Retailing in Japan: Overview and Key Trends

The purpose of this paper is to give a comprehensive overview of the history and present situation of the retailing industry in Japan. We first consider the characteristics of the retailing sector from a macro-perspective, analyzing its structure and how it has changed, using data from the Census of Commerce survey(s). From a foreign perspective, the Japanese distribution system, with its focus on traditional small and medium-sized retail shops, lags behind in both structure and efficiency. In this article we analyze to what extent these characteristics have been subject to change. After that, arguing from a micro-perspective, we give a simple overview of the history of newly created retail formats and representative firms within a time frame of the last 50 years. Furthermore, we shed light on the source of the strength and competitive edge of major Japanese retail players, using a Porter’s Model Analysis (Porter 1985a, b) and a Resource Based View Analysis (Barney 1991, 1997). Finally, we identify recent issues in the Japanese retailing sector, such as the industry’s reaction to a decrease in the total population, the aging society, the appearance of internet society, and the industry’s reaction to globalization, meaning the entry of foreign players into the domestic retail market as well as the advancement of Japanese retail companies into overseas markets.