Pandemic triggers transformation in Japanese retail marketing

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TOKYO – The number of products in Japan’s supermarkets is decreasing.
Analyzing data from Nikkei POS, a database of retail prices and sales volumes in stores in Japan, Nikkei found that the number of products decreased in around 70% of groceries and everyday items in 2020.
Amid the pandemic, customers are spending less time in supermarkets and having decided what to buy before shopping. As a result, signature products from well-known brands perform better than before. As a result, retailers and manufacturers have narrowed their product portfolios.
The result is that the pandemic has changed consumer markets in Japan.
In a survey conducted between December 2020 and January 2021 by Toppan, a publisher, and One Compass, a digital advertising company, 41% of respondents said they did “less than 20 minutes” shopping in supermarkets, an increase of 11 percentage points corresponds to spending so short time shopping compared to times before the pandemic. Around 30% of respondents said they “decide in advance which products to buy,” which is twice as many as before the pandemic. Due to the shorter shopping times, retailers have changed their marketing strategies. Inageya, a supermarket chain, said it has narrowed down the number of products it put on its shelves.
Nikkei’s POS data underscores this trend – it shows that the number of lipstick products available in stores fell 18% in December 2020 compared to pre-pandemic levels. On the other hand, the choice of face masks increased by 24%. Overall, 67% of the 670 product segments in the database saw a decrease in the number of products.
As a result, branded products from the big brands are now more likely to be selected in stores. Meanwhile, the social distancing policy has stopped new product development. Nichirei Foods, a frozen food manufacturer, launched 14 new products in the fall of 2020, less than half the previous year. This was in part because working from home hampered such developments.
The shrinking number of products is not only having a negative impact on business. Retailers and logistics companies will have less work, but manufacturing will also become less efficient. However, Hiroaki Watanabe, a retail industry analyst, said, “Supermarkets need to expand their private label brands and compete through discounts.” According to a government household survey, the recovery in consumer spending has so far been sluggish. As people continue their own austerity measures amid the pandemic, supermarkets and food manufacturers need to accelerate the transformation of their marketing strategies.

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