Recovery from Significant Adversity: How Japanese Retailers Deal with Digital Disruption

Abstract

In the 1970s, Japan advanced to become the icon of radical modernity and raised, in many ways, the bar for how firms should innovate. Today, Japan’s image is that of a giant that fell from grace, outpaced by the alluring size and growth of consumer demand in China and the digital transformation of South Korea. However, we should never write off Japan’s ability to bounce back or forward from disruption. An exploration of shifts in the retail environment is a good starting point for looking at how Japanese organisations square up to the challenges of the digital age. Retail makes a huge contribution to Japan’s economy. An exploration of shifts in the retail environment is a good starting point for looking at how Japanese organisations and, by extension, Japan’s economy square up to the challenges of the digital age.

Its mix of intellectuality and technology means that Japan continues to inspire how firms and consumers should (or could) interact. Japan has consistently been the second-largest consumer economy in terms of per capita or household consumption expenditure, and even though it has been overtaken as the second-largest economy in absolute terms by China, Japan is a vibrant retail market. Japan accounts for 55% of the Asian retail market, and the Japanese market attracts almost 40% of the worldwide spending on luxury goods. Japan also has one of the fastest growing e-commerce markets in the world.

Amidst the disruptions of digital transformation, Japan provides answers to two fundamental challenges: (i) How can retailers engage customers on an experiential level both instore and online, and (ii) how can new technologies help span boundaries of the supply chain? Retailing offers a rich context for analysing how Japanese firms continue to innovate. Our contribution aims to track new forms of firm-consumer interaction in Japan and charts attempts to converge online and offline channels.