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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARIL... - page 12 / 38

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joint merchandising companies, they offer excellent opportunities to U.S. food exporters. These retailers carry imported products particularly as a mean to differentiate themselves from other competing stores in their region.

Department Stores Department store sales have been declining in recent years due to the economic downturn as well as to increasing competition with GMS‘s and other retailers. Food sales made by department stores currently account for less than 5% of the total retail food sales. Nevertheless, department stores offer excellent opportunities for imported high-end food products and they are an under-exploited channel for U.S. exporters. Most department stores have extensive basement concessions (i.e., small, independently operated retail stands), otherwise known as

  • depachikas‘. There are also outlets operated by department stores themselves, offering an opportunity for U.S.

exporters to launch pilot stores or to conduct marketing trials. Department stores provide a showcase of imported, novelty, and high-end products and thus provide U.S. exporters of high-quality and fancy foods with an excellent opportunity to showcase their products.

Convenience Stores Convenience stores (CVS) are becoming an extremely important sales channel in Japan. Convenience stores have small floor space, about 100 m² on average, and typically stock about 3,000 products. They are well known for their high turnover and advanced inventory management. Convenience stores derive their competitive advantage from high turnover and efficient supply chains. Thus, short lead-time and nationwide distribution are essential in dealing with major CVS operators. While this presents a significant challenge to many overseas companies, indirect business with CVS, nevertheless, offers huge potential to them. Global sourcing of ingredients and raw materials, especially for the use of fast food, has become more popular. CVS operators not only work with consumer product manufacturers but also with trading firms and ingredients manufacturers. In order to differentiate themselves from their competitors, major CVS operators are constantly searching for novelty items and new concepts, which offer good opportunities to U.S. food exporters.

Local General and Specialty Stores Predominantly, Japan‘s food retail trade still consists of local specialty stores and grocery stores, most of which are small, family-run operations. These retailers, however, offer limited market potential to exporters. They are served by secondary or tertiary wholesalers, which, in turn, are supplied by Japan‘s major wholesalers. This sector has been shrinking as the food market has become more competitive. Deregulation of liquor licensing, for example, led to the closure of many small family-owned liquor shops. There are only a small group of retailers who specialize in imported products in Tokyo but other metropolitan areas may be able to offer opportunities to U.S. exporters.

Home Meal Replacement / HMR As in North America and the EU, the growth of the HMR sector is one of the most important developments in the

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