The Journal The Authority on Global Business in Japan

SoftBank staff faced their busiest days of the year on a sunny September weekend. The two new iPhone models, the 6 and 6 Plus, had just been released. Curious shoppers mingled with those that had reserved new devices.

All had questions and all needed tending to. But this year, the responsibilities of retail staff have changed. No longer do they need to just sell phones; they also need to sell SoftBank.

Staff at CEO Masayoshi Son’s stores are no longer required to just deal in matters relating to mobile phones. They also need to serve drinks. At many outlets, they need to deal with screaming kids in ball pits, mothers looking for a brew, and generally make sure potential consumers are as comfortable as possible.

Omnichannel retailing has arrived at SoftBank.

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Staff at SoftBank’s Umedacho shop in Osaka serve drinks to customers.

Go to the store with a problem, and you learn the catch. SoftBank staff will often tell existing customers that they need to check for solutions to their device problems online. In addition, they often ask for official ID cards and apologetically explain that they are in no position to deal with customers’ issues in-store.

“Japanese companies provide better telecom network infrastructure and greater customer satisfaction at retail stores,” Son told the Nikkei newspaper last year. “US companies are ahead in Web-based services. Businesspeople in both countries should learn from each other.”



Different strokes
Forrester Research, Inc. says that today, “consumers expect retailers to provide consistent and unparalleled service across all touchpoints.”

In other words, merely offering goods in stores is no longer enough for many customers. According to the Boston Consulting Group, “Fluid and dynamic … boundaries between marketing and selling online and offline blur—and often disappear entirely.”

Cutting through the jargon, customers don’t care as much about in-store buying today because they can get products delivered after ordering online. Stores therefore need to offer services that put brand appeal above straightforward sales.

Omnichannel marketing is an international phenomenon, but Japan’s particular circumstances set the experience here apart.

“Japan is a pioneer in omnichannel retailing because the country’s retailers and brands have had to entice consumers into stores in an economy that has largely been stagnant or on the low growth side for decades,” says Nicole Fall of Asian Consumer Intelligence, a market research company.

“Stores such as T-Site, a modern interpretation of a book and DVD shop, in addition to fashion stores that utilize RFID [Radio Frequency Identification] technologies to create a seamless digital experience, are now fairly common in Tokyo,” Fall added.

RFID technology is similar to bar codes or magnetic strips on the backs of credit cards. Scanning an RFID-equipped device enables a retailer to identify and track their products with ease, which leads to more efficient inventory control.

T-Site, owned by the DVD and CD rental retail chain Tsutaya, is designed with the older generation in mind. “The young adults who came to us for lifestyle navigation [in the 1980s] are now 50-something and 60-something years old,” according to the company. “So we decided to reinvent lifestyle navigation for these adults.”

The result is not so much a store as a complex. At the Daikanyama site in Tokyo, for example, there are spaces for dogs to play, a camera store, wine tasting counters, stationary sections, rooms for hosting talks and other events, and a cinema. Oh, and of course, a selection of books and DVDs.

“The difference between this place and normal Tsutayas is that we want to combine sales of books and other cultural products with a place to relax,” said Masahiko Oishi, a floor manager at T-Site.

“We have people—concierges—all around the store to recommend books to people based on their interests. Japan used to say you were not allowed to read books in-store. We encourage it.”

It is clear that another influence—the Internet—has led to changes in store design. Books are no longer arranged in the way they traditionally were. For example, the travel section will have not only guides, but also photography books, manga and other related publications. Magazines are also dotted throughout the floors based on a categorization system that bears more likeness to Amazon than a bookstore.

“We built this as a place for people in their sixties and seventies to visit and feel at home,” Shohei Matsushita, a senior assistant manager at T-Site, said. “Our customers [at Tsutaya stores] in general tend to be in their twenties and thirties, but here we get more people in their thirties to fifties compared to other branches.”

The store’s broad selection of leisure-related goods also means that more people come through T-Site’s doors. “We have about 130,000 books and 100,000 DVDs, and around 250 staff working here,” Matsushita said.

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Bricks and clicks
T-Site is perhaps Tokyo’s best example of an omnichannel marketing space, but there are plenty of others.

It can appear in something as simple as a convenience store offering a Hello Kitty smoking room, as one such Lawson store around Tokyo Station does, or as complicated as the modern SoftBank customer service model.

In Japan, however, the deflationary environment further complicates matters for both physical retailers and their online equivalents. Consumers will often wait to buy durable goods, expecting prices to drop. If they wait just six months, an item may go down in price from ¥100,000 to ¥80,000—a notable revenue difference for a company. So how are brands coping?

“Shopping is increasingly defined by user experience and return on buzz,” said Fall, “not by traditional definitions. This movement to a seamless bricks and clicks environment across retail channels is largely being driven by digital natives, who have grown up shopping and communicating online and make little distinction between the physical and virtual worlds.”

Burger King, for example, successfully generated buzz last year with its Kuro (black) Burger. The unique-looking—and tasting—sandwich garnered attention on social media and a range of websites. Japan Real Time, the Wall Street Journal’s blog on the country, did a report on the burger. No other story was more read on the blog in 2014.

While Burger King does not publish sales results, it is rapidly expanding its Japan presence, capitalizing on both the black burger buzz and problems at rival McDonald’s.

Companies such as Seven and i Holdings are taking a different approach. While some may say there is little to get excited about in the world of supermarkets and convenience stores, the company is taking advantage of its vast logistics network to get more goods to more people through the Internet.

Customers can now place online orders from the company’s large Ito Yokado supermarkets (another establishment in the Seven and i Holdings group) and collect them at nearby convenience stores.

“Because convenience stores in Japan are open 24-7 and are found throughout the country,” Fall said, “[they] logically are becoming a natural delivery location for time-pressed individuals who find it more convenient to designate a store as a pick-up point than [having to wait at] home or the office for deliveries.”



Dependence on data
There is also a Big Brother element to many modern marketing experiences. Stores are using their point-of-sale data to interpret customer desires and change store layouts accordingly. If people, for example, are found to buy more apple juice than orange juice in February, convenience stores will rearrange shelves and inventory to more prominently display apple juice.

Kirin has taken the concept even further. Its Roomy alcoholic beverage was made in collaboration with the Lawson convenience store.

The brewery got data on the drinks women were buying on their way home from work between 6pm and 10pm, information it used to design a drink to match their purchase preferences. In this case, that meant offering a sweet drink that conveyed the idea of relaxation. Roomy, claims Kirin, is a drink “for the end of the day, in the comfort of your home.”

Upon its release, the beverage outperformed expectations, outselling original projections and capturing a larger proportion of the female market than other alcoholic drinks.

Given Japan’s economic data, retailers will need to focus on diversifying their options and honing in on their target audience. Though the country still has a relatively low sales tax rate, currently 8 percent, the 3 percentage point hike last April sent the economy straight into a technical recession.

This occurred despite massive monetary stimulus from the Bank of Japan, an improved stock market, and a government that uses every opportunity to talk up conditions. Domestic consumption, which had surged in the months before the rate hike, was largely responsible for the decline.

Retailers such as Tsutaya seem to have found part of the solution to countering thrift. “We sell more books than any other Tsutaya in Japan,” said T-Site’s Matsushita.

Other organizations that pay attention to not only Japan’s complex demographic situation, but also the digital habits of young consumers and the lessons generated by sales data, are likely to remain healthy whichever way the economic winds blow.

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Richard Smart is a copy editor at the Nikkei who has been living and writing in Japan since 2002.

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