Foreign Supermarket Operators Struggling in Japan

July 22, 2018

Tokyo- Some of the major non-Japanese supermarket operators that launched businesses in Japan around 2000 featuring low prices through bulk purchasing have pulled out of the country.

Carrefour SA of France and Tesco PLC of Britain pulled the plug on their supermarket operations in Japan in 2005 and 2013, respectively.

Even the world's largest retailer, Walmart Inc. of the United States, is now considering selling Seiyu G.K., a supermarket unit in Japan that runs over 300 stores, according to informed sources.

In 2002, Walmart acquired a stake in Seiyu and introduced its "Every Day Low Price" strategy to Japan. Walmart at the time thought a success in the country would be needed for it to be a global retailer.

But Japan's population is declining, a major hurdle for retailers.

In addition, consumers in the country are picky about product quality. Shoppers buy "items that are worth more than their prices," a senior official of a major Japanese supermarket operator said.

Costco Wholesale Corp. of the United States and Metro AG of Germany, other major foreign supermarket chains that launched Japan operations around 2000, are surviving. They are competing in areas outside pricing.

Costco, which operates 26 stores in Japan, sells a variety of large-sized items that are often seen in the United States.

Many Costco customers share items with friends after buying them. "It's fun to visit" a Costco store, a Tokyo housewife said.

Metro runs a total of 10 supermarkets in Tokyo and neighboring prefectures targeting restaurant operators and other professionals.

Major Japanese retailer Aeon Co. has bought stores that were operated by Carrefour and Tesco. But Walmart is expected to face difficulty finding a buyer for Seiyu stores amid the tough business environment for supermarkets in Japan. Jiji Press