Wal-Mart Expects Big Loss in Japan, Plans New Strategy to Boost Image

The Wall Street Journal ^ | January 28, 2005 | GINNY PARKER

[snowsislander]

Almost three years after entering Japan's huge retail market, Wal-Mart Stores Inc. says it has discovered a surprising trait among Japanese consumers: Low-priced products don't always attract them. The misunderstanding is one reason why the retailer expects to have posted big losses in Japan last year.

On Friday, Wal-Mart's Japanese affiliate, Seiyu Ltd., announced it expects to post a net loss of ¥12.3 billion ($119.3 million) in 2004, nearly three times the previously forecast loss of ¥4 billion. The main reason, company officials say, was a focus too heavily skewed toward the super-low priced goods that have made Bentonville, Arkansas-based Wal-Mart a seemingly unstoppable retail force around the world.

Now, Wal-Mart says it will try to correct its mistake. Over the next several months, the company will introduce more high-end items in its Japan stores, which will come with higher prices. "We're really trying to broaden the assortment," says Jeff McAllister, Chief Operating Officer for Wal-Mart in Japan. Seiyu's clothing line, for instance, will include more fashionable blue jeans that cost as much as ¥3,600, instead of selling only jeans that cost around ¥1,000.

Wal-Mart is hoping the new strategy will help boost its image among Japanese shoppers who, long used to paying high prices for everyday goods, have a tendency to equate low prices with low quality. "The Japanese consumer walks around the store where everything is low-priced, and thinks of it as a cheap place to shop," says David Marra, a Tokyo-based consultant for AT Kearney. "Wal-Mart is having to fight against the prevailing image."

[...]

[HamiltonJay]

Could the Hello Kitty Meets Jenna Jameson world of Japan be too schizophrenic for even the worlds largest retailer?

[ChinaGotTheGoodsOnClinton]

That'll work.

"Where you get high end item?"

"WalMart"

[1rudeboy]

Somebody set us up the bomb.

[Fractal Trader]

So are the Japanese really addicted to high priced merchandise? What problems do they have with taking a bargain when they see it?

[NorCalRepub]

haha.....I think the Japanese look at the product, it says made in China and they throw it back on the shelve

[DTogo]

I coulda told Wal-Mart this years ago. Perhaps I should submit my resume...

[snowsislander]

So are the Japanese really addicted to high priced merchandise? What problems do they have with taking a bargain when they see it?

I think the problem is largely in the lower quality, not the lower prices.

Also, I think that Wal-Mart has still not picked up on the fact that the Japanese really do like to buy smaller-sized items than Americans do, and probably have not adjusted their packaging accordingly.

[mike182d]

They just need to change their name to:

SUPER-FUN-HAPPY-MART!!!

[Al Gator]

Japanese don't have a problem with a bargain, but "image" is everything.

Put a "Gucci" label on a plastic bag, sell it for 10,000 yen, you will sell a lot.

Some things don't make sense, you just have to know which thing!

(fifteen years in Tokyo)

[HuntsvilleTxVeteran]

When Walton was alive, Wal-Marts motto was "Buy American".
When they found out they could sell junk that lasted half the time and they could sell it for two thirds of the price and people would buy another item at twice the rate.
Their new slogan is "We are the great Wall mart of China".

[superiorslots]

Are there people that live in trailers in Japan and toothless women in sweat pants, with a dangling cigarette between their lips beating their kids in aisle 4?

[sbelew]

Ahhh, the Wal-mart clientele. Gotta love it.

I swear they put something in the air conditioning vents that lowers people's IQ by 50. Turns 'em into slack-jawed, dull-eyed, shuffling zombies, like Jack Nicholson in One Flew Over the Cuckoos Nest. THAT's why it takes an hour to get out of the place - dodging the folks who shuffle aimlessly along.

[brownsfan]

have a tendency to equate low prices with low quality

I think the Japanese look at the product, it says made in China and they throw it back on the shelve

I've always heard the Japanese people are bright. This would seem to be an example. The Chinese are their mortal enemies, and they understand that if you buy quality, it lasts/performs.
No wonder an island nation of that size, with the limited resources they have can compete with us.

[spetznaz]

I was with a friend of mine who is a fan of Japanese anime and manga, and he was trying to explain to me the intricacies of Japanese animation. The guy spent literally two hours telling me about that stuff. Literally (if it wasn't intriguing i would have left, but it was mind-numbingly mesmerizing LOL). There are so many different styles, some so divergent from one another as to be mystifying. Some of them are overt, some subtle, some even so close to pure pornography i was surprised kids even watch such stuff! And some of it was some of the most beautiful animation i have ever seen, which is only surpassed by the fact that some had plots that would (should) win oscars!

Which made me realize something. If a culture can develop animation to such a degree of perfection, then starting a company like Walmart that delves into high capacity-low price sales (of marginal quality products) in Japan would be an exercise in futility. The Japanese seem to expect a certain level of perfection, be it intrinsic or extrinsic, and thus opening a huge rectangular receptacle of mass produced products is a HUGE mistake!

Infact i learnt that in Japan cars are sold door to door! Door to freakin' door! Totally different from how cars are sold in the US. If that couldnt work obviously a Walmart style discount store wouldn't work.

I think Japanese culture is quite easily the most intricately developed in a myriad of ways. I'd say it started its path into greater intricacy around the Nara to Heian periods (starting from 646AD).

Anyways, if one considers the fact that they have Ryu (schools) dedicated to such mundane stuff as tea dinking (chanoyu/chaji) and flower arrangement (ikebana i believe), then one can see why something as blase and mundane as a huge Walmart would be tantamount to sand in the eyes according to the Japanese.

[newzjunkey]

Their rejection of the Wal-Mart (aka "Made In China" :D) is proof of their superior intellect and high culture.

Americans have a high tolerance for crap if it can be had "cheap" and, honestly, it makes us rather laughable and perhaps ultimately doomed as a civilization.

[newzjunkey]

When Walton was alive, Wal-Marts motto was "Buy American".

He's probably turning over in his grave. I know I would be. Who wouldn't after his heirs looked at this and said, "Oh my gosh, Vern! Dat'd 'ere teotihuacan'd make a great darn place for a Wal-Mart!"

[DustyMoment]

Wal-Mart Expects Big Loss in Japan, Plans New Strategy to Boost Image

Yeah, selling Chinese goods in Japan isn't a real winning strategy. There are still a lot of very hard feelings there.

[jpsb]

" He's probably turning over in his grave. "

Wal-marts day is coming, Americans will wake up to the fact that wal-marts is selling out the USA and it's people with their marketing of nothing but cheap chicom crap. I would not want to be a wal-mart person when war in the Pacific breaks out.

[GOP_1900AD]

Quality, quality, quality. Plus, no offense to my countrymen, I am simply telling it like it is, unlike most of us fidgetty Americans, who usually don't even read COO lables before buying, there are still many, many Japanese who would not buy crap made in Communist Red China.