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Japan Domestic Trade and Services
The nation's service industries are the major
contributor to
GNP, generating about 59 percent of the national totals in
1991.
Moreover, services were the fastest growing sector,
outperforming
manufacturing in the 1980s. The service sector covers
many, diverse
activities. Wholesale and retail trade was dominant, but
advertising, data processing, publishing, tourism, leisure
industries, entertainment, and other industries grew
rapidly in the
1980s. Most service industries were small and labor
intensive but
became more technologically sophisticated as computer and
electronic products were incorporated by management.
The operation of wholesale and retail trades has often
been
denigrated by other nations as a barrier to foreign
participation
in the Japanese market, as well as being called antiquated
and
inefficient. Small retailers and "mom-and-pop" stores
predominated-
-in 1985 there were 1.6 million retail outlets in Japan,
slightly
more than the total number of retail outlets in the United
States
(1.5 million in 1982), even though Japan has only half the
population of the United States and is smaller in size
than
California.
There were several changes in wholesaling and retailing
in the
1980s. Japan's distribution system was becoming more
efficient.
Retail outlets and wholesale establishments both peaked in
number
in 1982 and then went down 5.4 percent and 3.7 percent,
respectively, in 1985. The main casualties were sole
proprietorships, especially mom-and-pop stores and
wholesale
locations with fewer than ten employees. Almost 96,000 of
the
1,036,000 mom-and-pop stores in operation in 1982 were out
of
business three years later. Government estimates for the
late 1980s
show additional consolidation in both wholesale and retail
sectors
including a continued sharp decline in mom-and-pop store
operations. A further decline in mom-and-pop stores is
expected as
a result of the Large-Scale Retail Store Law of 1990,
which greatly
reduced the power of small retailers to block the
establishment of
large retail stores. Soaring land prices are a major cause
of the
decline of mom-and-pop stores, but an even more important
reason is
the growth of convenience and discount stores. Discount
stores are
not much bigger than the traditional small shops, but
their
distribution networks gives them a big pricing edge.
In the 1980s, Japanese consumers were discovering the
advantages of catalog shopping, which offered not only
convenience
but also greater selection and lower prices. According to
a Nikkei
survey, the mail-order business expanded 13 percent
between April
1987 and March 1988 to more than US$8.9 billion in annual
sales.
Specialty chains, particularly those handling men's and
women's
clothing, shoes, and consumer electronics, were also doing
better
than the overall industry. Department stores,
supermarkets, and
superstores (hybrid supermarket-discount stores) and other
big
retail operations were gaining business at the expense of
small
retailers, although their progress was quite slow. Between
1980 and
1988, department stores increased their share of total
retail sales
by only 1 percentage point to 8.4 percent. Supermarkets
and
superstores increased in market share from 6.5 to 7.3
percent.
Between 1980 and 1988, the number of department stores
grew from
325 to just 371, and other big self-service stores only
increased
in number by 62 units between 1984 and 1988.
Among service industries, the restaurant, advertising,
real
estate, hotel and leisure business, and data-processing
industries
grew rapidly in the 1980s. The fast-food industry has been
profitable for both foreign and domestic companies. By
1989 family
restaurants and fast-food chains had grown into a US$138
billion
business per year. Overall growth declined in the late
1980s
because of the sharp rise of rents and a proliferation of
restaurants in many areas. The number of hotel and guest
rooms grew
from 189,654 in 1981 to 342,695 in 1988.
Because much of the sales competition in Japan is of
the
nonprice variety, advertising is extremely important.
Consumers
have to see the suitability of products and services for
their
lifestyles. The intense competition for the domestic
market spurs
the growth of the world's largest advertising agency,
Dentsu, as
well as other advertisers.
Data as of January 1994
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