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.