Following French supermarket giant Carrefour's recent arrival into the Japanese retail sector, US behemoth and global number one Wal-Mart has announced that it is to follow suit with a 15,000m² mega-store in 2002.

Retail spending has declined over the last four years, as national economic problems made Japanese consumers increasingly cost-conscious, but this is proving a strong attraction for international operators of discount stores, the one sector that is growing rapidly. Furthermore, it is hoped that competition will become fiercer still once Carrefour, the second largest global chain, and Wal-Mart are properly established, generating a revival in consumer confidence.

With real estate prices dropping to historic lows, there has never been a better time for international retailers to capitalise on the Japanese market, as they also benefit from economies of scale in a global network of suppliers.

On the flipside of the opportunities now present for international retailers, there are several struggling Japanese companies. Sogo went under earlier in 2000, while Mycal and Daiei focus on generating cash from cost-savings. Others are expected to cut costs aggressively in a bid to maintain market share when the likes of Wal-Mart and Carrefour arrive.

The local press reported that Wal-Mart would first set up a subsidiary in the next few months, before the larger-scale hypermarket is opened in one of ten proposed sites. Already controlling more than 1000 outlets across Europe, the Americas and Asia, Wal-Mart operates 3,000 stores in the US and has revealed plans to establish a further 170-80 superstores in its domestic market and over 100 elsewhere. During last year, sales revenues reached US$165bn.

Carrefour meanwhile, which opened the doors of its first hypermarket near Tokyo to long queues at the beginning of December, has revealed plans to open 13 supermarket outlets in Japan by the close of 2003.