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News Release

The Future Trend of the Gap Between Business Formats in the Retail Sector
‐ The Consumption Market in 2015 by Business Format ‐

May 29, 2007

Overview

As birthrate decline and population aging continue, Japan's consumption market is likely to undergo a variety of changes. This report examines the data on the channels through which consumers make their purchases as published in the Ministry of Internal Affairs and Communications National Survey of Family Income and Expenditure and considers the future of the consumption market by sales format.

On the basis of the purchase channel data, the consumption trends among elderly people may be characterized as follows:
(i) Elderly people (those aged 60 or over) tend to spend more in ordinary retail stores and supermarkets than young people (those aged 29 or younger), and less in convenience stores, discount stores and mass retail stores.
(ii) However, structural change in the retail sector has led to change in the relative proportion of purchases commanded by the different channels. Over the last decade, the share of ordinary retail stores has fallen, while that of discount stores and mass retailers has risen.

Given these conditions, and assuming that the trend of change in the shares commanded by the different purchase channels recorded over the last decade continues, it is likely that the consumption markets for the different purchase channels in 2015 will be as follows:
(i) By sales format, supermarkets, discount stores and mass retail stores are likely to see considerable market growth. Although the share they command is small, mail order and other similar formats are also likely to see market growth.
(ii) In geographical terms, market growth is likely to be concentrated in and around major cities. However, it is likely that the market commanded by supermarkets, discount stores and mass retail stores will also expand in provincial areas.

Thus, identifying consumption demand in a society characterized by ongoing birthrate decline and population aging will require an approach that takes account of changes in population dynamics. In particular, it will be important to focus on the rapidly growing elderly market through (i) a clarification of pricing strategies, (ii) an emphasis on lifestyles and (iii) a review of regional strategies, among other initiatives.

For more information on the content of this report, please contact Hideki Matsumura, the Japan Research Institute, Limited.

Tel: 03-3288-4524
E-mail:matsumura.hideki@jri.co.jp

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