Japan’s fussy food shoppers finally go online amid pandemic


Although Japanese shoppers aren’t alone in going online during the outbreak, the shift is remarkable for a country that had been expected to take years to embrace online food shopping because of a zeal for fresh and perfectly presented produce.

FILE PHOTO: A shopper wearing a protective mask pushes a shopping cart at Japan's supermarket group Aeon's shopping mall as the mall reopens amid the coronavirus disease (Covid-19) outbreak in Chiba, Japan May 28, 2020.
FILE PHOTO: A shopper wearing a protective mask pushes a shopping cart at Japan’s supermarket group Aeon’s shopping mall as the mall reopens amid the coronavirus disease (Covid-19) outbreak in Chiba, Japan May 28, 2020.
(Reuters)

The coronavirus has forced
Japan’s notoriously fussy food shoppers to abandon doubts about
online grocery stores, sending retailers such as Aeon Co
scrambling to meet a surge in delivery demand.

Although Japanese shoppers aren’t alone in going online
during the outbreak, the shift is remarkable for a country that
had been expected to take years to embrace online food shopping
because of a zeal for fresh and perfectly presented produce.

“I think that this pandemic has triggered an inflection
point in the adoption of grocery e-commerce,” said Luke Jensen,
executive director of Ocado Group, hired to build a
grocery e-commerce business for Japanese retail giant Aeon.

Most companies won’t disclose numbers, but retail executives
and analysts estimate internet sales now account for about 5 percent or
more of Japan’s total grocery sales, compared with 2.5 percent before
the pandemic.

Although that is still lower than some pre-crisis estimates
of 15 percent in China and even 7 percent in broadband laggard Britain, it
challenges a long-held belief that Japanese shoppers will always
on shopping daily and in person, checking the goods first-hand.

Yuri Ohtaka, a graphic designer living in Tokyo’s western
suburbs, began ordering from multiple online supermarkets in
March after seeing shoppers emptying shelves at a nearby store.

Although fears of shortages have subsided, online deliveries
have made it easier as she works from home, making three meals a
day for her family, including her 3-year-old son. She’s also
happy to avoid stores amid fears of infections.

“There’s no need for face-to-face, dealing with registers,
or standing in line,” she said, adding that she’s also persuaded
her parents to go online. “They were shopping every day in the
supermarket, and I really didn’t want them to.”

As more households have two people working, analysts say,
people want to spend less time shopping. But they still have
exacting standards for service and produce quality, which have
perplexed previous foreign entrants such as Carrefour
and Tesco.

Such changes are closely watched as Japan is one of the
world’s most valuable grocery markets, worth over 50 trillion
yen ($466.42 billion) a year. Per capita, only countries such as
Switzerland, Norway and Israel spend more on food.

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Sudden demand

Major Japanese supermarkets, despite talking about online
services for years, have only recently begun large-scale
spending on e-commerce infrastructure.

Most have struggled to meet the spike in demand, and
would-be-shoppers on Twitter have complained of difficulty
securing delivery slots throughout the crisis.

Aeon hired British online grocery pioneer Ocado in November
to build state-of-the-art robotic warehouses, aiming to fend off
rivals such as Amazon, Seven & i Holdings’
Ito-Yokado and a venture between Walmart-owned Seiyu and
e-commerce giant Rakuten Inc.

But the first of those warehouses won’t start operating
until 2023. In the meantime, Aeon said it is hiring more staff
to help pack online grocery orders, although it is having
difficulty hiring more delivery drivers.

Despite such constraints, Aeon expects online grocery sales
to grow 50 percent and account for about 10 percent of sales by
the end of its financial year ending next February, according to
company executives.

That is not an official target unveiled to investors, but
the company confirmed President Akio Yoshida, who was appointed
to the top job in March, set it as a goal.

Executives expect the shift to last.

“When people increase their use of online, they stay with it
rather than going back. In Japan we’d expect there to be a step
up in the growth of e-commerce,” said Ocado’s Jensen, who is
also chief executive of the group’s Ocado Solutions technology
business.

Smart warehouses vs Mom and pop

Analysts say the shift is also likely to favour bigger
retailers who can invest in high-tech warehouses capable of
handling large volumes rather than just having store staff pick
items from retail shelves and package them for delivery.

That could put smaller supermarkets and mom-and-pop stores,
already struggling to match the likes of Aeon and Ito-Yokado in
pricing, at a further disadvantage.

But Violetta Volovich, who has researched global grocery
industry trends for e-commerce consultancy Edge by Ascential,
said remote and costly high-tech fulfilment centres were not the
answer for all retailers.

Instead, she envisions many retailers adopting automating
more jobs in existing brick-and-mortar stores and embracing
features such as “click and collect”, in which shoppers pick up
online purchases at the stores.

She also said the rise in food e-commerce didn’t mean an end
to traditional grocery shopping.

“Just because people get pizza delivery doesn’t mean they will stop going to pizza restaurants,” she said.

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Source: Reuters



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