Japan-US Business Report Logo

No. 356, May 1999

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American Companies in Japan


MERCHANDISING

Will Japanese manufacturers of a cross section of products sell direct rather than through traditional wholesale channels? Are consumers in Japan interested in buying in bulk to save money? COSTCO COS. INC. is finding out. It has opened the country's first membership warehouse club, a huge, 140,000-square-foot facility in the equally huge Torius Hisayama shopping center in a suburb of Fukuoka. The warehouse stocks roughly 4,000 items, including food, appliances, furniture, sporting goods and office supplies, most of which are made in Japan and are discounted by 10 percent to 40 percent. Costco's subsidiary reportedly is working with 600 or so suppliers. At least half are selling directly to the company, but the warehouse retailer is confident that it can raise that figure to 100 percent in time. Small companies, particularly individual retailers, make up Costco's initial target customer base. The company believes that the suburban Fukuoka location will do $60 million worth of business in the first year of operation. It plans to open a second warehouse next spring outside of either Tokyo or Osaka and to have 10 stores by 2004.

The American company that first shook up the retail scene in Japan, TOYS "R" US INC., is trying out a different floor plan in its 81st store, which is located in Kasugai, Aichi prefecture. The new store format is designed to make shopping easier by helping customers find what they are looking for more quickly. Products are grouped into 12 categories, each with its own color-coded section that is shown on signage around the store.

The first Mail Boxes Etc. location in Japan was scheduled to open in May in Tokyo. Last summer, San Diego, California-headquartered MAIL BOXES ETC. named a FAMILYMART CO., LTD. subsidiary as its master licensee (see Japan-U.S. Business Report No. 348, September 1998, p. 13). The convenience store franchiser see the growth of the SOHO (small office/home office) market fueling the development of more than 1,000 MBE locations over the next 10 years.

An exchange rate of ¥120=$1.00 was used in this report.aaaaaa

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