The Japanese economy is showing an uptick after almost two decades of recession. The retail industry has also experienced growth, benefiting from the policies of current Japanese Prime Minister Shinzo Abe’s aggressive economic approach (referred to as ‘Abenomics’). Sustainable success is unclear but Japanese customers are motivated to spend and retailers are looking for competitive differentiation.
In Japan, it is clear that the in-store experience is an important part of the customer journey. Digital provides the connection between online and offline points of shopper behavior and the omni-channel approach is key to creating the seamless experience that customers are asking for.
Accenture conducted a survey in 2014 to better understand consumer expectations and retailer capabilities in Japan. Stores are still the easiest way to make a purchase in Japan. More respondents expect to purchase more in store (14 percent vs. 10 percent last year) and fewer expect to purchase more online (39 percent vs. 49 percent last year).
In-store purchasing is even more prominent for “fresh” products such as groceries. Japanese shoppers have high expectations around quality and freshness. They tend to visit stores to check products before making purchases. Frozen products are less popular in Japan than other mature markets and customers tend to shop for groceries every other day rather than making volume purchases.
As competition intensifies, retailers will continue to look for innovative ways to engage customers with a variety of products through diverse channels. Retailers are transforming their operations and understand that digital has to play an important role to win the 24/7 customer.
Japanese shoppers want free delivery and the ability to schedule deliveries: 70 percent want to schedule delivery time and 19 percent want to schedule during “peak hours”. Delivery companies in Japan are currently offering flexible scheduling and many stores are running free-delivery promotions.
Return rates of goods in Japan are relatively low compared to other countries where e-commerce has become a way of life. Japanese customers tend to feel responsible for their purchases and typically avoid going through the trouble required to arrange a refund.
While coupons are not as popular in Japan as in other markets, loyalty programs are becoming a key driver to build a customer base. Signing up to a program and collecting points in exchange for products or discounts is becoming an increasingly attractive value for shoppers. Lawson’s Ponta card, for example, has one of the largest membership contingents with attractive point and cash discount options available for everything from concert tickets to groceries.
Japan was one of the first countries to start using mobile for a variety of purposes. While it is still largely a device to collect information before shopping in-store, some areas like ticketing, scan-and-go and pay-by-phone have been popular for some time now. With the smart phone quickly penetrating the market, mobile behavior is changing. There is potential for mobile to become a popular channel for online shopping and retailers are quickly adjusting their platforms to become mobile-friendly.