Commentary: Insights for U.S. retailers from the Japanese retail landscape

Chain Store Age

Originally published in Chain Store Age.

For Americans, Japan often brings to mind colorful neon signs, futuristic technology, and dense cities, which is pretty accurate for urban areas like Tokyo and Osaka. Japan is poised to be one of the fastest growing and largest e-commerce markets in the world, with an annual growth rate of nearly 10%.

Currently, it’s the fourth largest e-commerce market, ranking just behind the U.S., UK and China. Japanese juggernaut Rakuten rakes in $31 billion in annual e-commerce sales, Japanese consumers are also comfortable with technology and online shopping, with 74% of the online population shopping online and 91% of the population using the internet.

These factors make Japan one of the most innovative global markets in terms of eCommerce, and in some instances its technology outshines the United States. On a recent trip to Japan, I assessed Japanese shopping habits, retail options, and innovative technology. Here are some key takeaways regarding Japanese shopping and e-commerce:

Shopping needs to have an entertainment factor.

From Harajuku’s Omotesando to other major malls scattered across Tokyo like the Takashimaya in Shinjuku, Japanese urbanites enjoy leisure shopping. Malls are consistently packed with people, and though they tower dozens of stories, throughout the day these malls are drawing in a wide range of demographics, including students, professionals, and families alike.

Studies indicate that in recent years leisure time has been on the rise in Japan, despite the country’s workaholic reputation. Trends show that brick-and-mortar has continued popularity with Japanese consumers that value customer service and in-store experiences.

The bar is high when it comes to entertaining shoppers, and because of this, retailers invest in interactive experiences and engaging displays. This has made Japan famous for its restaurant window displays, but the concept extends to retail as well. Stores such as Tokyu Hands make shopping playful and full of surprises, with demo models on the shopping floor to help shoppers try the products.

I bought a toy at Tokyu Hands that offers uplifting and chatty phrases every time the refrigerator is opened, and gently reminds anyone in earshot to close the door. Shoppers in Japan are used to machines and appliances having a voice – from refrigerators to toilets to elevators. This makes technology feel not only useful, but human.

The vending machine locator app Vendi shows that vending machines are found on practically every block in many parts of Tokyo. The machines are an inherently interactive way to shop for everything from ramen to unique drinks and gifts. This further underscores the expectation that shopping should be a fun and easy experience.

As the brick-and-mortar landscape continues to change in the U.S., it’s increasingly important to build excitement and draw for the in-store experience. Retailers should not only be focusing on functional technology solutions that enable shopper tasks, but also using technology to make the experience fun. As voices like Alexa and Siri become more ubiquitous in the United States, retailers will be challenged to personify their own brand, and bring it to life in new and relatable ways.

AI & VR are soon to be mainstream.

While enjoying the shopping culture of Japan, there was one innovative experience that stood out from the rest. GU, a fast fashion retailer owned by Uniqlo has a cutting-edge store in Harajuku that combines artificial intelligence, virtual reality, and gamification to create a shopping experience similar to playing with Snapchat filters or Bitmoji characters. This tool takes the typical “virtual try-on mirror” experience to a whole new level.

The shopper stands in front of a virtual mirror, which creates a realistic animated avatar using face recognition and photography. The shopper can then explore different outfits, dressing their avatar to build an outfit. And of course, like most appliances and machines in Japan, the technology talks to the consumer in a friendly way.

Interestingly, this concept store did not allow for in-store purchases, and instead provided a scanned QR code, which drives participants to an online purchase experience for home delivery. This was a truly novel way to evolve virtual try-on and keep tech not only functional, but fun.

Since technology works from a solution-based approach, it is important to take a step back to think of how the experience can be made special. As tech terms like “endless aisle” gain popularity and become a business capability to check off a list, business leaders should seek the best possible experience for a given feature, and consider how it can be enhanced to surprise and delight.

Soon, having omnichannel technology available will not be a distinguishing factor from a consumer’s perspective; instead, the consumer will notice the delightful way the retailer brings this to life. Playing around with photobooths in a video arcade and making a “kawaii” photo with filters and bubbly quotes also underscores how far along photography and visual recognition has come. We know that Americans enjoy humor videos and quick clips; so brands should be able to capture that excitement as well.

In conclusion, as U.S. retailers strive to build practical technology solutions to shopping, we must also prioritize technology that can make brands stand out. The technology is there to create real-time photo filters, personalize virtual try-on, and give experiences a voice. And now the race is on to see who can be the first to leverage them in meaningful ways.

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Rigel Cable / Chain Store Age

Rigel Cable is director of data analytics at Astound Commerce.