Japanese ‘R’ Us: Market Opening : <i> After a struggle, Toys ‘R’ Us opens near Tokyo : </i>
“I came to buy a Christmas gift for my daughter, but she wants everything. She’s got to decide on one,” moaned Emiko Endo as she trailed her 2-year-old through the isles of a Toys “R” Us store.
Sound familiar? The lament echoed with a wonderful resonance across the Pacific Ocean because Endo along with 17,000 other Japanese consumers jammed the first Toys “R” Us store in Japan on opening day. The world’s largest toy retailer made its debut in the Tokyo suburb of Amimachi last Friday and rang up weekend sales that set a grand-opening sales record for the Paramus, N.J.-based company.
The store was three years in the making and took the help of Washington at that. Access to Japan had been a flash point between U.S. and Japan trade negotiators during the Structural Impediment Initiative talks. The phenomenal reception of Toys “R” Us challenges the conventional wisdom that quality-conscious Japanese consumers are not bargain hunters.
The U.S. chain is the first foreign company to operate a full-scale toy discount retail outlet in Japan, and it hopes to have 100 stores there one day. The Japanese pay exorbitant prices, particularly for toys, because of a multi-layered distribution network. The U.S. chain is cracking open the market, which may mean wider access for U.S. goods.
Fearful Japanese toy wholesalers and retailers have likened the intrusion of Toys “R” Us to Commodore Matthew C. Perry’s black ships, which forced a closed Japan to open up to the Western World. But the average Japanese shopper doesn’t agree. “For a consumer, this is great. I’m thrilled,” gushed Nobuyoshi Katsumata as he pushed a cart filled with toys for his 3-year-old.
Tokyo has eased its “big store law” that allowed mom-and-pop retailers to delay for up to 10 years the approval of any nearby large store. The law was revised to dramatically speed the application process.
Even then, it was not easy for Toys “R” Us. The chain, which can sell at discount prices by buying direct from manufacturers, had to cut through the Japan’s notorious distribution labyrinth. It was a struggle to buy direct in quantity from Japanese manufacturers, but the company managed to cut direct purchase deals with more than 50 Japanese toy makers.
About 40% of the store’s stock in Tokyo is imported and not necessarily from America. So the U.S. trade deficit from Japan is unlikely to shrink significantly. Still, the toy retailer’s presence shows that not every story about U.S.-Japan trade relations is filled with the spirit of Scrooge.
