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The failure of multinational food retailers in Japan: a matter of convenience?

Janet Haddock-Fraser
University of Kent, Canterbury, UK

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Nigel Poole
University of London, London, UK, and

Mitsuhiro Doishita
Agricultural Production Bureau, Ministry of Agriculture, Forestry and Fisheries of Japan, Tokyo, Japan
Abstract
Purpose The purpose of this paper is to address the question of why world major supermarket chains have been unsuccessful so far in the Japanese market. The paper considers arguments from the literature that differences in consumer attitudes and behaviour between the two markets may be the determinants of the success, or otherwise, of the large US and European supermarkets. Design/methodology/approach A review of literature about Western and Japanese retailing is followed by an account of exploratory empirical research into Japanese consumer grocery purchasing and consumption behaviour. Findings The results support an argument that the large store one-stop shopping supermarket format popular in the UK/EU is not and will not be the preferred format in Japan. Convenience, matters, but it is not the same concept as in the UK, for example. Research limitations/implications The sample survey is purposively biased towards younger female shoppers from the working population who will have a signicant impact on future consumer behaviour patterns. Results are more inferential than statistically validated hypotheses. Practical implications Supermarket chains should open a larger number of smaller stores, concentrating on frequently delivered and high quality products, above all in the fresh foods categories. Moreover, the growth of the small convenience store format in markets such as the UK and California suggests that western consumers desires for convenience are becoming more like those of Japanese consumers. Originality/value The paper shows that there has been little effort, to date, to demonstrate through primary research whether unique characteristics and buying behaviour do exist in the Japanese marketplace. Keywords Japan, Convenience foods, Consumers, European Union Paper type Research paper

Introduction Wal-Mart is battling to survive in Japan (Holstein, 2007); in Japan foreign retailers have so far had a lacklustre record (Reuters, 2007); foreign investment in Japan is not always a cakewalk for international retailers (USDA, 2006). These comments are typical of media releases relating to international food retailers and their less-than-successful attempts to penetrate the Japanese retail sector:

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the French international retailer Carrefour, having entered the market in 2000, sold its outlets and withdrew from the country after only four years, having found that its discount strategy and hypermarket model failed to attract customers emerging from a climate of recession and with increasing concern for style rather than a wide range of standard products at every day low prices (Jiji Press, 2005); Wal-Mart, having taken over a Japanese supermarket in 2002, has been in decit for four years. Only recently has it reported that Seiyus (the retailer purchased by Wal-Mart) total comparable store sales for scal 2007 were positive for the rst time in 15 years (Wal-Mart Stores, 2007, p. 10); and having taken over two small grocery supermarket chains, Tesco has not yet had a signicant impact on the food retail scene, and the limited presence enjoyed only modest overall sales growth in 2006 (Tesco, 2007). Nevertheless, Tescos expansion plans depend on a small store format rather than the typical international hypermarket model (Reuters, 2007).

This paper addresses the question, why have these major supermarket chains been unsuccessful? There are plenty of plausible reasons, such as a depressed market, management and employee conict, and a restrictive policy environment. Also, maybe Japanese attitudes to foreign products are a barrier that prevents foreign retailers from prospering? Or western retailers do not understand the tastes and shopping behaviour of Japanese consumers, and do not offer products with attributes attractive to the Japanese market? It has been argued also that the Japanese consumer has distinct attitudes toward food purchase that may act as an inhibitor for international food retailers (for example, Schmekel and Larke (2002), Sato (2004)). Differences in cultural t between a major chain and its employees and customers have been cited as a weakness (Holstein, 2007). According to the United States Department of Agriculture, it is demographic changes specically the fast-ageing population more than income growth, which affects the outlook for international retailers (USDA, 2006). But opportunities remain: Japan has the second highest GDP in the world, and its retailing market retains much potential, provided that retailers can tap into rapidly changing consumer lifestyles and align their strategies to meet new demands (Euromonitor, 2006). There has been little effort, to date, to demonstrate through primary research whether unique characteristics and buying behaviour do exist in the Japanese marketplace. There has been little consideration of structural or other factors that might be acting as barriers to growth. In addition, there is limited consensus from the literature linking consumer behaviour and the retail model in Japan: whether the buying behaviours of Japanese consumers relate to distinct attitudes to food products per se, or whether their food purchase behaviour relates to the traditional form and structure of food retailing. The objective of this paper is to explore reasons for the weakness of international retailers in Japan by investigating what are the driving forces for food shopping behaviour in Japan, and whether they relate to the uniqueness of the Japanese consumer or to the retail form. The paper is structured as follows. The next section reviews the current food retail environment in Japan, including an evaluation of research on the structure and format of the marketplace, and consumer attitudes and behaviour. An account follows of the

methodology used to survey the Japanese food consumer. Following this is a description and analysis of the results, with concluding comments to nish. The Japanese retail environment The macro environment in Japan Japan is one of the most educated, wealthy and developmentally advanced economies in the world. It is the second largest national economy in the world with a GDP in 2005 of $4,751 billion, at that time equivalent to the sum of the GDPs of the four BRICs (Brazil, Russia, India and China) countries combined and almost twice that of Germany ($2,797 billion) (JETRO, 2007). With a population of 128 million (growth rate 0.79 per cent) it is also the second largest consumer market after the USA with a food retail trading value in 2005 of $380.7 billion, forecast to reach $407 billion by 2010 (Datamonitor, 2006a). In 2005 the average income per capita (PPP) was $30,615 compared to $30,436 in the UK but with national income much more equally distributed than in the UK. The unemployment rate in August 2007 was 3.8 per cent and annual ination rate was 2 0.2 per cent (Statistics Bureau Ministry of Internal Affairs and Communications, 2007). Japanese consumers are sophisticated and demanding in respect of technological innovation and service levels in the consumer goods industries. Despite the economic scale and high levels of development, the Japanese consumer goods marketplace has been beset by recession for much of the period since 1992, with historically high levels of unemployment seen in 2003-2004 and wage decline by over 5 per cent during 1998-2003 (Reid, 2007). These pressures have resulted in Japan being undeniably a difcult market to enter, although Reid notes the success of some large brands during this time such as Coca-Cola (which generates 30 per cent of its global prots in Japan), IBM and to a lesser extent Proctor & Gamble and Unilever (Reid, 2007). The food retail market in Japan, in common with many developed economies, has been showing slow growth in the last ve to ten years. Expenditure on food and non-alcoholic beverages accounted for 14.5 per cent of total household expenditure in 2004 (Euromonitor International, 2006). In 2005, the market was estimated to have grown by 1.1 per cent, a decline in the growth rate from 1.9 per cent seen in 2004, but an improvement on declining growth before that (Datamonitor, 2006a). This is comparable with poor levels of growth in food retail sales in the UK in 2005 at 0.9 per cent (Datamonitor, 2006b). Notwithstanding the apparent economic stagnation, Japan has the highest value of retail sales per capita of all major economies (Euromonitor International, 2006). International retail comparisons The format and structure of food retailing in Japan differ greatly from the typical models in the UK and Europe, and also from the US. In the UK the retail concentration is very high and increasing: in 2006, the four largest grocery retailers accounted for nearly three-quarters of all grocery sales at supermarkets and convenience stores (Competition Commission, 2007a). The large-store or hypermarket format is common, with more than 70 per cent of grocery sales taking place in large supermarkets, 20 per cent in convenience stores and the remainder in other outlets, including specialist grocery stores. Bell (2000) noted the concentration of retail companies in other

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European countries, such as the Nordic countries and the Netherlands, as well as a similar popularity of the large retail store format in France, even though there are country specic differences in distribution systems (Cadilhon et al., 2003). The minimum store size for the primary weekly one-stop shopping, which is the dominant consumer practice, is estimated at 1,400m2 in the UK. A current trend is the increase in convenience stores in the UK, catering for more frequent purchasing patterns for fresh and chilled products, but this is attributable to format diversication by the dominant retail chains rather than growth in independent stores (Competition Commission, 2007a); the same is true across Europe (Bordier, 2004). Evidence on the changing frequency of shopping in the UK is equivocal (Competition Commission, 2007b). A shift in supermarket formats is also evident among international retailers such as Wal-Mart and Tesco in their home and overseas markets where strategies concerning optimal store size and format diversication are leading to increasing competition (Competition Commission, 2007b; Financial Times, 2007), as well as strategies focusing on social responsibility and relationship marketing (Martinez, 2007). Thus, most advanced economies have concentrated food retail sectors with dominant chains and a large store format, but with increasing hints of format diversication by the dominant chains. Similar patterns of increasing retail concentration have been noted in many developing and transition countries (Reardon et al., 2003; Dries et al., 2004; Hu et al., 2004; Neven and Reardon, 2004; et al., 2005). Notwithstanding research that has qualied this trend in at least Berdegue some food categories in some markets such as Vietnam (Cadilhon et al., 2006), the development of the Japanese food retail sector appears to be out of step with the much of the rest of the world. Japanese retail formats In Japan the food retail market is not concentrated, rms are mainly domestic and are of smaller size than Western supermarkets (see Figure 1). Table I shows that the store format also is smaller than prevailing retail environments in Europe and the US and also there is less dominance by a small number of large retailers.

Figure 1. Retail food sales by store type (%) 2005

Store type Department stores General merchandise stores Supermarkets (. 250m2) and traditional groceries Convenience stores Others Source: METI (2003)

Share sales 2002 (%) Company dominance 4.9 9.7 62.8 11.6 11.0 Top Top Top Top Top Top 3 account for 60 per cent 6 account for 81 per cent 10 account for 18 per cent 61 account for 50 per cent 2 account for 50 per cent 6 account for 80 per cent

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Table I. Market share by store type for Japanese food retail

Supermarkets In addition, the nature of a supermarket in Japan differs from the Western model. In Japan a supermarket is a food store with an area of over 250m2. This is concept is closer to the UK convenience store format, dened as stores below 280sq.m (3,000sq. ft); and stores between 280 and 1,400m2 (15,000sq. ft), which provide for secondary or top-up shopping (Competition Commission, 2007c). In Japan a large retailer has an area of 1,000m2; a UK supermarket has a lower limit of 1,400m2 and a western hypermarket could have 10,000-15,000m2. There is growth in the number of larger store formats in Japan, but the greatest growth rate is in small stores with an area of 500-1,000m2 (METI, 2005). Changes in food retailing are reected in the wider retail sector as differentiation and diversity in format and location reduce but from a highly fragmented baseline: New types of outlet, such as drugstores, clothing supermarkets and convenience stores, are experiencing signicant growth. On the other hand, the specialist and semi-specialist stores that make up around 90 per cent of retailing as a whole are declining, and department stores and other supermarkets are declining considerably. The types of business and commercial districts that are growing are thus changing (METI, 2005, pp. 136-7). Therefore, store area is a key factor, potentially determining a number of differences in service levels, product range, location, travel needs and frequency of purchasing. Smaller supermarket formats are more likely to: (1) Be sited within an urban area, whereas the large store format would need an out-of-town site. (2) Be restricted to food items, whereas the large store format is more likely to diversify into non-food sales. (3) Meet the needs of the regular shopper (daily or three to four times a week), whereas the large store format encourages less frequent visits. The prevalent small and diverse retail format in Japan is illustrated by the following examples of grocery supermarkets, which tend to be regionally based and offer differentiated market propositions: (1) Shop 99 has about 500 outlets mostly concentrated in the Tokyo area. It sells tinned goods, packaged and fresh foods besides other consumer goods, with a

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single price (99 yen), and operates 24-hour sales. It targets mainly singles, small families and busy city dwellers. (2) Harashin is a diversied group whose supermarket division has a chain of 42 outlets offering perishables and general food items, located mainly in and around the coastal city of Niigata. The store differentiates itself by providing a variety of services, such as a recipe service (linked with procurement and promotion) and free in-store hot beverages. (3) Yamazawa has 55 outlets in Tohoku in North East Japan. This store has a long tradition of private branding goods, having backward integrated into tofu, milk and prepared meal production. Convenience stores The second most important category of food retailer in Japan is the convenience store, accounting for 11.6 per cent of retail sales. Convenience stores are dened as food stores whose area is between 50m2 and 250m2. The sector is more concentrated than the supermarkets. Seven-Eleven is the market leader accounting for 31.5 per cent of total sector sales, but from an outlet total of 11,837 stores with an average income per store of $242,500 (Datamonitor, 2005). Kunitomo (1997) speculated that the reasons for Seven-Elevens market dominance in the convenience sector in Japan was a result of a number of factors. These include: the proximity of stores to peoples homes or workplaces; the high levels of cleanliness, friendly service, freshness control and fast-selling product lines; and the efciency of the distribution system, whereby stores set up in clusters, gaining economies of scale in distribution while meeting the convenience/local format for the consumer. According to Euromonitor (2006), it is the responsiveness of the convenience store sector to evolving consumer preferences that is the explanation for their recent strong performance. General merchandising stores In addition to the smaller stores (supermarkets and convenience stores), nearly 10 per cent of all foods are sold through general merchandising stores (GMSs). These are usually national chains, which are the equivalent to the UK/US department store model. The main GMS stores in Japan include Aeon; Ito-Yokado (parent company of Seven-Eleven), Daiei and Seiyu. While the stores expanded rapidly during the 1980s, this was possibly the result of protectionism through the Large Scale Retail Store Law (LSRSL) of 1974, which has been signicantly and progressively changed from the early 1990s leading to heightened competition in the retail sector (Tsuchiya and Riethmuller, 1997; Odagiri and Riethmuller, 2000). Since the mid to late 1990s the GMSs have suffered from stagnant growth and nancial crises. Dawson and Larke (2004) found that the GMSs strategy in the 1990s was just to expand oor space as they had in the 1980s, hoping the economic situation would soon improve. This simplistic strategy through the long recession caused huge debt and pushed the GMSs into serious nancial crises. For example, in 2005 Seiyu made losses of Yen 17,774 billion before it became a subsidiary of Wal-Mart on 21 December 2005 (Seiyu, 2006), after a loss of Yen 12,318 billion in 2004 and losses in previous years also. Ito-Yokado has seen constant decline in its operating prot since 1993 with at sales since the mid 1990s (Datamonitor, 2005).

Attitudes and needs of the Japanese consumer While it is clear from the previous discussion is that there are palpable differences between the retail structures in Japan and other OECD countries, a number of authors suggest that differences in consumer attitudes and behaviour between the two markets may be the determinants of the success, or otherwise, of the large US and European supermarkets in the Japanese food retailing market. Two broad theses have been advanced in the literature to explain the differences. Food product quality preferences Jonke and Takahashi (2002) highlighted the importance of food quality to the Japanese consumer, particularly in terms of domestic origin, freshness and health perception. Schmekel and Larke (2002) elaborated on these ndings by noting that food quality often takes precedence over price. The Japanese Ministry of Agriculture has also noted some signicant differences between the European and Japanese consumer in terms of attitudes to food purchase, showing the importance of food quality to the Japanese consumer compared to European and US counterparts (see Table II). There is an attraction to the Japanese consumer of promotions, although every-day (i.e. consistent) low prices are seen as less appealing (Schmekel and Larke, 2002). Sato (2004) outlined the features of Japanese shopping behaviour, noting the importance of product freshness in addition to taste; he also highlighted the signicance of promotions and small package size (see Figure 2). Satos model places strong preferences for particular product attributes as the driver of consumers choice of store and therefore of forms of retail provision. Convenience: retail distribution store, and domestic storage preferences The second principal factor from the literature that, it is argued, denes consumption patterns, is convenience shopping. Flath and Nariu (1996) hypothesised that the structure of the Japanese food retail sector was dominated by small local stores as a result of the geography of consumption, particularly dense urbanisation: there is a dependence on a complex but efcient public transport system related to low car ownership; and a relative scarcity of living space making household storage limited and costly. They suggest that the driving force for small purchases and frequent shopping is the limited ability of the consumer to buy, transport and store in bulk, rather than factors relating to consumer attitudes to product freshness, origin and quality. Sato (2004) elaborated on this by suggesting that the Japanese consumer shops frequently (even daily), as the cost to do so is low, facilitated by the high retail density. However, he suggested that as car use increases and there is greater movement to the
Price considered very important (%) Germany The UK Italy France The USA Japan 53 59 50 57 51 49 Quality considered very important (%) 33 23 35 37 18 64

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Source: The Japanese White Paper on Agriculture for 1996, quoted in Sato (2004), pp. 87-8)

Table II. Importance of price and quality: international comparisons

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Figure 2. Characteristics of Japanese shopping behaviour

suburbs, shopping frequency would reduce. This presents the opportunity for the growth of large-scale grocery retail, suggested by Schmekel and Larke (2002) as being the latest stage in retail internationalisation in Japan. Methodology In order to assess the dynamics of the Japanese food purchasing, a consumer survey was conducted among household principal food shoppers across various regions of Japan. The questionnaire was prepared and piloted by the UK-based research team and the survey was administered electronically by NTT Resonant Inc. Respondents were selected randomly from NTTs 200,000 registered consumers, while aiming to collect at least 50 responses from each of ve less populated regions in Japan (Hokkaido, Tohoku, Chugoku, Shikoku, Kyushu), and at least 100 responses from three densely populated regions (Kanto, Chubu, Kinki). Questionnaire structure and content Questions followed a logical sequence moving through a series of topics concerning purchasing practices and preferences: . frequency and time of week of shopping for various foodstuffs; . types of outlets used; . the importance of store characteristics in the decision about where to shop; . the importance of product characteristics in purchase decisions; and

the importance of seasonal, regional and national cultural preferences, freshness, shelf life, and provenance.

A matter of convenience?

Descriptive statistics and x2 analyses were applied to the largely categorical data to assess the extent to which the assertions made about the behaviour and attitudes of Japanese food shoppers could be veried. The assertions tested concerned the concepts of quality preferences and purchasing convenience: (1) Freshness, quality and other cultural preferences are of principal importance to the product choice decisions of Japanese consumers. (2) Bargains are more important than low prices per se. (3) Urban density determines purchasing practices by: . constraining transport options to public mass transit systems, and therefore limiting the size of purchases; and . reducing domestic storage capacity, and therefore frequent shopping is preferred over one-stop weekly shopping. Sample socioeconomics A total of 616 interviews were conducted during April 2006. The distribution of respondents by region, with data on population density and car ownership, is outlined in Table III. The heterogeneity of regions suggested categorisation by population density rather than region itself. Of the respondents, 72 per cent were female, and 28 per cent were male, and 34 percent were single with the balance being married. The age distribution of the sample is shown in Table IV, with a comparison at the national level. There was a purposive bias towards the younger female shoppers from the working population who will have a signicant impact on future consumer behaviour patterns: Just over 25 per cent represented households with both spouses in employment, as summarised in Table V. Regarding the annual income category distribution of respondents, approximately 40 per cent of respondents fell in the range 3-6 million ($30,000-60,000) annually. This compares with national average individual (household) income in 2004 of yen 3.9 million $39,000) (Japanese Bureau of Statistics, 2005). Regarding household size, the

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Region Hokkaido Tohoku Kanto Chubu Kinki Chugoku Shikoku Kyushu Total

Frequency 60 58 110 110 113 53 60 52 616

Percent 9.7 9.4 17.9 17.9 18.3 8.6 9.7 8.4 100.0

Population density of region (car ownership/household by prefecture) , 250/km2 251-1,000/km2 . 1,000/km2 60 29 27 2 15 25 27 185 (0.88) (0.90-0.95) (0.94-0.97) (0.94) (0.90-0.93) (0.93-0.95) (0.93-0.95) 209 29 9 33 58 38 35 7 222 (0.91) (0.97) (0.95-0.96) (0.90-0.94) (0.88-0.94) (0.90-0.93) (0.87-0.95)

101 50 53 18

(0.64-0.88) (0.94) (0.73) (0.87) Table III. Sample data, population density and car ownership

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mean was 2.04 (sd 1.503) compared with the national average of 2.55 in 2005 (Statistics Bureau Ministry of Internal Affairs and Communications, 2007). Of the respondents 17 per cent lived alone, 23 per cent in two person households, 20.5 per cent in three person households. Of the respondents 53 per cent were homeowners, with the rest in rented or other accommodation. The majority (89.8 per cent) had a valid vehicle driving licence although only 42 per cent of households actually owned one (or more) vehicles. This gure is slightly lower than the national data, of 435 passenger cars per 1,000 of the population in 2003 (Euromonitor International, 2004), an increase of almost 6 per cent since 2000. Results and discussion The results of the survey are presented in two formats. Initially we present descriptive statistics of the main ndings. This is followed by the results of cross-tabulation analyses and x2 tests to assess whether there are signicant associations in the sample. The results are also compared against existing research ndings in the UK market to explore differences between the Japanese food customer and their British counterparts. Data descriptions Shopping frequency Figure 3 shows the frequency of food shopping by the sample. For fresh and perishable produce the shopping takes place frequently, with 52.8 per cent of respondents shopping for fresh food (e.g. fruit, vegetables, sh, meat and milk) several times a week at least, and 42.8 per cent of respondents doing likewise for perishable processed foods

Age , 19 20-29 30-39 40-49 50-59 . 60

Census (%) 2004 19 13 14.5 12.5 15 26

Sample total (%) 1 24 44 22 7 2

Table IV. Respondent age categories compared with census data

Source: Sample data and Census data from Statistics Bureau Ministry of Internal Affairs and Communications (2007)

Employment categories Clerical/technical/manual Full-time homemaker Senior management/professional Self-employed Part-time homemaker with other employment Student/other not in employment Other

Number 185 182 73 66 46 58 6

(%) 30.0 29.6 11.9 10.7 7.5 9.4 , 1.0

Table V. Employment categories of sample

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Figure 3. Food shopping frequency by food type

(e.g. butter, cheese, tofu, natto, bread, ham or chilled food). In addition, 56.2 per cent of respondents shop for food on both weekdays and weekends. While the frequency of shopping events is lower for other processed foods (e.g. bottled, canned, dried food) and prepared hot meals, frequency of purchase is still higher than consumers in the UK, where (as noted earlier) 84 per cent of the population shop for food goods once a week or less. Store choice Figure 4 presents the survey results relating to where consumers shop for different food products. It is evident that the dominant retail format is the grocery supermarket (over 250m2 in area), particularly for fresh and perishable processed foods. Larger supermarkets and the department store format closer in scale to the Western supermarket model tend to be used less than 20 per cent of the time, regardless of food products purchased. In addition, it is notable that: . non-perishable items are more frequently purchased in a range of retail formats, including speciality stores and discount stores;

Figure 4. Type of outlet most frequently used for each food category

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speciality stores attract a relatively large amount of snack and confectionery business, as well as some purchasers of alcoholic drinks and rice; convenience stores tend to attract purchasers of hot ready to eat meals; discount stores are the dominant format for the purchase of alcoholic drinks only; and rice the dominant staple of particular cultural signicance is obtained from the widest range of sources: 26 per cent of respondents cited other sources including direct from rural sources of production.

Comparing this with the trend in the UK market highlights some important differences. In the UK one-stop shopping is prevalent, with 80 per cent of customers grocery shopping in a single store (one-stop shopping), and that 85.3 per cent of all grocery spend takes place in a UK supermarket (dened as over 600m2 in area) that is to say, the large store format (Competition Commission, 2000). Clearly, the Japanese consumer not only shops more frequently, especially for fresh food, but also uses a wider range of store formats, with the store format chosen dependent on the type of food purchased. Factors affecting store choice Figure 5 highlights the factors that are important to the Japanese food shopper when deciding the store to visit. The most important factors mentioned were:

Figure 5. Importance of various factors in store choice

. . . .

low prices (45 per cent considered this extremely important); proximity to home (34 per cent); easy access by car 34 per cent); and wide assortment of products (34 per cent).

A matter of convenience?

In contrast, for the UK consumer (Competition Commission, 2000) the following were the most important attributes when choosing a food retailer: . 43 per cent considered the ability to one-stop shop was their main factor; . 18 per cent selected easy and convenient reach of home as most important; . 16 per cent selected low prices; and . 6 per cent selected range of goods. In addition, research by IGD showed that the three main reasons for the UK shopper to select a store were: (1) Familiarity with the store layout (47 per cent). (2) Happy with prices (21 per cent). (3) Ease of access (10 per cent) (IGD, 2004, p. 68). This illustrates that there is a contrast between the Japanese market and the UK one when considering driving forces for grocery shopping. While prices are somewhat important to both, they seem more important to the Japanese when selecting a store. Conversely, the desire to one-stop shop, while of primary importance to the British shopper, is considered extremely important by only 20 per cent of the Japanese sample. Both markets seem to look to ease of access and proximity to home as important factors, but with proximity being of greater interest to the Japanese. It is curious also that more than 90 per cent of Japanese consumers rate wide product range as important or extremely important, yet also purchase different foods from a wide range of store types, as noted previously. This may reect the importance of range of choice within a particular category rather than a wide range of food categories necessary for one-stop shopping. Factors affecting product choice The analysis next considered which were the most important product attributes for the Japanese consumer when purchasing fresh foods. The results are shown in Figure 6. The three most important attributes are intrinsic eating quality attributes: freshness, food safety and hygiene and taste. The relatively low importance of price seems to contrast with its priority when selecting a store, and may reect the value for the Japanese consumer of quality and freshness within fresh food categories. It is noteworthy that production attributes such as origin, environmental and welfare issues are of lesser importance, as too are extrinsic attributes such as brand and packaging. While no direct comparison was available for the UK consumer, the following observations can be made: (1) Quality is seen as a key factor inuencing purchase decisions, and the term relates to a number of product attributes, including taste, appearance, smell, texture and ingredients. However, these attributes needed to be balanced with reasonable price.

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(2) The concept of freshness appeared to differ compared to the Japanese market. Whereas in Japan, freshness is an attribute that indicates how long since the product was harvested/slaughtered, in the UK freshness seemed to be indicated by length of time until the sell-by date i.e. the remaining shelf-life of the product. The primacy of eating quality over price supports the differences noted in Table II. Inferential data analysis A series of x2 analyses were conducted to assess whether there were signicant differences within the sample, specically whether demographics factors (such as gender, age, household size) signicantly affected food purchase factors, relating to: . frequency of purchase; . importance of in-store characteristics; . nutritional attributes of importance; . product positioning factors; . social product attributes (e.g. environment, animal welfare); and . shopping logistics. The results are presented in Table VI. Gender Certain characteristics of the sample are consistent with gender roles, behaviour and employment patterns in most countries. Gender differences are signicant in respect of frequency of shopping and the importance of in-store characteristics, and some product nutritional attributes. There were also gender differences in the importance of product origin, although this attribute was of little overall importance (see Figure 6): . females shopped more often for fresh foods than men; . men shopped more frequently for ready meals; . women cared more about the shopping environment, retail services available, bargain offers, one-stop shopping and loyalty programmes; . long opening hours were signicantly more important to men; . freshness, taste, food safety and hygiene plus nutrition and function are signicantly more important product choice factors for women; and . there were no gender differences in social or logistical considerations. Age There were limited effects overall of age, with the exception of shopping frequency, which showed that younger respondents (under 34 years) were less likely to shop frequently for fresh and perishable processed foodstuffs than older people. Marital status Marital status also affected frequency of purchase, with single people shopping less frequently for food and perishable processed food, and more frequently for prepared ready hot meals, compared to their married counterparts. In addition, long opening

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Gender Age Marital status Income Household size Type of house Car ownership Population density
* ***

NS NS
*

*** **

NS
*** ***

*** *** ***

NS NS NS NS NS NS NS
*

NS

* *** *

NS NS NS

NS NS NS

** *** *** ** ** ** ** ***

NS NS NS NS
*** * *** ***

NS NS NS NS NS NS NS NS NS NS NS

NS NS NS NS NS NS NS

NS NS NS NS NS N*

NS

NS NS NS NS NS NS NS NS

NS NS NS NS NS NS NS NS

*** ** *** ***

NS

NS

NS NS NS NS NS NS NS
** *

NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS
*** *** ***

NS NS NS NS NS NS

NS NS NS NS NS NS

NS NS NS NS NS NS

NS NS NS NS NS NS

NS NS NS NS NS NS

NS NS
* *

NS NS NS NS NS NS NS NS

NS NS NS NS

NS NS NS NS NS NS

NS NS NS NS NS NS NS NS NS
*** ***

NS NS NS NS NS NS NS NS NS
*** ***

NS NS NS NS NS NS NS NS NS
** ***

Frequency Frequency of purchase/ready meals Frequency of purchase/fresh foods Frequency of purchase/processed perishables In-store characteristics Product range Shopping environment Retail service Amusements One-stop shopping Bargain offers Loyalty Long opening hours Nutritional attributes Product quality Freshness Taste Appearance Food safety and hygiene Nutrition and function Product positioning Price Packaging Country of origin Region of origin Brand Seasonality Social Traditional or organic Environmental benets Animal welfare Logistics Proximity to public transport Easy access by car Proximity to workplace Proximity to home NS NS NS NS NS NS NS NS
*** *** *** ***

NS NS NS NS

NS NS

NS
**

NS NS

NS NS

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Table VI. Cross-tabulations of demographic factors and food-purchasing behaviour

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Figure 6. Importance of various attributes when purchasing fresh food

hours, and proximity to home, to the workplace and to public transport were signicantly more important to singles, although the ease of access by car was more important to married respondents. Income Lower income respondents were signicantly more price-sensitive an uncontroversial result within the context of an overriding preference for quality ahead of price. There was no other income effect on other food purchase factors. Household type Household size and household type affected purchase frequency and logistical factors. Generally, larger households and those living in detached houses shopped more frequently for fresh and perishable foods than smaller households. Where larger houses are expected to have more storage space, this result appears counterintuitive. However, it illustrates the primacy of freshness and quality over domestic storage facilities as a determinant of purchasing frequency.

Logistics Proximity to public transport was more important to smaller households, as well as those living in apartments, whereas larger households and/or detached households looked to ease of access by car. This is also uncontroversial, as car ownership was positively associated with detached housing (p , 0:05), and with household size, although in the latter case the difference was not signicant. In terms of population density, proximity to public transport was signicantly more important for people in more densely populated prefectures, and ease of access by car was more important for people who lived in less densely populated prefectures. Dening consumer preferences and purchasing patterns The descriptive and inferential statistics, although only exploratory, have provided much detail on the characteristics of shopping behaviour for the Japanese consumer, both in terms of product and store choice, as well as other shopping behaviours. The data provided previously are now used to discuss the hypotheses outlined earlier. Food product quality preferences The working hypothesis was that freshness, quality and other cultural preferences are of principal importance to the product choice decisions of Japanese consumers. The results show that intrinsic food quality attributes are highly important: freshness, safety, hygiene and avour; price is of lesser importance in product choice but is the most important factor in store choice; extrinsic factors such as geographical provenance, branding and packaging, social and welfare attributes connected to food production systems are of least importance to the Japanese consumer. Rice purchasing seems to be unique, but quality driven, probably because of its cultural signicance. Packaged goods and alcoholic drinks, quality of which is likely to be more homogeneous and controlled than in fresh foodstuffs, are sourced by consumers in what could be termed a less discriminating manner. It can be inferred that concepts of freshness and the consequent product and purchasing preferences can be related to the different approaches to freshness in European bread markets: the Japanese concept of freshness seems to be closely related to that of French consumers whose practice is to buy fresh baguettes, baked daily in the early morning. This concept of freshness differs from that valued by many British consumers who tend to make infrequent purchases of a type of loaf that will stay fresh either packaged or, for example, stored in a freezer, i.e. have a long shelf life. Convenience: retail distribution and domestic storage/store and storage preferences Again, the working hypothesis was related to the geography of consumption both in respect of store and housing type and location: does urban density determine purchasing practices by constraining transport options to public mass transit systems, limiting the size of purchases and reducing domestic storage capacity? A marked difference in store preference exists between Japanese and most western consumers: large supermarkets are the most frequently-used outlet type for purchasing any single category of foodstuffs by no more than 20 per cent of consumers. Compared with large western-style supermarkets, small stores are much preferred. Also, the willingness of consumers to make frequent purchases from a wide range of store types

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and in the case of rice, from beyond normal marketing channels is a distinct feature of buying behaviour. Factors such as house and household type and size did affect the frequency of shopping, but frequency of shopping was unrelated to factors dening the geography of consumption, such as car ownership and population density. There was no difference between the two groups of car owners and non-car owners in the frequency of shopping trips for different food categories. This suggests that one means of transport simply substitutes for another, and car ownership does not affect the pattern of purchasing, nor stimulate a move towards one-stop shopping. Thus it seems that the purchasing preferences are not related to the geography of consumption and that convenience is distinct from the western preference for convenient one-stop shopping, more akin to small and frequent top-up shopping at stores with long opening hours that can be easily accessed by whatever transport is available, be it car or public transport. Summary and conclusion A summary of the attributes tested, evidence found and results of the research are provided in Table VII. The results of the research show there are some clear difference (as expected) between the Japanese food consumer and their UK/EU counterparts. Convenience matters, but means something different to Japanese consumers. Compared with the prevailing one-stop shopping habit of many western consumers, shopping preferences include: . more frequent food shopping; . more varied outlets used; . the importance of proximity and transport factors; and . the importance of freshness, quality and safety as critical attributes in fresh food purchase. What has become clear from this investigation is that high frequency of purchase does not relate either to small/high density housing (i.e. the lack of storage space as identied by Flath and Nariu (1996) or lack of car ownership). It does suggest that freshness matters: perishable food shopping is dictated by freshness, safety and taste, with the need for freshness dictating the high frequency shopping and from this the desire for ease of access (whether by car or public transport). This therefore leads to smaller stores (compared to the western retail model) providing a small geographic, but relatively high-density, retail hinterland. This suggests that the literature to date on the importance of quality attributes is the most likely factor affecting Japanese food shopping habits, although the convenience factors are important, albeit for frequent purchase of fresh food rather than for logistical reasons. Convenience also matters but in Japan it signies a preference for top-up over one-stop weekly shopping. The results support an argument that the large store one-stop shopping supermarket format popular in the UK/EU is not and will not be the preferred form in Japan, regardless of suburban development and higher car ownership. Supermarket chains would be better placed in opening a larger number of smaller stores, and concentrating on frequently delivered and high quality products, above all in the fresh

Association Freshness was found to be the most important attribute in buying fresh food (Figure 6) Clearly freshness is the principal factor in fresh food shopping, which the Japanese consumer sees as important and distinct from other food shopping, unlike their UK counterparts

Evidence

Result

Freshness is of principal importance and freshness implies more frequent shopping

Clear evidence that the Japanese use differing retail formats for different foods and this differs from the UK one-stop shopping format Clearly price matters in store choice for all products, but is a lesser factor for fresh food products

It is not clear whether this is a distinctive Japanese characteristic or if the European model would show the same There is a positive association between frequency Respondents living in detached housing (assume Population density does not dictate shopping frequency per se, but household size and of purchase and population density lower density) show more frequent purchase household type do patterns than apartment dwellers. Larger households also show more frequent purchasing patterns This nding contradicts Sato (2004) as it suggests There is a negative association between The inferential statistics show that there is no frequency of purchase and car ownership correlation between frequency and car ownership. that increased car ownership does not reduce the frequency of shopping and is unlikely to affect However, access by car is more important to store choice detached house dwellers who also shop more frequently The Japanese consumers desire for fresh produce No evidence of importance of this to the Japanese Evidence suggests that local/regional produce is consumer not an explicit driver of the freshness attribute is driven by preference for local or regional per se produce

Over 50 per cent of the population shop for fresh food more than three times a week (see Figure 3), in contrast with one-stop shopping in the UK The Japanese consumer does not embrace one Grocery supermarkets are the most popular stop shopping but uses diverse retail formats choice for perishable products but other retail formats are used for non-perishables such as rice, alcoholic drinks and snacks (see Figure 4) The Japanese consumers buying behaviour is not Evidence provided in Figures 5 and 6 suggests price-elastic in product choice that, as far as store choice is concerned, price is the dominant factor, closely followed by proximity to home, and easy access, but is a less important factor in product choice (for fresh food) with attributes of freshness, hygiene and taste being more important The only demographic factor of importance for price was low income, as would be expected

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Table VII. Summary of data ndings against research questions

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foods categories. This appears to be the strategy of Tesco in Japan, rather than the hypermarket format by Carrefour and Wal-Mart. Also, the growing phenomenon of the small convenience store format in markets such as the UK (Competition Commission, 2007b) and California (Financial Times, 2007) suggests that western consumers desires for convenience are becoming more like those of Japanese consumers[1].
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