Japan Marketing News

Japan "31" to increase shops by 101 in 09

Baskin Robbins Japan, which is known by Japanese consumers as "31" (in reference to the brand's offering of 31 flavors), is planning to open 101 new locations in Japan in 2009, bringing their shop total here to over 1,000. The company is even planning a new format that's twice as big as the average existing store, with the first of these slated for the new Ami Premium Outlet Mall that's opening in Ibaraki this summer.

Given the state of world and domestic economies, you might be forgiven for assuming that expansion news like this means that B.R.'s ice cream biz is screaming forward while the overall Japanese market screams in pain.

In reality the company may be, in a sense, running in place.

According to a Nikkei article I read last week, B.R.'s sales were up 5% in 2008, but a good deal of this had to do with price hikes and marginal contributions from last year's net increase of 40+ new locations. Actual footfall dropped by 8% at existing stores, and average customer spend went down by 9%.

In recent years B.R. has in part secured new locations in Japan relatively easily thanks to the appearance of so many new shopping centers. But due to revived restrictions on allowable square footage in new commercial facilities, shopping center construction has been falling off quickly.

As a result, Japanese consumers may find more Baskin Robbins' openings in locations abandonded by failed convenience stores and other businesses. And there will be no shortage of those this year.

* The official name is B-R 31 Ice Cream Co. Ltd., which is a JASDAQ listed company (2268)

What is McDonald's Japan up to?

Last month, McDonald's Japan closed its Omotesando shop without warning and a few weeks later, just as suddenly, this QUARTER POUNDER shop appeared. It's basically the old store, but they've removed most of the fixtures, furniture and wall coverings, closed the dining areas and painted the place black and red. And they've cut the menu down to just a few items. You can order Coke or Coke light, french fries, and either a Quarter Pounder with Cheese, or a Double Quarter Pounder with Cheese (which, if I recall from my training in English and math, more accurately should have been called a Half Pounder with Cheese, but I digress). 

If you look closely, you'll see that nowhere on the signage or inside the shop do you see the "Golden Arches." That's because McDonald's never announced to the general public that the store—and the Quarter Pounder—are affiliated with the company (the last time McDonald's sold the Quarter Pounder in Japan was the late 1970's, so essentially it's brand new for most people). McDonald's Japan is keeping the QP's origins a mystery, perhaps hoping to create some kind of drama to generate pre-buzz before the sandwich is released through regular shops. Obliquely, they're running a consumer promotion in which Quarter Pounder shop customers receive a quiz card asking "which famous hamburger company is affiliated with the Quarter Pounder?" Those that bother to mail in correct answers have the chance to win something in a prize drawing.

Why on earth are they going this route? After all, McDonald's has quite a bit of accumulated positive brand equity in Japan, and they can certainly afford to do a national roll out using a real ad campaign. So why open just two specialty locations in Tokyo (there is one additional shop in nearby Shibuya, located, oddly, in a poorly traveled back alley) instead of opting for the time honored approach? The product has already tested successfully in regional Japanese markets.

Japanese pubs lure kids (and parents)

Generally speaking, in Japan it's pretty rare to see families out to dinner at any place other than fast food joints, cafes, or chain restaurants like Denny's or Jonathan's.

In some traditional households, moms are still expected to stay home with the children, while dads eat out with colleagues and clients. With others, parents are worried that young kids will disturb diners with their fussing and crying. And then, of course, there are the families concerned about smoke. Despite the addition of no smoking sections at many eateries in recent years, most are ineffective because it's not practical to install barriers that keep the smoke from spreading everywhere (and even when it is practical, many establishments just don't bother).

But change may be on the horizon. Perhaps it's a sign of evolving consumers, or restaurants, worried over ever-diminishing revenues in tough economic times, have begun to innovate.

Regardless, a few Japanese pub chains have started installing windowed "kids rooms" that parents can monitor from the main dining area or private rooms

Outfitted with toys, TVs and video games, the rooms appear to provide the essentials to keep many kids occupied, but I haven't had the chance to see any in person, so I can't go so far as to vouch for their quality.

The above photo comes from a yakitori chain called Toritetsu, which is part of the Asrapport dining group.

Coupon use now common amongst Japanese women

I came to Japan back in 1987 and have lived here ever since. As a consumer encountering the market for the first time, and then later as a marketing professional, I was often surprised by the degree to which businesses had yet to understand the promotional power of coupons.

Things have changed a lot since.

Nowadays, a variety of companies are leveraging coupons to promote trial and generate repeat business.

Late last year, Catalina Marketing conducted a survey amongst 1,000 Japanese women aged 20 to 69 who visited supermarkets at least once each week.

Amongst their findings:

Subway Japan builds repeat business with customized coupons

Interesting effort here by Subway Japan. Users can visit the dedicated promotional website and create custom-tailored coupons based on their personal sandwich preferences. All you have to do is click through an easy questionnaire and then print out the coupon when you're done.

Starbucks Japan: ongoing drop in same store sales a harbinger of darker days ahead?

Back in April I wrote about some of the new approaches Starbucks Japan has been taking to promote continued business growth in this market. At the time I noted that future success in Japan is anything but certain, but that the brand has so far managed to maintain growth in the land of the rising sun (read that post here).

Now, a Nikkei Ryutsu Shinbun article published yesterday seems to confirm a growing sense of ambivalence about the company going forward.

On the one hand, performance for the first quarter of 2008 was excellent, with both revenues and operating profits up substantially versus the previous year (+15% and 34% respectively).

On the other hand, in the most recent quarter, the pace of growth has fallen off with revenues and operating profits up just 9% and 4% compared to 2007. Moreover, and perhaps much more importantly, same-shop sales have fallen below last year's levels for the last four months in a row. Prently, Starbucks' growth in Japan is entirely due to the opening of new locations, which, if I recall correctly, has been at something like 100 per year.

But how long can the brand continue to rely on new openings for growth?

Heineken Japan taps a cool new angle

Historically, international beer companies have faced some difficult challenges in Japan, especially when it comes to getting distribution in restaurants, pubs and clubs. Oftentimes local proprietors receive very strong incentives (cash!) to stock the brews of just one Japanese company or distributor, and that means that the door can be slammed shut on international brands—and other Japanese brands—right from the start.

Things can be rough even if a bar or restaurant is open to the idea of serving competing beers. International brands have to go head to head with Japanese companies offering a multitude of excellent brews, to say nothing of fighting it out with other world players.

What's a foreign company to do?