How did Japanese retail defeat e-commerce?#
#Omnivore
Highlights#
One is the change in products, and the other is the change in stores. ⤴️ ^7dd8b673
What cannot be sold online or is inconvenient to sell is the way offline found to fight against online.
⤴️ ^a418d6e6
This article is from WeChat official account: Retail Qipa Talk (ID: gh_38aef1369e9c), first published on December 5, 2023, author: Wang Qi (16 years of Japanese retail, 7 years in China. The first Chinese to win the Aeon President's Award in Japan; former deputy general manager of fresh legend, executive deputy general manager of Andeli supermarket), the original title: "52 Weeks MD Founder Talks about Retail: How Japanese Retail Defeated E-commerce (Part 1)", the pictures in the article are provided by the author, the cover picture is from: Visual China
This article introduces the strategies of Japanese retail to combat e-commerce, mainly involving changes in fresh products, including the expansion of cooked food, the change in convenience, the demand for freshness, and the increase in organic products. In addition, it also discusses changes outside of fresh products, such as the convenience of all categories, the increase in frozen food, the expansion of private brands, and the increase in health products. The changes in stores include visual kitchens, tasting areas, planning and promotion, and attracting customers to regular stores. Finally, it emphasizes the importance of creating attractive stores and online businesses.
• 💡 Japanese retail combats e-commerce by meeting customer needs and expanding sales in the cooked food department.
• 💡 The increase in frozen food provides opportunities for retail by showcasing and tasting in stores to enhance the customer experience.
• 💡 Through visual kitchens, tasting areas, and planning and promotion, retail successfully attracts customers to regular stores, improving sales and customer experience.
How to break the current dilemma faced by Japanese retail? In terms of results, this is actually a strategy against e-commerce.
What changes have occurred in Japan?
==One is the change in products, and the other is the change in stores.==
In terms of changes in products, especially the changes in the four departments of fresh food (vegetables and fruits, meat and poultry, seafood, cooked food) and food. These changes are actually strategies against e-commerce.
I. Changes in fresh food
- Expansion of cooked food
The most important thing for fresh food is to meet customer needs. So what are the customer needs?
There are more and more people working outside, and products that can be eaten quickly and cooked quickly, ready-to-eat products, have grown rapidly in the past 10 years.
Therefore, the sales proportion of the cooked food department has almost exceeded 10% in all supermarkets, and even more than 15%. Among the four departments of fresh food, vegetables and fruits have always been the highest, but now, in some companies, the cooked food department has surpassed vegetables and fruits.
This is a very big change. In terms of results, this is one of the strategies against e-commerce.
- Change in convenience
It refers to simple and convenient products. For example: fresh fruit cuts, vegetable cuts, ready-to-cook vegetable combinations, etc., the increase in these products is significant.
Of course, e-commerce also has ready-to-cook vegetable combinations, but it cannot match the freshness of products made on-site in stores and better displayed to consumers. This is also a major change in fresh food.
- Demand for freshness
Among customer needs, there is also an increasing demand for freshness and low prices. First of all, to meet the demand for freshness, for example, vegetables that are picked in the early morning and sold in the afternoon; for seafood, it may be difficult in the morning, but it can be sold in the afternoon, which means that more direct delivery from nearby sources is increasing. By providing this extreme freshness, it can counter e-commerce.
- Increase in organic products
In addition, in the overall changes in products, organic vegetables and natural vegetables have always existed, and although the prices are high, now, despite the prices not being low, because of the aging population, the demand for health is increasing, so various companies have also developed many products. For example, Aeon has launched the natural GREEN I and LIFE's BIO-RAL (organic).
In terms of private brands, it has always been snacks, food, beverages, and other food categories. Fresh food also has its own brands, which is a new trend. Of course, e-commerce also sells these products, but compared to the simple purchase on e-commerce, the offline experience or interaction and introduction to customers, this experiential feeling is completely different. This can also play an important role in combating e-commerce.
II. Changes outside of fresh food
- Convenience of all categories
Just mentioned the change in convenience, the development capability of cooked food products has increased rapidly. For example, local delicacies, which were originally made by well-known local restaurants, can now be made with similar taste through the improvement of on-site processing technology in retail stores, attracting customers to the store.
- Increase in frozen food
Another significant change is the increase in frozen food. The display area in convenience stores has increased by 50% recently. At the same time, in Aeon, the largest retail company in Japan, a specialized store for frozen food called @frozen has been opened recently. The frozen food area in regular Aeon stores has over 700 SKUs, while this store has over 1500 SKUs.
Why is frozen food an opportunity? Because it can provide products suitable for young customers, working customers, and elderly customers.
Especially, the product development capability of frozen food manufacturers is getting stronger and stronger. This year, I bought a frozen product of a certain brand, the Chinese cold noodles. What surprised me was that even when heated in the microwave, the ice did not melt. Even when heated in the microwave, you can still enjoy delicious cold noodles. This is due to the improvement in product development capability and freezing capability.
Although these products may also be sold on e-commerce, being able to taste them in stores and better introduce them is the advantage of physical stores. It is not just about providing customers with products, but before providing them, how to use the products, how to cook them well, introducing and recommending them to customers in stores, this experiential feeling is completely different from simply purchasing on e-commerce. This can also be a major strategy against e-commerce.
- Expansion of private brands (PB)
Nowadays, the sales proportion of private brands has reached 10% in almost all supermarkets in Japan; for companies like Aeon and 7-Eleven that started laying out private brands more than 10 years ago, the proportion has exceeded 20%; of course, the proportion of private brands is not the higher, the better, there must be a balance between private brands and manufacturer brands.
At the same time, private brands should also be divided into low-priced PB, high-end PB, and natural organic PB. The role of private brands is not only to increase gross profit and sales but more importantly, to convey the value of the company and its philosophy to consumers, which is also an excellent way of self-promotion for the company.
- Expansion of healthy products such as reduced salt and sugar-free
These have been available before, but now, with the increase in the aging population, they have become essential categories for various companies. There has also been a significant improvement in terms of quality, price, and product variety, greatly enhancing the customer experience.
III. Changes in stores
- Visual kitchens
Nowadays in Japan, the popular stores are open-type visual kitchens. In the past, stores used to make products in the kitchen and display them in the store. The kitchen was relatively closed and located in the least important position in the store. But now it is connected to the store, and customers can see the employees working inside through glass windows.
Why do this? First of all, it allows customers to feel entertainment, liveliness, and a sense of life; at the same time, it also makes employees feel the pressure and tension of being seen by customers at any time. Employees cannot do anything wrong inside, such as putting things that fell on the floor into the products, which is impossible.
To sum up, it can increase the customer's sense of experience and standardize the work attitude of employees. These have become increasingly important. These are also something that e-commerce cannot do.
- Tasting areas
Another point is the suspension of tasting and trial activities during the epidemic.
For example, there is a company in Japan called SUMMIT, which has a long-term and fixed tasting area in the store. Every week, 10 products sold in the store are selected for tasting and trial promotion. After free tasting, it is not about asking customers to buy, but through this free tasting method, customers actively inquire about the display location of the product.
At the same time, it can also make children often say to their parents that there are delicious things every time they go to that store, and they want to go and eat. This can also increase the store visit rate. Of course, tasting and trial activities can not only increase sales and gross profit but more importantly, increase customer's sense of security and trust. When they go to that store, they can eat a lot of things that are delicious. These are also things that e-commerce cannot do.
This ingredient is recommended for stir-frying, soup, and hot pot.
It has always been a proposal for cooking methods. Of course, now it can also be realized through videos, etc., but before that, face-to-face with customers, clearly conveying the cooking methods to consumers, and at the same time, recommending related products to customers, these are things that e-commerce cannot do.
- Planning and promotion in stores
There have been many changes in planning and promotion recently, no longer just simple POPs. For example, a company called Don Quijote has done various POPs, not only introducing products but also proposing various interesting usage methods to customers. Through various POPs and other promotions, it means performances (to promote) other than products, which is something that e-commerce cannot do.
- Attracting customers to regular stores
At the same time, in the changes in stores, in the past, more promotions were at the entrance or special areas, but now it is more about attracting customers to stay. Through continuous customer surveys conducted for many years, it has been found that the length of time customers stay in the store is getting shorter and shorter, of course, this is also because the consumption time is getting shorter. The current promotion is not just about customers coming to the store and directly leaving after buying what they want, but hoping that customers can explore the entire store, attracting them to the regular areas of the store with the largest area.
In regular areas, there can be special areas, special price zones, private brand zones, display areas for cooking-related products, and recommended purchasing areas, allowing customers to explore the store and make many new discoveries. This is something that e-commerce cannot do.
IV. How to create a top-notch store
- From the era of economic growth to the era of mature economy
For the strategy of Japanese retail against e-commerce, because it has already entered the era of mature economy, it has become increasingly difficult to sell products. For stores, profit can only be made when gross profit is greater than costs. To make more gross profit than fixed costs such as high rent and labor costs, changes must be made in stores, the store, and products. The result of doing this is actually a strategy against e-commerce, not just a simple price reduction or other partial behaviors, but finding the joy and charm of customers coming to the store. This includes changes in products, changes in stores, and changes in store creation.
- Creating attractive stores
Therefore, I believe that the strategy of Chinese retail against e-commerce is to first do a good job in stores and create attractive stores. I have actually seen many stores in China. Of course, having a large number of products on display is good, but there may also be problems where customers find it difficult to take the products. The display is beautiful, but for customers, it is still inconvenient to purchase. These issues may still exist.
So please first understand customer needs, and then consider competitor stores. There are definitely many stores competing on price, and of course, in this era, we cannot ignore the price, so we must first set a strategy to compete against prices, and at the same time, develop strategies beyond prices and implement them well. Then, reconfirm the strengths and weaknesses of our own company, down to different departments, different products, and different stores, what are our strengths, and what are our weaknesses. We can develop strategies to make our strengths stronger, which is also a strategy against competitors.
- Good physical stores will also have good online businesses
Finally, to summarize, e-commerce strategies are not one-time or independent. First of all, as a physical store, allowing customers who use online businesses to also consume in the store is actually an e-commerce strategy. Or, online is important, and offline is also important. It can be considered as the relationship between the palm and the back of the hand. For example, online businesses have not been profitable all the time because of high logistics costs, but recently, due to better adjustments, they have started to make profits.
It is often said that if physical stores are doing well, online businesses will also be good. But if online businesses are doing poorly, physical stores will not have charm. Therefore, if physical stores are doing well, in terms of results, it can actually improve online businesses and also become a strategy against e-commerce. Can we think about it in this way?
This article is from WeChat official account: Retail Qipa Talk (ID: gh_38aef1369e9c), author: Wang Qi (16 years of Japanese retail, 7 years in China. The first Chinese to win the Aeon President's Award in Japan; former deputy general manager of fresh legend, executive deputy general manager of Andeli supermarket)