Everyone may be talking about China, but Japan remains an ideal destination for retailers seeking to expand, conference delegates were told yesterday [Thursday].

The world’s two largest retailers, Wal-Mart and Carrefour, have both moved into Japan recently, but news headlines may dissuade others from following suit. The Japanese economy is reported to be in crisis, retail sales are plummeting, deflation is a major problem, consumer confidence is low and anyway, China is bigger, easier and just next door.

Professor Roy Larke of the University of Marketing and Distribution Sciences in Kobe, Japan, worked hard to dispel this impression for delegates at IGD’s Global Retail conference in London. He emphasised that consumers do still have money, they’re just reluctant to spend it. Monthly household income stands at ¥538,277 (US$4,568) while food spend accounts for ¥73,396.

Give Japanese consumers something new and they’ll happily open their wallets, he said, citing the example of the new Daimaru Sapporo store that opened on 5 March and rang up sales worth ¥1.5bn in its first week. Similarly, the new Louis Vuitton store in Omotesando made ¥125m on its first day alone.

Land prices are low, staffing should not be difficult as there is a pool of highly educated workers, and consumer demand for new, imaginative offerings is growing.

Retail concentration is extremely low, with the top ten retailers accounting for a market share of just 16%, against 37.9% in the UK or 45% in France. Retailers in Japan are aeons behind their counterparts in the US or Europe, providing little more than a shop window. It is manufacturers who currently control the supply chain, including all marketing from branding to advertising, instore display and promotion and, not least, pricing.

Service is uniformly polite but uninspired and Larke believes that consumers are crying out for what they’ve never had: lower prices; well supported and presented brands; genuine, friendly and outgoing service; and imaginative new products and services.

Retailers who dare take their brand to Japan and adapt it to fit and excite local consumers stand to gain a huge amount. Costco, Carrefour and Wal-Mart have taken the challenge – who’s next?

just-food.com will be publishing a full feature about the IGD Global Retail conference next week – keep an eye out for it!