PL Trade Show Japan
The 2012 Private Label Trade Show Japan takes place on June 20-22 at Tokyo Big Sight, Tokyo, Japan. The following is a Q & A with Hiroshi Nakamura, professor, Graduate School of Strategic Management, Chuo University.
Private Label Trends in Japan
How big is the Japanese private label market?
The current Japanese Private label market share is roughly 10% of grocery market (as of 2010). Japan’s 30 trillion yen food and household products is comprised of 3 trillion yen private label market. This market share is not big compared with the US and Europe. One of the reasons is that there are less larger-scale retail companies who dominate the market in Japan. However, scale of retail companies like Seven & i and the Aeon Group has been expanding and the market share of the large-scale retail companies continue to increase. On the other hand, the Japanese market entered a recession following the Lehman Brothers shock of September 2008 and has failed to fully recover. Consequently, disposable consumer income has shrunk and price sensitivity has risen. Under these circumstances the private label share of the Japanese market continues to grow.
What product categories have the highest private label share in Japan?
POS data reveals that products with higher shares include grains like rice and bread (26%), dairy products (25%), and dry agricultural goods (24%). Alternatively, items with a lower share include fancy beverages like instant coffee (7%), condiments like soy sauce and ketchup (7%), confectionaries like chocolate (5%), and alcoholic beverages like beer (4%). It is easier for private label products to enter “variety seeking” categories (like confectionaries) in which consumers want to try various brands, but it is still difficult to gain a large market share.
What types of products are sold as private label?
There are four types of private label in Japan: Generic Private Labels, Store Brands, Premium Store Brands, and Value Innovators. Prices of Generic Private Labels are lower than store brands, simple packaging and pricing at 20% to 50% lower than national brands. Store Brands have slightly lower quality than national brand and their prices are 20% to 30% less than national brand. As is shown in Figure 1, Premium Store Brands are higher or same priced and higher or same quality products compared with NB. Value Innovators represented by Japanese companies like Uniqlo and Mujirushi Ryohin appeal to customers with high level quality and ultra-low pricing. Currently Store Brands have an overwhelmingly high share of the market, with Premium Store Brands and Generic Private Labels comparatively lower. However, with Japanese brands like Seven Premium introducing “Seven Premium Gold” and Aeon’s Top Value introducing “Top Value Select” it seems that Premium Store Brands are making some headway in the market. It is highly likely that Premium Store Brands will continue to grow. Value Innovators in the clothing sector like Uniqlo have gained market share, but, currently, it is unlikely that we will see any of this growth in the grocery industry.
Consumers’ evaluations of major PL products
A joint study by Chuo University and the Distribution Economics Institute of Japan shows that 94% of consumers have purchased private label products in the most recent one-year period. Among those who have purchased private label products, 61% purchased more than in the previous year. Younger generations like those in their 20’s or those who earn less than 3 million JPY per year buy more private label products. 80% of private label purchasers also report that they are “satisfied/somewhat satisfied”. Attitudes given towards private label include: “not against buying or using” (81%) and “helps out the family pocketbook” (70%). Common responses, especially among those in their 20’s and 30’s, include: “helps out the family household economy,” “I wish there were more available in stores,” and “when I compare them with national brand in stores I always buy private label.”
How far will private label grow in Japan?
The market share of Japanese private label will undoubtedly rise in the future. It is still predicted that the private label market share will grow to around 30% due to a rebounding economy and private label development among large retailers. However, in order for the market share to rise to this level, not only low-priced private label products, but also Premium Store Brands that can compete with national brands must increase as well.
For more information on the Private Label Trade Show Japan visit www.jma.or.jp/pb/.
