Interesting article about Wal-Mart and their problems in Japan. Makes an interesting follow-up to our discussion about Category Killers from last week.
Always Low Prices," alwayslowprices.net, according to a Wall Street Journal dispatch by Ginny Parker. In fact, Wal-Mart's low-prices -- a juggernaut in America and elsewhere around the globe -- apparently are a turn-off in Japan. "The Japanese consumer walks around the store where everything is low-priced and thinks of it as a cheap place to shop," comments David Marra of AT Kearney in Tokyo. "Wal-Mart is having to fight against the prevailing image, he says." It seems that Japanese are so accustomed "to paying high prices for everyday goods" that they "have a tendency to equate low prices with low quality."
Wal-Mart hopes to fix the problem by introducing -- yes -- higher-end items at higher prices. "We're really trying to broaden the assortment," explains Jeff McAllister, coo of Wal-Mart in Japan. For example, the retailer plans to introduce "more fashionable blue jeans that cost as much as 3,600 yen, or about $35, instead of selling only jeans that cost around 1,000 yen." Also under revision is Wal-Mart's use of newspaper inserts -- which were first eliminated and then brought "back when sales suffered." But the inserts apparently still aren't all that effective, and so the plan is to start using them "to highlight products centered on traditional Japanese holidays and events such as cherry-blossom viewing." That's not to say the Bentonville Bunch will give up on the Americana, though.
A half a million dollars was spent on "Halloween goods" last year, "not knowing how well they would sell in a country that doesn't traditionally celebrate the holiday." How did that go over? Well, Jeff McAllister was surprised to find that "costumes for dogs sold poorly, while Halloween lawn stakes sold well, despite the rarity of yards in Japanese cities." Why? "People were putting them in their planters," he explains. Oh. Wal-Mart actually operates as "Seiyu" in Japan, having taken a 37 percent stake in Seiyu Ltd, a 400-store supermarket chain, in March 2002. The net loss for last year is projected at 12.3 billion yen ($118.9 million), down from 53.8 billion in '03. "Competition is severe and clearly more than any other retailer, we're undergoing a lot of changes," says Jeff McAllister. "There are still lots of opportunities for us to continue to get better," he adds.
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