----- Original Message -----
Sent: Monday, October 27, 2003 9:58
AM
Subject: [Sndbox] Wal-Mart moves quietly
into Japan
Wal-Mart moves quietly into Japan
U.S. retailer makes inroads by teaming up with a local partner
known to shoppers.
By Yuri Kageyama
Associated Press
October 26, 2003
YOKOHAMA, Japan -- The new supermarket west of Tokyo has all the
trademark Wal-Mart touches -- roomy aisles, price rollbacks and big shiny
signs, but shoppers have almost no idea this outlet is run by the U.S. retail
giant.
Yuki Kitamura, a housewife who swears by the store's vegetable
selection, didn't know and didn't care that Wal-Mart Stores Inc., the world's
largest retailer, has a 37.7 percent stake in the supermarket chain Seiyu, the
operator of this store and 400 others nationwide.
"The store got a liberating feeling, and it got roomier," she
said. "It's fun."
Despite the $6.4 million remodeling of the flagship store, the
Wal-Mart name is nowhere to be seen. Moreover, there isn't a single
Supercenter in Japan, and Wal-Mart officials say they may never open one
here.
Wal-Mart is making its entrance into Japan cautiously and
stealthily. The retailer, based in Bentonville, Ark., studied Japan for
several years and concluded it was a complex market best penetrated under an
alliance with a local partner that understood Japanese shoppers. So it took a
stake in Seiyu last year.
"For Japanese customers, the name Wal-Mart doesn't mean a lot.
The Seiyu name means a lot. For the near future, we'll go with the Seiyu
brand," said Billie Cole, spokeswoman for Wal-Mart International Holdings.
Wal-Mart, which operates in 10 nations besides the United
States, has adapted its approach to different markets, making itself more
visible with Wal-Mart stores in places like China, while taking a lower
profile in Mexico and Britain, where it has chosen partners.
But nowhere else is the total invisibility of Wal-Mart quite as
clear as in Japan. Foreign brands are sometimes embraced -- among them,
Coca-Cola, Louis Vuitton, Walt Disney, the Gap -- but often face failure
verging on total rejection.
"If Wal-Mart brings in a bunch of products in bulk, such as
candy Japanese can't stand, it's doomed," said Yasuyuki Sasaki, an analyst
with Credit Suisse First Boston in Tokyo. He believes it will take two or
three more years to see the impact of Wal-Mart management on Seiyu.
Many Seiyu stores have yet to get makeovers. The flagship store
has introduced Wal-Mart's price rollbacks and discounts that run for an
extended time. But it has yet to carry out Wal-Mart's basic concept, everyday
low prices.
Everyday low prices rely on the advantage of cost cuts that come
from global suppliers and from Wal-Mart's sheer buying power, with about 4,700
worldwide stores. Achieving those savings takes time.
"We really are focused on making the internal changes that are
needed to bring our cost down and to do a better job for the customer," said
William Wertz, director of international corporate affairs at Wal-Mart.
"There's nothing magic that we can do. There's nothing quick
that we can come in and fix overnight. It's just getting in and working with
the Seiyu people and gaining a good understanding of the Japanese
customer."
What's more obvious is the response from major Japanese retailer
Aeon Co., which is hurriedly reshaping its strategy and opening stores with
the growing threat from Wal-Mart in mind.
A new Aeon store in a Tokyo suburb is a sprawling shopping mall
with a distinctly American look. Escalators crisscross to popular
foreign-brand stores, The Body Shop, Tower Records, The Sports Authority,
Talbots -- all visible from the other floors.
"The walls are coming down in Japanese retail to foreign
giants," said Aeon spokesman Kenichi Arai. "We need to be reborn as a retailer
that meets global standards."
To one-up Wal-Mart, Aeon has been forging alliances with
overseas retailers, signing up suppliers that can produce cheap electronics
goods and adding fashionable boutiques. But Arai acknowledges that Aeon,
despite its recent growth, remains dwarfed by Wal-Mart, which posted $246.53
billion in worldwide sales last year. Aeon's annual sales total about $27.5
billion.
And Wal-Mart is bringing its technological know-how to Japan,
introducing a computerized system to track inventory and purchases to boost
efficiency and trim costs at Seiyu. Within two years, all the stores will have
the electronic system; the technology already has enabled Seiyu stores to
reduce the number of full-time workers and replace them with part-time
employees.
Meanwhile, some Wal-Mart brand products have been introduced
into Seiyu stores, such as clothing sold in the United States, although they
have been adapted to smaller Japanese sizes.
Store manager Kazuo Funakoshi walks up and down the aisles,
showing off to a visitor his store's new look -- the remodeled elevator that
takes shopping carts straight to the parking lot and a neat stack of displayed
wares that can be moved simply by setting a forklift under it. So far, it
seems the stealth Wal-Mart strategy is working.
"Our business is way up," Funakoshi said.
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