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Datawatch

Pandemic sparks transformation in Japan's retail marketing

Supermarkets forced to sell fewer products as consumers spend less time shopping

Customers are spending less time at supermarkets, deciding what to buy before they shop in order to adhere to social distancing guidelines.

TOKYO -- The number of products in Japan's supermarkets is decreasing.

Nikkei analyzed the data of Nikkei POS, a database of retail prices and sold volumes at stores in Japan, and learned that in 2020, the number of products decreased in about 70% of the food and everyday items.

Amid the pandemic, customers are spending less time at supermarkets and have decided what to buy before they shop, which is making signature products from well-known brands perform better than before. As a result, retailers and manufacturers have narrowed down their product portfolio.

The result is that the pandemic has altered consumption markets in Japan.

In a survey conducted between December 2020 and January 2021 by Toppan, a publishing company, and One Compass, a digital advertising company, 41% of respondents said they spent "less than 20 minutes" shopping at supermarkets, an 11 percentage point increase in people spending such short periods shopping compared with pre-pandemic times. About 30% of respondents said they "decide which products to buy in advance," which is twice as many as did so pre-pandemic.

Due to the shorter times spent shopping, retailers have changed their marketing strategies. Inageya, a supermarket chain, said they have narrowed down the number of products they put on their shelves.

Nikkei POS data underlines this trend -- it shows that in December 2020, the number of lipstick products available in stores fell 18% when compared with pre-pandemic levels. On the other hand, the range of face masks went up 24%. Overall, out of the 670 product segments in the database, 67% saw a decrease in the number of products.

As a result, signature big-brand products are now more likely to be chosen in stores.

The number of alcoholic cocktail beverages sold in cans declined 11% year-on-year in December 2020, while lemon-flavored ones, the most popular flavor in this category in Japan, accounted for 47% of the total sales revenues, up 7 percentage points from the previous year. Asahi Breweries said that Japanese consumers now buy in bulk and have a tendency to buy signature products; thus, the company has downsized its product portfolio.

A similar trend has been noted in frozen pasta meals; the number of frozen pasta products decreased by 15%, while the overall market size for frozen pasta meals grew.

Meanwhile, social distancing policies have put a halt to new product development. Nichirei Foods, a frozen food manufacturer, launched 14 new products in the autumn of 2020, less than half the number of the previous year. This was partly because working from home hindered such developments.

The shrinking number of products does not only have a negative impact on business; there will be less work for retailers and logistics companies, but manufacturing is also becoming less efficient. However, Hiroaki Watanabe, a retail industry analyst, said, "supermarkets will need to expand their private brands and compete by discounting."

According to a household survey by the government, the recovery of consumption expenditure has so far been sluggish. As people continue their own austerity measures amid the pandemic, supermarkets and food manufacturers will need to speed up the transformation of their marketing strategies.

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