Outbreak pushes shoppers to buy things online in Japan

Bloomberg

Now that Japan’s government is urging consumers and businesses to step up efforts to contain the coronavirus outbreak, shoppers may finally have no excuse but to embrace e-commerce and wean themselves from brick-and-mortar stores.
Prime Minister Shinzo Abe declared a state of emergency for Tokyo and six other areas last week. In response, Uniqlo clothing owner Fast Retailing Co, department store operator Isetan Mitsukoshi Holdings Ltd and other retailers are temporarily closing shops or cutting hours, while grocers and other essential services will remain open.
Online shopping got a boost in the US, China and the rest of the world as more people turned to the web to buy essentials and shop for clothes, gadgets and other discretionary items. In Japan, it’s been a different story — the archipelago has so far avoided the severe shutdowns that have crippled other nations, and e-commerce penetration has long been among the lowest of developed markets. Only 7% of transactions were online in 2018, according to government statistics.
“There could be first-time users during this time who see the merits of e-commerce,” said Takeshi Mori, a researcher at Nomura Research Institute. “After the coronavirus outbreak calms down, more people will be online in Japan.”

Digital Lag
That would be welcome news for the Japanese government, which has been promoting cashless payments and pushing businesses to embrace new retailing technology. More demand for web shopping could also nudge traditional retailers to invest in digital infrastructure to attract customers. Japan’s web shopping rate lags well behind the US and even more so compared with China, where a fifth of retailing is now online. One early convert is Shun Iwata, 51, who before the outbreak used to eat out during the week and shop in stores. Concerns over privacy also kept him away from web shops.
Now, he considers it an essential service and signed up for an Amazon.com account a month ago. He initially sought to buy masks and disinfectant because stores were sold out, but now browses for knick knacks, including a hard-to-find case for his car keys. “There’s a lot of things you can get online that you can’t find in the stores,” he said.
Rakuten Inc, the Japanese e-commerce company, said its online marketplace sales in recent months are higher than they were a year earlier. A spokeswoman for the company declined to provide figures, but said daily essentials were selling well. A spokeswoman for Amazon, which has been in Japan for two decades, declined to comment.
“There’s a big chance for e-commerce right now,” Takeshi Okazaki, Fast Retailing’s chief financial officer, said at the company’s earnings conference. “We haven’t seen any declines in e-commerce demand, and we’re having trouble keeping up with with shipping and logistics.”
The 109 Shibuya fashion building, temporary closed due to the coronavirus outbreak.
Even so, rising digital sales aren’t likely to make up for lost brick-and-mortar sales, not to mention the chilling effect the economic downturn is having on consumption. Most large retailers have said they are bracing for hard times ahead.
Last week, Tokyo Governor Yuriko Koike requested that all non-essential shopping facilities including malls close to slow the spread of the virus, and offered up to one million yen ($9,200) to support businesses that shut multiple outlets.
Ryuichi Isaka, chief executive officer of Seven & i Holdings Co, said the convenience store operator is considering new services, such as a system that would shorten shopping times in stores. “Consumers will change their shopping behaviour,” he said in an earnings call.
The question is whether people will stick with web shopping once things settle down, according to Mori.