Japan’s innovative distribution companies, which break the common sense of distribution and are recording high growth despite the recession, are drawing attention. The Korea Chamber of Commerce and Industry introduced innovation cases of Japanese distribution companies through a research report titled “Response Cases and Implications of Japanese Innovative Distribution Companies Overcoming the Recession” on the 15th.
According to the report, these companies are continuing their high growth despite the crisis due to their “experience of finding what they need rather than selling a lot,” “price that can be understood over a low price,” and “structure of making and supplying themselves” rather than outsourcing production. Handsman, a DIY goods store that has grown mainly in Kyushu, Japan, has secured an overwhelming diversity of more than 200,000 products in one store through its “do whatever customers want” product policy. The company plans to “divide into subdivision” for each category, including woodworking, electricity, gardens, and plumbing. For example, there are 10,000 types of screws.
Japanese premium grocery retailer Kitano Ace also has more than 500 types of curry products and more than 100 types of salad dressings on display in a single store alone. Unlike general supermarkets, “the joy of discovery” is regarded as a core value rather than product turnover, and it has evolved into a “select shop that explores food culture” to secure strong loyalty from certain consumers. Discount supermarket OK is presented next to all major products in the store, including why the price of a specific product has risen, whether the quality has been maintained, and when the price can be readjusted on a piece of paper called “Honest Card.” Through this honest card system, OK builds strong trust with customers and ranks first in customer satisfaction for 13 consecutive years. The operating margin is 5.9%, far exceeding the average operating margin of Japanese supermarkets of 2-4%.
The “internalization of manufacturing” policy, which integrates the entire supply chain, is also notable. Under the motto “We are a company that builds clothes with information,” Uniqlo has achieved innovation in “system (information manufacturing retail) where production begins as soon as it is sold” by integrating all departments and sharing real-time data between departments. As of last year, the parent company’s annual sales (September 2023 to August 2024) increased by 54.5% and operating profit increased by 23.5% compared to the same period in 2020, breaking all-time highs. In line with rapidly changing consumer trends and online markets, we are also actively promoting sustainable work type innovation, away from the old business model. Ion Retail, Japan’s largest retail company, is increasing its stay time, transforming hypermarkets into a family-type complex cultural space, and evolving its business nature by strengthening its children’s specialty stores, footcoats and ready-to-eat food, and operating experiential markets.
Life, a leading supermarket chain, is also considered to have shifted its paradigm to digital, sustainable and experiential stores by introducing the next-generation supermarket 4.0 model that applies advanced technologies such as self-scanning carts and electronic price display devices to stores.
“The Japanese retail industry has turned the recession into an opportunity with the opposite strategy,” said Jang Kyung-won, head of the Korea Chamber of Commerce and Industry. “As Korea is also experiencing similar difficulties of aging and sluggish consumption, it is imperative to improve its fundamental constitution to build its own strengths and provide new value to customers, away from short-term price competition.”
SALLY LEE
US ASIA JOURNAL
