japanese life
Sorry, but just this once I'm gonna NEKOBAKA this entire article, FAIR USE because nobody is reading this blog. It will be removed by 10pm March 26 Tokyo time.Japan: The American Revolution
Thu Mar 25, 6:33 PM ET
Wal-Mart's entree into Japan is Seiyu, the country's fifth-largest grocer, a 400-store chain with $8.9 billion in sales. When it agreed to sell Wal-Mart a 6% stake, the company was nearly bankrupt and had little to distinguish itself from its competitors, says Seiyu President Masao Kikuchi. Two years later it still seems to be struggling. Revenue fell 17% as it posted a loss of $65 million in 2003. Walk around a Seiyu store and you will be hard-pressed to notice any difference from before.
Look closer, though, and you see a revolution in the works. Fifty-three Wal-Martians have converged to move Seiyu's point-of-sale and inventory tracking systems over to the standard Wal-Mart setup. It will take three years for them to switch over all 400 stores, and then they'll move on to Seiyu's distribution centers. Store managers will know how many items of each individual brand were sold, how many are on the shelf and how many are in the warehouse.
The future of Japanese shopping as Wal-Mart sees it lies in the Futamatagawa store, near Yokohama. First, the company moved most general merchandise upstairs and put all the food onto the first floor. The entrance has been turned into a wide, inviting funnel crammed with fresh fruits and vegetables. A greeter hands out baskets to arriving customers and answers questions. Wal-Mart has made the elevators to the parking lot big enough to hold shopping carts and has radically increased the number of cash registers. Sales of food at the store are up 50% from last year.
But not everything is going according to plan. On the second floor, even though clothing prices have been cut by 20% as generics replaced brand items, sales have fallen 10%. The Japanese, apparently, like their brands. Still, overall revenue at the Futamatagawa store has risen 17% since Wal-Mart made its changes.
The real challenge for Wal-Mart will be dealing with the convoluted and opaque Japanese distribution system. Realizing that many manufacturers will sell only through their traditional wholesalers, Wal-Mart has decided to work with them when necessary and help educate them in how to cut their own costs. To wean suppliers away from middlemen, Wal-Mart holds out the carrot of access to its 5,000 outlets around the world. At the same time it's trying to encourage Seiyu buyers to turn to Wal-Mart's global partners like Procter & Gamble, Nestle, Johnson & Johnson and Kellogg.
Wal-Mart is learning from Seiyu, as well. Its systems will have to adapt to the rigor of Japanese shoppers, many of whom can tell just by tasting a piece of fish whether it has ever been frozen; prices can drop five times a day as the fish ages.