Non-store retailing continues to grow faster than any other channel, with major retailers now developing serious online alternatives to their physical stores. Men are still the primary buyers online, and more women still prefer catalogues, but shopping by mobile or tablet is the fastest growing browsing method. Meanwhile there have been improvements in online store design and a better understanding of what consumers want from non-store retailing.
E-commerce continues to expand, driving growth in non-store retailing overall. The latest survey of the non-store market by Fuji Keizai suggests growth of 7.8% in 2013 to ¥7.65 trillion. Fuji defines the market as physical merchandise, excluding services and digital downloads, bought through catalogues, TV, e-commerce and radio. In general Fuji Keizai’s market surveys are conservative, with smaller market values than other indicators might suggest, but the ¥7.65 trillion figure syncs well with Nomura’s estimate of ¥12 trillion including digital content.
In 2013 much of the growth came from the apparel and food categories, with some more modest growth from toiletries and media such as books and DVDs. Since March 2011, Japanese have become increasingly used to shopping for food and beverages online, helped by investment from leading supermarkets in net super operations, often with same day delivery at least around Tokyo. TV advertising for net supers has increased markedly in the last year, and with more mothers now working, net food sales will only increase, rising 9.2% last year to ¥890 billion.
Fuji estimates apparel sales rose 10.8% to ¥1.7 trillion with much of the growth from smartphones and tablets, both through browsers and dedicated apps. Japanese are experimenting with shopping for many more categories of apparel and fashion product online; while underwear and other basics have been e-commerce staples for a long time, consumers are also increasingly seeing little barrier to buying footwear and even high end jewellery online. This is both a function of acclimatisation but also the much better services, in particular no quibble returns at no cost.
Data from a recent Nikkei survey suggests that overall men remain the most important users of non-store retailing, perhaps not surprisingly given their general preference to avoid shops when given the chance. While falling in recent years, men make 11.1 purchases a year according to the report, compared to 8.5 times a year for women. Younger men especially enjoy non-store shopping, with those in their 20s buying 15.4 times a year and t-shirts and other casual fashion purchases the most common. Older men shop less frequently, but age groups above 30 still make around 10 purchases a year, more than the average for women. In contrast, non-store shopping by women is highest among 50 and 60 year olds, increasing as women get older.
By media channel, share for paper catalogues has fallen fast from 50% in 2004 to just 22%. One of the big growth areas is the over 50s, who are replacing catalogues with tablet-based shopping. Paper catalogues are still used slightly more by women, with 28.5% of non-store shopping by women made from paper, compared to only 20% by men. In terms of actual orders too, 65% come from a PC, a figure that is roughly the same for both men and women, while women use phones more.
For Nikkei’s sample of around 3,000 non-store shoppers, only 8.7% of orders were made through smartphones last year, with another 11.8% through other phones. On the other hand, Fuji Keizai estimates mobile sales accounted for some 16% of total non-store merchandise sales in 2013 and rose the fastest of all channels, up 28.2% to ¥1.2 trillion. Other sources put the volume of non-store retail traffic from smartphones at closer to 30% for younger generations and especially in major commuting centres around Tokyo and Osaka. Fuji Keizai says that for the under 30s mobile phones account for more than 20% of all non-store apparel sales.
Whatever the true number, what is most striking about the use of different media channels is the way they effect product choice (see Chart). Online media is, it appears, more conducive to impulse buying and for keeping up with fashion trends, most probably because of the much broader range of options available for discovery. In contrast, consumers report that they perceive paper media to be more trustworthy, and they take more time to read details of product use and usage scenarios in paper catalogues. There is also a growing trend of ordering regular deliveries of the same item through online channels, notably drinks, nappies and even fresh foods.
In the past 12 months there have been a number of developments in the e-commerce field. More and more high street retailers are finally accepting that they need to offer an additional online channel, with the issue again being emphasised by Seven & I’s ‘omnichannel’ targeted acquisitions in December. Although many online sales pages take the same merchandising approach as some of Japan’s older stores, trying to cram as many products as possible into a customer’s eye line, less cluttered merchandising is becoming more common online too, with leading companies like Start Today, and to some extent even Rakuten, attempting to improve page clarity and reduce the congested nature of their sales sites. With this new maturity in sales methods and ever increasing access to major retail brands online, consumers will continue to increase spending in the online channel.
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