A Review of Japanese Retail Practices and Preferences

1. A Review of Japanese Retail Practices and Preferences JSRCS Japanese Retail Review June 2013

2. Konichiwa and Welcome to Japan Welcome to Japan the land of the Rising Sun. From the Golden Pavilion to the Shinkansen Bullet Train, it’s Retail offers a traditional cultural based service in modern surroundings. Japanese Retail Review June 2013

3. Introduction Japan - Features of the Country • Has a population of 128 Million across 4 Major Islands. • About 73 per cent of Japan is forested, mountainous, and unsuitable for agricultural, industrial or residential use. • The Greater Tokyo Area is the largest Metropolitan area in the World with over 30 Million in population living in Units averaging 84 sqms. • Is a Constitutional Monarchy with an Emperor and an Elected Legislature –The Diet. • Is a Major Economic Power being the 3rd largest Economy by GDP. • Is the 4th largest Importer and Exporter in the World. • Has officially renounced its Right to Declare War. • Has the 2nd lowest Homicide but highest Suicide rate in the World. • Japanese Women have the 2nd highest life expectancy (82 Years). • The Median Annual Salary is AUS $37,000. Japanese Retail Review June 2013

4. Map of Japan Honshu is the Main Island that features the largest populations of Tokyo, Kyoto, Osaka, Nagoya, Yokohama and Hiroshima. The Main Airports are Narita and Haneda in Tokyo and Kansai in Osaka. Main Train Stations exist in all these cities. Japanese Retail Review June 2013

5. Traditional Japanese Cuisine • Japanese cuisine is based on combining staple foods, typically Japanese rice or noodles, with a soup and okazu being dishes made from fish, vegetable, tofu and the like to add flavour to the staple food. • In the early modern era ingredients such as red meats that had previously not been widely used in Japan were introduced. • Japanese cuisine is known for its emphasis on seasonality of food, quality of ingredients and presentation. • Japanese cuisine offers a vast array of regional specialties that use traditional recipes and local ingredients. • The Michelin Guide has awarded Japanese cities more Michelin stars than the rest of the World combined. • No rice is allowed to be imported into Japan. • Modern Western Food Brands / Chains are now prominent in Japan. Japanese Retail Review June 2013

6. Japanese Airports • As of February 2012, Japan had 98 Airports, with 28 operated by the Central Government and 67 by Local Governments. • Of these, there are 5 Hub / First Class Airports that serve a hub role in Domestic or International Transportation. They are subdivided into Privately Managed Airports (the three largest international airports), National Airports (run by the Central Government) and Special Regional Airports (hubs run by Prefectural or Municipal Governments) Japanese Retail Review June 2013

7. Japanese Rail Stations • Japan Railways Group (JR) Company, state owned until 1987, provide passenger service to most parts of Hokkaido, Honshu, Shikoku, and Kyushu. • Japan's railways carried 22.24 billion passengers -In comparison, Germany carries only 2.2 billion passengers per year. • Fukuoka, Kobe, Kyoto, Nagoya, Osaka, Sapporo, Sendai, Tokyo and Yokohama have Subway systems. • Japan pioneered the high-speed “Bullet Train" or “Shinkansen", which now links Japan's largest cities at speeds of up to 300 km/h. • Many stations (eki) around the country make special bento boxes featuring local specialties such as seafood, meat or vegetables. Including generous portions of rice - the ekiben is a traditional and a complete Japanese daily meal. • It is served in cardboard and now plastics have become popular, although wooden chopsticks still accompany the ekiben. Japanese Retail Review June 2013

8. Cultural Features • Japanese culture has developed a number of distinctive features that are prominent in the Retail Service Industry, namely; • Cleanliness is displayed in Personal presentation and deportment as well as the fittings, fixtures and surfaces of all Retail Tenancies. • Shops, Streets, Malls, Concourses etc are cleaned daily and are litter free with a complete absence of graffiti. • Japanese display a deep respect and a sincere caring for each other and Visitors to its Country. The bowing of the head replaces the Western handshake and all customers are warmly greeted and respectfully farewelled. • The Japanese are very religious and the main religions are Shinto, Buddhism and Christianity to a lesser degree. • The exchange of money in any transaction is very procedural – the order is taken, the POS Visual Display Unit is used to accept the customer’s approval of the charge. Japanese Retail Review June 2013

9. Cultural Features – Con’t • Credit Card or Cash is tabled onto an oblong dish and any change and the receipt is returned to the customer on the same dish. The currency is the Japanese Yen (90.5 Yen to the $AUS). • This is a very transparent procedure that would eliminate staff slippage and incorrect charging for products • Queuing is common practice in Japan be it at the Train, the Restrooms or at the Café. Front Counter designs are well marked for customers to commence queuing. • Menus and Plate Images are openly on display externally to all Restaurants and Cafes – to entice prospective customers. • Japanese is the main language, although English is taught in all Schools and both languages are found on menus and product labels • Vocal banter by Sales Representatives and Shop Assistants is commonplace focussing on special products and welcoming guests. • Office workers never leave before their Boss as a sign of respect. Japanese Retail Review June 2013

10. Major F&B Brands in Japan Major F&B Brands are split between Japanese and International. The Major International Brands, include the following, namely; • McDonalds - Burgers • Burger King - Burgers • Subway - Sandwiches • Starbucks - Coffee • Paul - Bakery • Vie De France - Bakery • Mister Donut – Donuts & Sweets The Major Japanese Brands include the following, namely; • Doutor - Coffee • Lotteria - Burgers • Soup Stock Tokyo - Soups • MOS Burger - Burgers Japanese Retail Review June 2013

11. Japanese Fast Food Brands Japanese Retail Review June 2013

12. Doutor Coffee Doutor specializes in Coffee and Coffee Roasting and operates over 900 Stores in Japan. In comparison, Starbucks has 985 Stores. The menu has been extended to offer bakery and sandwich items that cover all parts of the day Japanese Retail Review June 2013

13. Lotteria Lotteria’s most popular items are hamburgers, cheese burgers, teriyaki burgers and shrimp burgers. It offers Wi-Fi and reduced prices over the lunch time period from 11am to 2pm. Japanese Retail Review June 2013

14. Soup Stock Tokyo Soup Stock Tokyo provides both fresh and frozen (takeaway option) soups to its customers with rice supplements and special teas. There is also a popular delivery service to home and work place. Japanese Retail Review June 2013

15. MOS Burger MOS Burger menu offers hamburgers, rice burgers, naan sandwiches, desserts, hot dogs and drinks etc. Its slogan is “Japanese Fine Burgers & Coffee” and it’s the 2nd largest Fast Food Franchise in Japan behind McDonalds. Japanese Retail Review June 2013

16. Coffee Price Evaluator • By comparison, food & beverage items are typically less expensive in Japan compared to Australia (Equivalent $AUS Comparison) Japanese Retail Review June 2013

17. Japanese Tourism to Australia • Japan represents the 7th largest Nationality to visit Australia in the Y/E September 2011 with a spend rate higher than the overall average. Japanese Retail Review June 2013

18. Visual Displays of Food Dishes This is a typical display of food dishes (artificial) to be found on display externally to most Restaurants and Cafes. The Japanese like to view what’s on offer before commitment. It also assists International Visitors to make a choice. Japanese Retail Review June 2013

19. Floor Guides for Restaurants In Japan, Restaurants and Cafes are often located on many levels in a Building. Advance directional advertising is common to inform customers of what and where it is on offer. Details are usually in Japanese and English, along with the Floor Number e.g. 4F, 2F. Japanese Retail Review June 2013

20. Outdoor Settings Although smoking in most Restaurants and Cafes is allowed (restricted areas), it is common for Outdoor Settings to provide for this common Japanese practice. There are also non smoking areas set aside outside. Many Cafes feature indoor and outdoor settings to encourage patronage. Japanese Retail Review June 2013

21. Vending Machines Every product from drinks, food, tobacco and confectionery is available from Vending Machines. They are located in Airports, Train Stations, Street Corners, Shop Frontages, Parks & Gardens and Tourist Attractions. Prices are typically cheaper than Shops. Japanese Retail Review June 2013

22. Summary • The Japanese Culture of respect and assistance dominates the Retail customer interaction process. • Visual displays, multi-language signage and organized queuing systems entice customer participation. • Traditional Japanese food styles dominate the market place, but with a rising Western Brand influence. • Customer interaction doesn’t entail bartering and tipping. • Coffee consumption is increasing, but Tea still dominates the Japanese market. Japanese Retail Review June 2013

23. Summary – Con’t • Tenancies are typically small (50 – 75 sqms) and focussed only on the main products for display. • Western style open food courts are not common with the preference being for individual Tenancies with internal seating. • The population density ensures that Train commuting is dominant and Major Stations generally underpin high rise buildings anchored by hotels and department stores – e.g. Granvia / Takashimaya / Daimaru. Japanese Retail Review June 2013

24. Summary – Con’t • The Major Airports (Narita / Kansai) provide a strong array of International Specialty Retail Brands, but few International F&B Brands. • In-house Retail Departments operate the Terminal Business with few International Airport Operators. • Japanese infrastructure is generally well organized which assists easy movement within and between Cities. • Japan has set an excellent standard of Customer Service throughout its Retail Operations. Japanese Retail Review June 2013

25. Sayonara from Narita Airport Japanese Retail Review June 2013