Walmart aims for Japan turnaround

DIAGNOSIS 1 
Barry Lustig
Managing partner 
Cormorant Group

In fairness, many of Seiyu’s recent difficulties have not been of its own making. A weak yen and an increase in the national sales tax diminished the overall purchasing power of Japanese consumers who were already bruised by wage stagnation and a gloomy economy. Also, after the 3/11 earthquake, convenience store locations multiplied by over 20 per cent throughout Japan. With a wider selection of food and other necessities, convenience stores began to eat into Seiyu's business.

At the same time, many of Seiyu’s difficulties have also been self-inflicted. The company over expanded, a mistake that its convenience store competitors will realise that they have made too. More fundamentally, ‘Everyday Low Prices’, Walmart's positioning and pricing strategy, doesn't naturally resonate with Japan's bargain crazy consumers—at least within the context of Seiyu.

As it refreshes, the chain should consider opening a handful of American-style Walmarts. In recent years, Ikea and Costco have succeeded precisely because they have made a point of not turning Japanese. This gives them greater license to break from stale retailing norms and bring a new shopping experience to their customers. It stands to reason that Japanese shoppers might just warm to ‘Everyday Low Prices’ at their local Walmart too.
 

DIAGNOSIS 2
Hal Ito
MD
BBDO Japan

Evaluating Walmart (Seiyu) in Japan is equivalent to putting the whole Japanese consumer market under the microscope. The Japanese population is declining and one-person households are increasing rapidly—in Tokyo almost 50 per cent. They certainly don’t need big supermarket shopping baskets. Subsequently, Japanese mega-chains are shutting down numerous stores and major multinational players have withdrawn or shrunk their operations in Japan.

Furthermore, low price is less appreciated in this mature market so many marketers, including retailers, are shifting from fierce price promotion—which has damaged business profitability and even brand image—to added value marketing by harnessing key trends such as ‘premium’, ‘speciality’ and ‘healthy’.

The challenges of the Japanese market should be embraced positively as an opportunity to reinvent your brand and business model generating further innovation opportunities for marketers. I think Seiyu is making a great effort in adapting the core values of Walmart with innovative localisation, which is sometimes missing among other multinational players in Japan.