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The Honolulu Advertiser

Posted on: Sunday, April 25, 2004

Japanese give a welcome to Wal-Mart

By Yuri Kageyama
Associated Press

Japanese shoppers say wide aisles are just one of the appealing features of Wal-Mart's jumbo store in Numazu, Japan. The store is called Seiyu, the name of Wal-Mart's Japanese partner.

Associated Press

NUMAZU, Japan — The aisles are wide, the selection is huge — and Wal-Mart's first warehouse-sized supercenter store in Japan is a hit with shoppers.

It's not Wal-Mart itself that's drawing Japanese consumers — they're not familiar with the name that is nearly ubiquitous in the United States, and the store is called Seiyu, the name of Wal-Mart's partner in Japan. Since the store 60 miles southwest of Tokyo opened April 7, people have been lured by its sheer size.

"If a big store like that opens, it's really convenient for the residents," said Koichi Watanabe, a community leader who oversaw town meetings to discuss the supercenter. "The aisles are roomy. The whole place is made for easy shopping."

Compared with old-style Japanese stores with a mishmash of merchandise crowding the shelves, the towering aisles here are filled with rows and rows of similar products — soda, sneakers, frying pans.

The American look is new to most Japanese. Bold signs that read "shoes" or "toys" hang from above to direct shoppers to the right aisles, and a moving walkway takes shoppers with their giant carts to a rooftop parking lot. The massive single-floor store is so unusual that benches had to be placed in some spots to accommodate Japanese who complained they needed a rest.

Shoppers like Eri Hiraiwa can't get enough.

"It's great the prices are affordable," the cosmetics company employee said, studying a knit top that sells for 997 yen, the equivalent of $9.24. "This would cost 2,000 yen ($20) in other stores, and I love it that it's cheaper than 1,000 yen ($10)."

The opening here had none of the public rancor that recently marked Wal-Mart's plans to expand into Chicago and Los Angeles, where residents worry that Wal-Mart's arrival will bring traffic jams and low-wage jobs and threaten independent retailers such as pharmacies. Residents of Inglewood, Calif., voted earlier this month against the proposed opening of a supercenter.

But in this country, even if nearby residents and business owners are unhappy, it's not evident. Harmony is valued over dissent in Japan, making grassroots protests against suburban sprawl rare. Equally rare are massive shopping malls — until regulations were revised about a decade ago, partly in response to foreign pressure, large-scale stores were nonexistent.

"I've never once heard of any opposition in the community," Watanabe said.

Wal-Mart Stores Inc., based in Bentonville, Ark., took a stake two years ago in Seiyu, which runs 400 stores in Japan, to gain a foothold in the world's second-largest economy. Japan is just one of Wal-Mart's international operations, which include China, Germany, Mexico, Britain and other countries.

"Japanese consumers have been and will be very receptive," said Greg Penner, senior vice president at Wal-Mart International Holdings.

The Japanese stores still don't offer the chief appeal of Wal-Mart in the United States, everyday low prices. The company's sales volume — it had $258.68 billion in revenue in 2003 — allows it to hold prices steady. But Penner said Wal-Mart hopes to have everyday low prices in Japan before the end of 2006.

The biggest obstacle for Wal-Mart in Japan is likely to come from rivals imitating its supercenters and pricing strategy, analysts say. Structures that look like American malls have been popping up in suburbia lately as Japanese retailers prepare to battle Wal-Mart.

"Internally, we use the term EDLP," acronym for "everyday low prices," said Atsushi Fujita, spokesman for Izumiya Co., an 87-store retailer that opened its first supercenter last year. "It offers the advantage of being able to shop for everything in one place."

Yasuyuki Sasaki, analyst with Credit Suisse First Boston in Tokyo, said Wal-Mart is still struggling to differentiate itself from its rivals in Japan.

"The appeal of Wal-Mart is that after a day of shopping, you feel you got a 20 percent savings," he said. "Wal-Mart can't compromise on quality but must lower prices. And that's a pretty big challenge."

Seiko Takano, an English teacher who came to check out the store so she'd be able to talk about it with her friends, wasn't too impressed by the grocery prices.

"It does have a wide selection," she said. "But it's so big it's hard to see everything."