Daily Management Review

Walmart Reports Online Grocery Growth In Japan Where It Has Struggled For Almost 2 Decades


02/20/2020




Walmart Reports Online Grocery Growth In Japan Where It Has Struggled For Almost 2 Decades
While the brick-and-mortar stores of the largest retailer of the world Walmart in Japan, having opened up about decades ago, continue their search for profits, the company has tucked into a sweet spot in the Japanese food market as its fast-growing venture was ranked third in a fairly nascent online grocery sector in the country.
 
Rakuten Seiyu NetSuper Chief Executive Tamae Takeda said that a joint venture between U.S. supermarket chain's Seiyu and local e-commerce firm Rakuten Inc, which was formed about a year ago, amassed about 30 per cent growth in sale between October through December compared to the same number for the same period a year earlier when Seiyu had not tied up with its Japanese partner.
 
"We're doing even better since the start of the new year," Takeda told the media. She said that people are probably trying out the service because of concerns over the ongoing coronavirus epidemic. "People aren't really wanting to go out," she said.
 
This development could be a booster for Walmart which is now ready to take on Amazon in its home market of the United States where the focus of retailers now is on the fastest delivery. Analysts said that this success for Walmart in Japan could also be significant in showing the online services can do better in a market where consumers are known to be choosy about shopping from online sources because of their concern for freshness of products which potentially inhibits them to purchase produce online. 
 
There is a also a growing demand for time-saving solutions, specifically from an increasing number of working mothers in Japan which had contributed to drive overall growth, Takeda said. According to government data, more than 70 per cent of Japanese women with children who were under the age of 18 years currently work compared to the same number being 50 per cent about 20 years ago.
 
The tie up with Rakuten also granted Seiyu access to the 99 billion members of the Japanese firm which helped Walmart venture to expand its market beyond the 333 stores it operates in Japan which also helped the good performance of the joint venture in such a small time. In exchange, the ties that Seiyu has with local suppliers have come to benefit Rakuten and put it in a position to rival Amazon in the Japanese market.
 
This combination of taking advantage of each other’s strengths has helped both the companies to offset the pressure of a shrinking labour market which has resulted in increased delivery costs. This market situation has even driven Seiyu's rivals such as Uny to completely abandon e-commerce.
 
Walmart had entered Japan in 2002 and had taken up 6 per cent stocks of Seiyu and had then slowing increased its stake in the company till it became the owner of Seiyu in 2008. Despite the company cutting down costs and closing unprofitable stores, this venture has mostly recorded losses.
 
"It is true that Japanese people appreciate fresh food. But people are realising you don't have to go to the supermarket to get fresh food," said Roy Larke  researcher at JapaneseConsuming. "Long term, we will get there."
 
(Source:www.businessworld.in)






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