TOKYO -- The livestreaming event hawking model trains was a hit. An employee at Japanese hobby shop chain Popondetta showed off a variety of items for the camera to delighted comments from viewers, and orders flowed in.
Early this month, Aeon Mall -- a subsidiary of Aeon, Japan's largest retailer -- opened a livestreaming space for tenants at its Makuhari New City location near Tokyo.
This service, called Live Shopping, has garnered interest from consumers as the coronavirus pandemic keeps people away from malls. Aeon Mall is gradually rolling out Live Shopping at all of its 80 or so locations across Japan, the largest such initiative by a retailer here.
But the service actually started months earlier in China. Aeon Mall began setting up in-mall studios last May, which tenants have used to market a steady stream of products to online consumers.
Aeon, one of Asia's leading retailers, has long focused on brick-and-mortar stores while neglecting new technology. Now, the company is importing digital services to its home market after pilot programs in China, the center of Aeon's tech revolution.
Aeon stores in China have adopted new technology at a rapid clip since 2019, when the company set up subsidiary Aeon Digital Management Center in Hangzhou.
The unit manages data from 5.4 million supermarket customers in mainland China. It has released an app with services including online ordering and the ability to scan products and check out via smartphone rather than at a register. The app offers coupons and other promotions based on each customer's shopping history.
Aeon also has developed self-checkout terminals resembling giant smartphones. These can connect to facial recognition functions in apps like Tencent Holdings' WeChat Pay, letting customers pay for their purchases just by scanning their faces and entering a code.
After testing these services in China, Aeon picks the ones best suited to Japan and introduces them in its main market.
China is not a big part of Aeon's business. The retailer, which entered the country in 1996, had about 490 locations there at the end of February 2020, earning 276.5 billion yen ($2.61 billion at current rates) in operating revenue during fiscal 2019 -- 3.5% of what it brought in from Japan.
But China became the starting point in Aeon's digital pivot for two reasons, one of which is the country's openness to new services like superapps from companies such as Alibaba Group Holding that can even calculate credit scores for users.
Consumers are less leery about companies using their personal data than in other markets, which helps Aeon gauge the risks of bringing a new service to Japan. China also boasts a wealth of talented developers.
The other factor is the smaller scale of Aeon's Chinese operations. "We were able to do this because we didn't have anything" in China, a company source said.
Around the time Aeon Digital Management Center was established, Chairman Motoya Okada -- then the group's president -- fumed that Aeon's business in Japan was "going nowhere because of unnecessarily conservative and negative thinking." The familiarity of its massive network of physical stores made it difficult to adopt new digital ideas.
A further complication was that each company acquired by Aeon had its own systems, demanding more time and effort to develop services that work across the group.
The relative lack of such constraints in China opened the door to new technologies that can be adopted in Japan as well as in Southeast Asia, where Aeon has nearly three times as many stores as in China. The retailer created a new subsidiary in October to spread technology developed in China to the rest of the group.
Aeon also aims to unite all the consumer information from its various businesses into one central database. The company has issued Aeon credit cards to 46 million domestic and foreign customers, and 85 million cards for its Waon e-money service.
"We operate one of the country's largest customer databases," yet this valuable asset is "wasted" by being split among the group's various companies, said President Akio Yoshida.