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Sun, Nov 02, 2003 - Page 12 News List

Wal-Mart enters Japan's market at a calculated pace

AP , YOKOHAMA, JAPAN

The new supermarket west of Tokyo has all the trademark Wal-Mart touches -- roomy aisles, price rollbacks and big shiny signs, but shoppers have almost no idea this outlet is run by the US retail giant.

Yuki Kitamura, a housewife who swears by the store's vegetable selection and shops there three times a week, didn't know and didn't care that Wal-Mart Stores Inc, the world's largest retailer, has a 37.7 percent stake in the supermarket chain Seiyu, the operator of this store and 400 others nationwide.

"The store got a liberating feeling, and it got roomier," she said. "It's fun."

Despite the ?700 million (US$6.4 million) remodeling of the flagship store, the Wal-Mart name is nowhere to be seen. Moreover, there isn't a single Super Center in Japan, and Wal-Mart officials say they may never open one here.

Wal-Mart has arrived in Japan, but it's making its entrance cautiously and stealthily.

The retailer, based in Bentonville, Arkansas, studied Japan for several years and concluded it was a complex market best penetrated under an alliance with a local partner that understood Japanese shoppers. So it took a stake in Seiyu last year.

"For Japanese customers, the name Wal-Mart doesn't mean a lot. The Seiyu name means a lot. For the near future, we'll go with the Seiyu brand," said Billie Cole, spokeswoman for Wal-Mart International Holdings.

Wal-Mart, which operates in 10 nations besides the US, has adapted its approach to different markets, making itself more visible with Wal-Mart stores in places like China, while taking a lower profile in Mexico and Britain, where it has chosen partners as it has in Japan.

But nowhere else is the total invisibility of Wal-Mart quite as clear as in Japan, the world's second-largest economy, where foreign brands are sometimes embraced -- among them, Coca-Cola, Louis Vuitton, Walt Disney, the Gap -- but often face failure verging on total rejection.

"If Wal-Mart brings in a bunch of products in bulk, such as candy Japanese can't stand, it's doomed," said Yasuyuki Sasaki, an analyst with Credit Suisse First Boston in Tokyo who believes it will take two or three more years to see the impact of Wal-Mart management on Seiyu.

Many Seiyu stores have yet to get a makeover. The flagship store has introduced Wal-Mart's price rollbacks, discounts that run for an extended time, but it has yet to carry out Wal-Mart's most basic concept, everyday low prices. That idea does away with the necessity for constant advertising and weekly discounts to woo buyers.

Everyday low prices rely on the advantage of cost cuts that come from global suppliers and from Wal-Mart's sheer buying power, with about 4,700 worldwide stores. Achieving those savings takes time.

"We really are focused on making the internal changes that are needed to bring our cost down and to do a better job for the customer," said William Wertz, director of international corporate affairs at Wal-Mart Stores. "There's nothing magic that we can do. There's nothing quick that we can come in and fix overnight. It's just getting in and working with the Seiyu people and gaining a good understanding of the Japanese customer."

What's more obvious is the response from major Japanese retailer Aeon Co, which is hurriedly reshaping its strategy and opening stores with the growing threat from Wal-Mart in mind.

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