ARCTIC DIMENSION

Design – LifestyleCross-sectoral Business Opportunities

Business Opportunities Quick Check Japan

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Country Facts 1• GDP and information on major cities

GDP : JPY 532,302 billion (2004)

GPD (gross prefecture production)1. Tokyo: 81,843 billion 2. Osaka:38,296 billion3. Aichi:33,923 billion

• Educational level• Compulsory education (until Junior High School) :

99.98%• High School : 97.30%• University (include 2 years collage) : 49.00%

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Country Facts 2• Population

• Whole Nation : 127,687,000 (2004) • Age range: 0-14: 14% / 15-64: 67% / over65: 19%

• Major city population Tokyo(1st): 8052000 Osaka(3rd): 259400 Nagoya(4th): 216900 Sapporo(5th): 1806800 Fukuoka(8th): 1331400 Sendai(12th): 946600

• Marital status division (2004) ・ House Hold : 46,323,000 ・ Single: 10,817,000 ・ Parents and child (couple/parents+child/single parent+child) : 2,8060,000 ・ Grand parents and parents and child : 4,512,000 ・ Others : 2,934,000

- rate of late marriage is increasing in nation wide - rapid increase in rate of single especially urban area - rate of divorce has been continuously and rapidly increasing for these 10 years

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Everyday lifestyle

• Time Consumption of daily life• Living time consumption

1. Sleeping/Eating etc: 10.34h / day2. Work/Household etc: 7.00h / day3. Free Time: 6.26h / daydiscretion on Work / Household time and incretion of free time

especially in 60’s age• Free time time consumption

　 ・ Relaxing time (reading, TV) : 3.53h / day　 ・ Active free time (study, hobby, sports, volunteer activities etc.) :

1.10h / day stagnation in free time activities / decrease of active activates even

people wish to do• Living expenditure per household

Average : 304203JPY/month 1. Education 2. Refresh (e.g. alcohol drink, pet, gardening, hobby) 3. Information (e.g. PC, Internet usage, mobile) 4. Outsourcing (e.g. prepared food, eat out, day care for child) 5. Health (e.g. health foods, faintness)

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Keywords for Understanding the Life style of the Japanese people

Health

Safety / security

AuthenticityOriginality

Concept Discriminating Taste

Innovativeness (IT)

Premium

Relaxation (Healing / Calming)Ecology

Convenience

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Key Factor of Change and Diversification of life style in Japan

• Rapidly increase of aging population and decrease of birth rate

• Diversification of Household type 3 generation family (grand parents + parents + child) – 2 generation family – increase in single house household

• Rapid increase of number of woman working outside the home

• Collapse the myth of steadily and predictable increase of income

• Rapid penetration of Information Technology Chang and diversification of Lifestyle

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Consumption Patterns of the Japanese

• Increased selectivity and polarization in consumption minimum consumption in daily life products and not much

limitation in premium consumption • Obsession with food freshness and quality highly concern about food safety especially recent food safety

problem (BSE, Bird Flue, Pesticide residue in vegetable etc.)• Increase in dining outside the home changing of life style ( increase of female employment rate /

aging society)• Growth in convenience shopping changing of life style ( increase of unmarried people, increase

of female employment)

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Recent attractive consumer target

• Active Senior actively participate in society and spend time and money to enjoy their own life. Average saving for over 70’s is JPY 20 million• A large baby- boomer cohort (born in between 1971 -1974) JPY 80 trillion market in 2007 because of their retirement money• Parasite Single age 20 – 34 : 10 million parasite singles• Six Pockets market for kids / parents+ 2 grand parents (6 pockets) spend their

money to child or grand child because of decrease of child birth, parents and grand parents will be able to spend the money for grand child

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Keyword for Japanese Consumer Behavior High Price

Convenience Premium 37%(2000) 35%(2003) 13%18% ・ Main customer: 40’s, 50% male ・ Main Customer : 20’s, 30’s unmarried ・ Market channel : Convenience Store Male, Female Internet channel ・ Market Channel : Female: Department Store ・ Consumption Eagerness: weak Male: Consumer Electronics Mass Merchandisers ・ Consumption Eagerness: Strong

weak discriminating taste strong discriminating taste

Reasonable Price Exhaustive Search 40%34% 10%13% ・ Main Customer: 60’s ・ Main Customer: 10’s, 20’s ・ Market Channel : Discount Store　 ・ Consumption Eagerness: Weak ・ Consumption Eagerness: strong

Law Price

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Keyword of Lifestyle Concept in Japanese Market

• Slow Life Eco LOHAS

• Brand Accessible Luxury Brand Luxe

• Universal Design

• Traceability

• Healing & Health business

Detox / Massage / Esthetics

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• Lifestyles of Health and Sustainability, LOHAS, is a new-coming end consumer’s trend in US and in Japan.

• Its market conservatively estimated at $228.9 billion in the U.S., and growing. There is no statistical data for Japanese market, but estimated large scale of market segment and rapidly growth.

Trend of Lifestyle Creation in Japanese MarketLOHAS (Lifestyles of Health and Sustainability)

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Trend of Lifestyle Creation in Japanese MarketLOHAS market segment

• Green building and industrial goods 

• Renewable energy• Resource-efficient products• Socially responsible investing• Alternative transportation• Environmental management • Natural, organics; nutritional

products• Food and beverage• Dietary supplements• Personal care• Ecological home and office

products

• Organic / recycled fiber products• Environmentally friendly

appliances• Eco-tourism and travel• Health and wellness solutions• Acupuncture, homeopathy,

naturopathy, etc.• Holistic disease prevention• Complementary medicine• Mind, body and spirit products

such as CDs, books, tapes, seminars

• Yoga, fitness, weight loss• Spiritual products and services

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Proposal for Life Style,Selling concept & not selling Product; Eco, LOHAS, Healthy

• In some cases, environmental benefits have come to be expected, such as with energy-efficient electronics and appliances. Due to a variety of forces, such as energy blackouts, escalating fuel costs, and improved technology, buying energy-efficient appliances and electronics is now second nature to many consumers. These market forces have also been driven from decades of government involvement, through programs.

• Furthermore, about two-thirds of consumers indicate a willingness to spend more on the initial purchase price for products that will save them money on their electric or water bills in the future. This shows a predisposition to “invest now for future savings.”

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Life style creationLOHAS & Branding for Values-Driven Consumption

• Many environmentally-friendly products on the market today are attractive to consumers, even if the primary benefit is not solely environmental.

• Many products offer health benefits (such as natural/organic

food and personal care). Others offer cost savings (as with energy efficient products and hybrid cars).

• Many premium brands incorporate LOHAS values. These brands are able to sustain brand image (and price) premiums, perhaps in part because they have developed meaningful and differentiated LOHAS-related platforms.

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Penetration of lifestyle concept (Medium)

• TV program program related LOHAS http://www.tv-tokyo.co.jp/lohas/lohas.html • Magazine Lifestyle magazine: “BRIO” “LEON” ”Croissant” “SOTOKOTO” “ELLE DECO” Free magazine: “R25” “Hot Pepper”• Events Lifestyle Forum (exhibition, music live, seminar type talk session) http://www.lifestyle-forum.org/ Slow Food event at Hotel or famous popular restaurant (invite famous shef / slow food menu / cooking class etc) Interior Lifestyle Event http://www.interior-lifestyle.com/en/index.html http://lifestyle-net.com/myroom/menu/pdp/experience/report/index.html • Internet site http://www.woman.co.jp/ http://woman.excite.co.jp/life/

* WEB is only available in Japanese

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Recent Trends in Major Retail Store Categories 1/3

• Department Sore (annual sales: JPY 8.43 trillion)Seven straight years of negative growth - 1. Takashimaya (Osaka) / 2. Mitsukoshi (Tokyo) / 3. Daimaru (Osaka) / 4. Isetan (Tokyo) / 5. Marui (Tokyo) http://www.takashimaya.co.jp/ (only Japanese)

• General Merchandise Stores (annual sales : JPY 8.5 trillion) - Separating the winners from the losers - Ito-Yokado / Aeon / Daiei http://www.itoyokado.co.jp/company/index1_e.htm• Supermarkets (annual sales : JPY15.9 trillion) - Intensified competition over “Food” crosses store category 　　　　 boundaries - Life Corporation (Osaka) / Maruetsu (Tokyo) / Tokyu store (Tokyo) http://www.lifecorp.jp/ (only Japanese)

* Some pictures of the each type retail store are available on WEB page for the reference.

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Recent Trends in Major Retail Store Categories 2/3

• Shopping Center (annual sales : JPY 26.2 trillion - declining number of new SC opening - Roppingi Hills (Tokyo) / Sapporo Stellar Place (Hokkaido) / Aeon Ota shopping Center (Gunma) http://www.roppongihills.com/jp/index.html ( only Japanese)• Convenience Store (annual sales : JPY6.7 trillion) - continued expansion through “scrap & build” - Seven-Eleven / Lawson / Family Mart http://www.sej.co.jp/english/index.html• Home Centers (annual sales : JPY3.9 trillion) - Pace of growth decelerates - Cainz / Kohnan Shoji / NAFCO http://www.cainz.co.jp/english_Site/e_index.html• Consumer Electronics Mss Merchandisers - Digital electronics boom leads to market growth - Yamada denki / Yodobashi Camera / Kojima http://www.yamada-denki.jp/company_e/index.html

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Recent Trends in Major Retail Store Categories 3/3

• Drugstores (annual sales : (JPY 2.5 trillion) - Rapidly growing new store type - Matsumotokiyoshi / Cawachi / Hac-Kimisawa http://www.matsukiyo.co.jp/index2.html (only Japanese)• Specialty Store Retailers of Private Lavel Apparel - Fast Retailing (UNIQLO) / Shimamura / Five Fox (Comme ca) http://www.uniqlo.co.jp/english/index_f.html• General Discount Stores - Limits of the low-price-only business model - Don Quixote / Mr. Max / Daiei (Topos, D-Mart) http://www.donki.com/index_en.php?lang=en• Mail-Order Business (include Internet Shop) - Growing to a size of over 2 trillion market - Rapid growth in TV shopping channels - proliferation on Internet sales

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New type Retail Store Category• Lifestyle store Conran shop, Afternoon tea living, Franc Franc, Mono Comme-ca, Muji http://www.conran.ne.jp/ (only Japanese) http://www.afternoon-tea.net/ (only Japanese)• Gourmet Supermarket Seijo-Ishi, Kinokuni-ya, The Garden, Queens Isetan, http://www.garden.co.jp/ (only Japanese)• Basement Department Store which concentrate fixed food shop (Depa–chika) http://www.depachika.com/ (only Japanese)• Business Convenience Store Kinko’s http://www.english.fedexkinkos.co.jp/

• Flagship Store• Destination Store• Shoppertainment Store

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Seek for New Business Model Recent distribution market is moving into a phase of multifaceted

competition between complex store and store types / between different regions, instead of older pattern of homogenous competition between individual stores or store types.

A large combination shopping complex model: Combines the extensive product line characteristic of general merchandise stores with the specialized character of specialty stores in convenient and pleasant shopping experience. Emerging as new players in this market are not only retailers but also general trading companies, developers, food service establishments a variety of service enterprises.

Shopping Center ( regional model / neighborhood model) Railway station retailing (“Eki-naka” or (“in-station”)) Food entertainment themepark Combo with convenience store Outlet mall

The new business model is a place of growing potential for foreign retailers

because of low cost and the size and the diversity of site characteristics and will have a ability to create flexible store combinations.

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Reference

• Census : Ministry of Internal Affairs and Communication , Statistics Bureau

• “White Paper on Welfare and Labour” Ministry of Health, Labour and Welfare

• “imidas 2006”

• JETRO

• Mipro

• “Survey for Japanese lifestyle and life view” Industry Laboratory

• “Survey of 10 thousands people’s daily life” Nomura Research Institute