Study

5

Yedo department stores

Background

Yedo is a successful Tokyo-based department store chain with six outlets in Japan and two more in London and New York. It has an excellent reputation for high-quality goods. Yedo also offers outstanding service and a large number of sales staff. Many lifts have uniformed attendants.

Yedo’s strategy — to offer a wide choice of products and personalized service — has worked well until recently. Last year, however, profits fell sharply and results for the first six months of this year have been disappointing. As a result, several similar famous store groups are now heavily in debt.

Market research

Yedo’s management has asked an international marketing agency, TWCB, for advice on how to maintain and increase profitability.

Yedo Department Stores: fact file

Yedo Department Stores: extract from TWCB’s market report

• 3. Competition
• 3.1. Convenience stores

These appeal to all groups, including housewives. They offer a much wider range of goods and services than they used to, and respond quickly to demand. Conveniently located, they often operate round the clock.

3.2. Discount stores

Prices in these stores are 20—30 % below the manufacturers’ recommended level.

Also, stores which price all products at Г100 have become popular in Japan.

3.3. Speciality stores

Stores such as Muji and Fast Retailers sell good quality, «по-brand» products at low prices, backed up by sharp advertising. Fast Retailers has opened 430 stores in Japan and plans another 80 to 100 each year. Muji has 251 stores in Japan, and appeals mostly to young shoppers.

3.4. Foreign retail chains

Following deregulation in the retail industry Carrefour from France, and the American chain Wal-Mart, plan to open in Tokyo.

• 4. Trends
• 4.1. As the Japanese population ages, older groups will provide opportunities for sales growth.
• 4.2. Japanese consumers want value for money and to feel they have got a bargain.
• 4..3 The Japanese are less brand-conscious now. Sales of «по-brand» goods are increasing.
• 4.4. Japan is moving from a luxury culture to a convenience culture. People want services which make life easier or save time.
• 4.5. Women are marrying later in life.

Discussion questions

• 1. Should Yedo continue to position itself as an up-market store selling exclusive products?
• 2. Should Yedo try to appeal more to older or younger people? What products and services should it offer to appeal to these target customers?
• 3. What are the advantages and disadvantages of renting parts of the store to other businesses? Should Yedo be doing this?
• 4. Should Yedo expand overseas, with more stores abroad? If so, what countries would be suitable for overseas expansion?
• 5. Should Yedo use the Internet? If so, how can it use the Internet effectively?
• 6. How can Yedo compete against the convenience stores?
• 7. How do you see the Yedo Department Store group developing in the future?

Task

You are members of the marketing agency, TWCB. An informal meeting has been arranged to discuss ways of maintaining and increasing Yedo’s profitability. Yedo’s CEO has prepared some discussion questions for you to consider. Hold the meeting and note down your best ideas, which will be incorporated into a report.

Writing

As head of TWCB, write a report for the Chief Executive of Yedo, Kazuo Yamashiro, on your agency’s ideas (See chapter 2, p. ??).