Analysis of Retail Markets in Japan and Australia

This report analyses the retail markets in Japan and Australia, including differences in structure, size, and profitability. It also examines potential issues faced by organizations entering these markets and the impact of cultural differences.

Running head: INTERNATIONAL AND GLOBAL BUSINESS
INTERNATIONAL AND GLOBAL BUSINESS
Name of the Student
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Executive Summary
The report is based on the analysis of the retail based sectors of two countries
including Japan and Australia. The differences that are evident between the
structures of the retail industry is an important part of the analysis. The analysis is
also based on the profitability levels and the size of the retail industry in both the
countries. The issues which can be faced by the organizations which enter the retail
industry of Japan from Australia is a part of the analysis. The cultural differences that
exist among the two countries are considered to be a major part of the analysis that
has been made in the report.

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Table of Contents
Introduction........................................................................................................3
Choice of the two countries...............................................................................3
Understanding differences between the structure of the retail market in two
countries.......................................................................................................................3
Estimating the size and the profitability of Australia and Japan........................5
Analysing the potential issues which can be faced in retail market Australia
and Japan.....................................................................................................................7
Considering of the cultural aspects impacts retailing in Australia and Japan...8
Conclusion and recommendations..................................................................10
References.......................................................................................................12

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Introduction
Retail marketing process is based on the sales of services and goods from
the business organizations to the end users. This is the process by which the
retailers are able to promote the interest and awareness based levels of the services
and goods in order to generate the sales from consumers. The process of retailing is
thereby based on different approaches which retailers are able to use in order to
market the services and the goods. Different types of communication and advertising
based tools which are able to grow the levels of awareness among the prospective
consumers (Rezaei, Fahim and Tavasszy 2014). The development of a right
marketing mix thereby plays an important role in the effective operations of the retail
based organizations.
The report will be based on the analysis of the retail markets that have been
established in two different countries which are located in different areas of the
world. The different aspects that are able to affect the operations of different retail
based organizations in these two countries will be analysed in the report.
Choice of the two countries
The two countries that have been selected for the analysis in the report
include Japan and Australia. The retail industry within the countries and different
aspects which are able to affect the retail organizations will be a major part of the
analysis. The ways by which the retail organizations in Australia are able to operate
in Japan will be examined in the report.
Understanding differences between the structure of the retail market in two
countries
Australia - According to Pantano et al. (2017), the retail based industry of
Australia is considered to be a major contact point between the wholesalers or the
manufacturers and the consumers. The industry is able to provide effective
convenience points to the consumers so that they are able to acquire the required
services and products. The advent of online shopping on the other hand was able to
offer the products to the consumers with the help of different online platforms. The
process of development of the Australian retail industry is thereby driven with the

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help of huge number of factors that include, the preferences of the consumers,
advances in technologies and the different competitive pressures as well.
The retail industry of Australia had been quite isolated in nature due to the
protected markets and the geographic position. However, with the increase in
internet market based activities the Australian retail industry has been able to
become much more open in nature. A major development in the Australia retail
industry is based on the online shopping related activities. The retailers in Australia
are able to carry out a range of functions which include, providing convenience to the
consumers, developing a mechanism related to discovery of markets and the after
sales services (Kasemsap 2018).
The goods can be purchased in smaller quantities by the consumers which
are provided by the wholesalers and the manufacturers. The structure and nature of
the Australian retail industry has evolved in a huge manner in the last few years
which is thereby based on the changes which have taken place in different
technologies. The structure of the market has started changing in an effective
manner from the 19th century to the current position. The preferences of the
consumers and the technological changes are the major factors that are able to
affect the changes which have taken place in the Australian retail sector (Çifci et al.
2016).
Japan - The retail based industry of Japan has started changing after the
process of Meiji Restoration in the country. The structure of the business in retail
industry of Japan has faced many changes and turning points due to different
aspects which include, income, population, technology, competition and the legal
framework. These factors have led to the effective emergence of the different retail
formats of the country. The rates of consumption of the consumers have been
changing in the country. The retail based formats which are now being used in the
country have changed in a huge manner from the previous situation (Kaul 2017).
A major turning point which is an important part of the retail businesses is
considered to be the rise in competition between different domestic and global
organizations in the country. The emergence of the new formats in Japan have
further been a dynamic process which has led to changes in the structure of the
market. The levels of innovation in the Japanese retail industry have increased and

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this has been able to act as a major factor which has led to high amounts of
changes. The development of various new formats has also been able to play a
major role in the ways by which Japanese retail industry and its structure has started
changing (Zolnowski, Weiß and Bohmann 2014).
The levels of restrictions in the industry has also reduced in which has further
been able to lead to effective changes in the country. The lack of growth which has
been seen in the consumption of products in the Japanese retail industry is based on
the decline in levels of population in the country. The country has started entering
the era which is related to the decline in rates of population. The GDP rates of the
country have also been affected by the changes in rates of population. The
behaviour of the consumers had started changing from the year 2005. The
competition based levels have thereby started increasing among the local stores and
the global organizations which operate in the country (Çifci, Ekinci and Whyatt 2014).
Estimating the size and the profitability of Australia and Japan
Australia - The Australian retail industry had thereby started growing in size
from the 20th century. The concept based on the establishment of modern retail
based services has been an important part of the development that has been
depicted by the industry. The new retail based model based on the development of
malls was embraced by the Australian retail based sector. The first drive-in mall was
thereby established in the country in the year 1957. The size of the industry has also
started increasing in an effective manner after the 20th century. The different
organizations which have been able to play a major role in the increase of size of the
Australian retail industry mainly include, Wesfarmers and Woolworths. These two
organizations have developed the operations of the industry in an effective manner
(Ibisworld.com.au 2018).
The mall based culture in the country had thereby enabled the retailers to
provide different types of speciality stores and products to the consumers under a
single roof. The entertainment based factors of the industry had also started
increasing in an effective manner due to the changes which have been seen the
retail process. The global financial crisis which had taken place in the country in
2007 and 2008 had major effects on the sales of different retail based organizations
in Australia. The entry of major global organizations within the Australian retail

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industry had major effects on the sales and levels of profitability of the domestic
organizations. Another major development which had increased the business
prospects of the industry is the introduction of self-service within the retail industry.
This factor had played a major role in engaging the consumers within the shopping
based process (Kpmg.com 2018).
The advancement in self-service had thereby taken place in the modern times
based on the proper levels of adoption of the technologies which are user directed in
nature. The preference of consumers had played a major role in increasing the levels
of control and the cost based advantages as well. The Australian consumers had
also started accepting the self-service based methods in such a manner which had
further led to effective innovation within the industry. The size of Australian retail
industry is also increased effectively with the help of franchising. The franchising
based model had mainly originated in the United States which led to the increase in
number of stores of different retail companies (Kpmg.com 2018).
This had played a major role in the ways by which organizations are able to
operate in the retail industry. The process of franchising had been able to increase
the expansion of the companies in both the domestic and the international market
based areas. The retail organizations in Australia had also started introducing their
private labels in order to operate in the industry effectively. The private labels were
mainly introduced in order to sell the products of the company to the consumers in
an exclusive manner. This is considered to be the most important factor which has
led to the increase of size of Australian retail industry (Kpmg.com 2018).
Japan - The retail industry is Japan is however quite different as compared to
that in Australia. The organizations which have their operations in the country
operate in a completely different manner as compared to the ways by which the
Australian organizations are able to operate. As compared to the retail industry of
Australia, the mall based retail format is not quite prevalent in Japan. The smaller
retail stores are quite common in the country. The dualistic nature of the economy of
Japan is considered to be a major reason behind the structure of retail market. The
distribution based activities in the country are also not quite effective for increasing
the size of the retail industries which operate in the country (McKinsey & Company
2018).

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The number of smaller retail stores in the country is thereby quite large as
compared to that in Australia. The laws and the regulations which have been
implemented by the government of the country has also been able to play a major
role in the development of smaller stores. The obstacles have thereby been
developed in the establishment of large stores in the Japanese retail based industry.
The Large Retail Store Act which was thereby established in the year 1973 has been
able to provide more importance to the size of the stores rather than its nature. The
time which is taken by the government in order to review the applications which are
placed for the development of new stores has also been able to cause negative
effects on the ways by which retail stores have been established in the country
(McKinsey & Company 2018). The ease with which retail stores are set up in
Australia and the easy entry of global retail based organizations is not available in
the retail sector of Japan. The behaviour which is depicted by the Japanese
consumers can also be considered to be a major factor which is able to affect the
operations of the different Japanese retail organizations. The effective entry of global
organizations in the country is not easy and has been able to cause issues for the
different retail based companies (Nguyen, Pham and Trieu 2018).
Analysing the potential issues which can be faced in retail market Australia
and Japan
Australia - The Australian industry has started facing major challenges in the
year 2018. The costs based on running day to day business operations is thereby
considered to be the biggest challenge that is being faced by the retail companies.
The rise which has been experienced in the operational costs of the retail
organizations is considered to be a major challenge that has been faced in Australia.
The future operations of the industry are also expected to face similar challenges
based on various costs of production. The changes that are taking place in the
industrial relation based laws have been able to affect the revenue levels of retail
organizations in a huge manner (Ibisworld.com.au 2018).
The rise in competition in the market has further led to the lack of loyalty
among the customers related to different brands. The understanding of needs of
consumers is considered to be an important factor which needs to be considered by
the retail companies. Data of the consumers is thereby considered to be a major

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factor which is able to affect the ways by which the company is able to offer the
products and services to them. The competition in the retail industry also needs to
addressed effectively by the retail organizations in order to maintain their position in
the industry (Ibisworld.com.au 2018).
Japan - The retail industry in Japan is however facing different types of issues
which are quite different from those which are faced in Australia. The levels of
productivity in the Japanese retail industry are low. Different types of barriers are
thereby evident in the market which have led to the lack of revenues of the industry
as well. The major reason behind low productivity in the retail market of Japan is
related to the presence of the unproductive traditional stores in the industry. More
than 50% of total number of stores in the country are traditional in nature. This has
been able to affect the overall revenues of the industry. The dynamics of the industry
have also been affected in a huge manner by the unproductive stores which operate
in Japan (Japanretailnews.com 2018).
The traditional stores however do not face any competition from the other
organizations in the industry. The foreign retailers who operate on a large scale
basis have to face huge levels of competition in the retail industry. The industry also
faces major levels of external barriers based on the levels of productivity and
revenues as well. The laws that have been imposed in Japan based on the
operations of the retail organizations have been able to play a major role and create
a barrier in the operations. The exit based barriers that are thereby present in the
market is able to affect the operations of the traditional retailers
(Japanretailnews.com 2018).
The retail industry of Japan thereby faces major issues related to the lack of
large stores in the country. The country thereby needs to improve the laws and the
regulations that are followed in order to increase the levels of profitability of the
industry.
Considering of the cultural aspects impacts retailing in Australia and Japan
The cultural differences between the two countries can be analysed in an
effective manner with the help of different factors which are a part of the Hofstede
Model. The analysis of the two countries with the help of this model has been able to

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depict that there are many differences between the cultures which are able to affect
the retail industries in a huge manner.
The power distance based score of Japan is higher as compared to that of
Australia which has been able to depict that the hierarchical organizational structures
are more prevalent in Japan. The Australian retail organizations thereby need to
keep this in mind before they plan to enter the country. The individualism on the
other hand is higher in Australia which depicts that the group based culture is
followed in Japan. The long term orientation based activities in the organizations in
Japan is however higher as compared to Australia which will further affect the
policies that are developed by the retail organizations in the country (Hofstede-
insights.com 2018).
Figure 1 – Hofstede cultural comparison
Source - (Hofstede-insights.com 2018)
For example, types of coffee which are sold in Australia are normal ground
ones and the freshly brewed ones. Australia is also considered to be a major coffee
consuming country of the world. However, the types of coffee offered to consumers
are quite normal. On the other hand, coffee lovers from all over the world visit Japan
for getting the proper taste of third wave coffee.

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Figure 2 – Japanese Coffee of art
Source - (Japanretailnews.com 2018)
Conclusion and recommendations
The report can be concluded by stating that the retail based industry and its
operations is quite different in Australia and Japan. The retail industry in Australia is
quite advanced and open in nature and that in Japan is developing. The retail based
laws in Japan have been a major factor which has affected the operations of different
organizations. The legal structure of the country has thereby been able to play a
major role in the ways by which the retail industry operates. The lack of larger retail
stores is also considered to be a major factor which has been able to reduce the

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levels of profitability of the industry. The format of stores and their operations is
thereby quite different in Japan as compared to that which is followed in Australia.
This has to be considered by the global Australian organizations before they plan to
enter the Japanese retail market.
Recommendations – The recommendations that can be provided to the
Australian retail industries before they enter Japan is based on the proper analysis of
the laws and the policies. The market conditions also need to be analysed by the
companies in order to start their profitable operations in the country. The cultural
differences can also have major effects on the Australian retail organizations.

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