Retail in Japan is steeped in ritual. The Japanese notion of omotenashi, or hospitality, is imbued in every step of the sales process, where customers are treasured guests. From the smallest rural shops to the major department stores of downtown Tokyo, the same call of “irasshaimase” (welcome) echoes out across the floor the moment a customer enters, and is followed by gracious service and a sense of gratitude for the customer’s presence. Compared to the lacklustre service in many other countries, this has become a defining characteristic of Japan. The slogan of iconic department store Isetan proudly proclaims, “This is Japan”.
But is this Japan?
With the advent of online retailers such as Amazon and Rakuten, the shopping habits of Japanese consumers are changing. Online reviews, quick comparisons, and cutthroat price competition have led to a new demographic of shoppers who want a decent product at the lowest price, and none of the unnecessary ritual that comes with making a trip to the store. The success of Tokyo-based online retail giant Rakuten, whose revenues reached US$5.9 billion in 2015, is evidence of consumers’ increasing acceptance of online retail.
Why aren't more Japanese consumers taking advantage of the world's best service?
In the context of a long-stagnant economy, more young Japanese are excluded from the relative security of a corporate job. They find themselves underemployed, without benefits or stability, and for them, the extravagances of their parents’ generation are unimaginable.
Making do with less has become the new social norm. Amazon’s new one-hour delivery service allows them to order on their commute home and schedule delivery for their arrival, freeing up precious time between part-time jobs and errands. Three-year-old startup Mercari, valued at over US$1 billion, is pushing the hyper-efficient, affordable online economy even further with an app-first, consumer-to-consumer business model.
Even the older generation is turning to online shopping. In a country where 30 percent of the population is over age 60, delivery is fast becoming a necessity.
|This article is part of the Cultural Radar series|
So how can more traditional Japanese retailers compete online in this new world where the definition of good service is quickly coming to mean cheap, fast, and convenient? The key lies in user experience.
Compare Rakuten’s website with that of boutique personal care product retailer, Aesop. Rakuten confronts users with a heap of banner ads and unsolicited recommendations, forcing them to dig deep to find the products they need. There is no relationship with users except to bombard them with a mess of product information. Aesop, on the other hand, adopts the calm and organised approach evident in its physical stores, gently offering advice about each product category, and respecting the consumer’s need for concise and well-presented product information. Intro text at the top of each category page explains the role of the products, somewhat recreating the experience of staff guidance. While both sites offer the same basic function, the Aesop site better reflects the Japanese ideal of omotenashi.
Opportunity lies in merging the values and sense of being a treasured guest, which traditional Japanese retailers are so expert at, with the speed, convenience and flexibility of the online retail world. Treating your customers as treasured guests means to anticipate their needs and provide for them unobtrusively.
Young Japanese are keenly aware of this, and will gravitate towards service models and businesses that best understand who they are and what they need from a retail experience. With lower barriers to entry, and the freedom to approach problems creatively, it is likely that businesses which effectively carve out a digital niche for themselves will be highly successful in coming years.
Colten Nahrebeski is research executive with Flamingo Tokyo