No. 4: What drives the restructuring of retailers before railway stations (May 18, 2011)

Business centered by a railway station is growing quite rapidly in Japan. Especially, Japan Railways (JR) exerts lots of energy to activate the station business under the concept that stations are the places not only for passengers but also for shoppers. One of Japan’s leading departments opened a new outlet in Osaka station on May 4. Because the new outlet is directly linked to the platform of Osaka station, it draws 200,000 visitors daily on average. Actually, JR’s energetic efforts to activate the station business are facilitating the restructuring of leading retailers.

Historically, Japanese cities developed with a railway station in the center. In the Osaka area, two private railways are competing with JR, and the three companies naturally try to shorten the travel time between Kobe and Osaka and between Kyoto and Osaka to win the competition. Now the story has changed. What is important now is the ability to draw visitors, whether they are incoming and outgoing passengers or shoppers of department stores. With the growing presence of JR in the trend to expand station facilities and build new outlets, department stores affiliated with a private railway face the necessity of restructuring to keep their customers coming. The same situation is going on across the country.

JR’ station business is growing rapidly with its scale and efficiency. In a sense, it seems that a government enterprise is pressing hard the business of private companies, but change of thought is vital in this case. Shoppers drive out to large shopping malls with the development of motorization, but stations are ready to draw more shoppers with the growing concern about global warming. It is the time for retailers to depart from the strategy to sell almost the same product lineup at almost the same price rage to compete with JR-run retailers and devise a strategy to differentiate themselves. Only retailers successful in differentiation can survive in the days of declining birthrate and a growing population of elderly people, especially in the station-originate business.

No. 3: Growing demand for domestic premium wines (May 3, 2011)

Land left uncultivated is increasing in Japan with the progress of low birthrate and longevity, but the world is as kind as it is cruel. An increasing number of ex-salaried workers started to venture to produce premium wines. An elite businessman became independent and cultivated the abandoned farmland, and he is now growing about 7,000 vines for premium wines in this 3.2-hectare land. The most expensive wine from his winery is 5,000 yen, but it was sold out in a half year after it was launched this past spring. Another elite businessman started to produce a total of 20,000 bottles of wine and sparkling liquor in a rural area. He also runs a restaurant and an outlet of wines inside the winery, and lets visitors see the fermentation equipment and storage tanks. More than 30,000 people visit his winery and see the production process annually. Wines between 3,000-5,000 yen are popular among them.

Wines are growing popular among people as moderately priced wines become easily available. It is no longer unusual that housewives buy import wines below 500 yen at supermarkets together with foodstuffs. It can be presumed that they usually buy moderately priced domestic wines, and look for premium import wines for special occasions. However, an industry source says that sales of import wines increased 12.5% in bottle in 2010 over the previous year, but indicates that an increasing number of customers prefer import wines priced around 2,000 yen, showing a clear decrease in average customer spend. While sales of less expensive import wines are growing, Japanese domestic wine makers are shifting their focus on premium wines.

Driven by medium-sized wine makers, leading wine makers have been launching high-value added wines lately. Sapporo renovated its winery to start producing domestic premium wines around 3,000 yen coming September. Suntory launched a premium wine made only from domestic grapes was sold on its website for 18,000 yen last December, and it was immediately sold out. It is increasingly visible that preference for premium wines is growing stronger in Japan.