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Thursday, Dec. 21, 2000

MEDIA MIX

Success of discount barns should come as no surprise


" 'Tis the season," and while many a crabby gaijin points out that Japan's decidedly commercial spin on Christmas excludes its religious meaning, shopping makes a lot of people happy, so why knock it?

Still, happy is as happy does. Though I ran into sidewalk-clogging crowds in Ginza last weekend, according to the media, all those folks were apparently "just looking" since consumption remains sluggish and isn't expected to pick up anytime soon.

Gucci may be enjoying record sales in Japan, but the Japanese public no longer seems willing to pay premium prices for good stuff. As it does annually, Nikkei Trendy magazine recently listed the year's top 30 products, services and commercial phenomena. At the top of the list was Uniqlo, a discount clothing retailer that has convinced Japanese shoppers that a cheap price doesn't have to mean cheap quality.

The media, which seemed to be slightly behind the news curve on the discount boom, made up for lost time with almost saturation coverage of the latest retail trends. Coverage focused on outlet malls and the foreign-owned bulk retailers Costco and Carrefour, both of which opened outlets a few weeks ago in Chiba's Makuhari.

All the network news shows sent video crews to the openings, but in terms of depth of coverage they couldn't compete with financial "edutainment" shows like Nihon TV's "Super Terebi" (Monday at 9 p.m.) and TV Tokyo's "Shukan Keizai-o" (Sundays at 12 p.m.), whose treatment of consumer trends is fast-paced and sexy. These programs show their viewers what actually happens in the back room, interviewing managers and eavesdropping on strategy meetings.

Consequently, today's business heroes are not the innovative manufacturers of the past like Soichiro Honda or Konosuke Matsushita, or even the young high-tech entrepreneurs who can lay down 100 million yen in cash for a condo in Tokyo's Osaki district. They are rather the retailers who have made a killing by selling for less.

As one department store after another bites the dust, men like the one who founded Daiso, the company that operates those ubiquitous "100-Yen Shops," or the part-timer-turned-president who carried the fast-food gyudon (beef bowl) chain Yoshinoya from the brink of bankruptcy to the first section of the Tokyo Stock Exchange, are considered geniuses and saviors.

The awe-filled coverage these businessmen receive heralds the end of an era that measured progress by the average person's ability to spend more money. The Japanese public's legendary self-image as a homogeneously middle-class society always included the idea that everyone was willing to pay more for quality, whether it was a melon or a Mercedes.

But, of course, Japanese consumers have always been attracted to cheaper goods; it's just that the media's obsession with extravagance (especially in terms of food) kept it under wraps. What finally killed the myth, ironically, was the opportunity for consumers to acquire extravagance at a discount.

As the country's granite-hard distribution system was slowly chipped away by deregulation, discount retailers managed to get their hands on merchandise that, previously, was only available to licensed agents. Now, every high school girl in Shibuya owns a Louis Vuitton bag. Once designer brand goods (whose high price is based on name not quality) are for sale at Bic Camera, why buy them at a boutique in Ginza?

Thus, high-end brand makers, even those who manage to keep their wares out of discount stores, can no longer afford to turn up their noses at the word "bargain" -- though they still try.

Outlet mall retailers are owned or managed by the manufacturers of the products they sell, which means they directly compete with other stores that are licensed to sell those products at higher prices. That's why facilities' management companies force the TV crews who cover the outlet malls they control to sign contracts stating that certain stores and logos will not be shown or mentioned.

In addition, the developers who build these malls need brand names to occupy their retail spaces, and most of these companies will not set up outlets near places where their stuff is being sold at premium prices. The result, however, is that while people flock to Ginza for Christmas window-shopping, they are flocking to the suburbs to do their actual shopping, thanks to the media coverage.

So what happens once the coverage stops? A good indication is the fate of VenusFort, a shopping mall in Tokyo's Odaiba waterfront area that caters to young women. When it opened two years ago, the media was there in force and the place was mobbed with visitors, but sales have never been as good as the size of the crowds would seem to indicate.

VenusFort is not a discount shopping area, but for the time being at least, the attraction of places like the outlet mall in Gotemba and the discount retail complex in Makuhari is based on their novelty appeal, which was created by the media. Outlet malls and bulk retailers are American inventions, which evolved in a specific environment, namely the uncluttered suburbs of wide roads, cheap gas and big houses, none of which you can find in Japan.

Once consumers realize that they're spending a lot of fuel and time just to save money on things they probably wouldn't have bought in the first place, these places may suffer the same fate as the department stores. All those folks who shelled out 4,000 yen to join Costco just so they could load their SUVs with groceries will find out when they get home that they don't have any place to put them.



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