Coronavirus spurring change and innovation in Japan’s restaurants and retail sector

The coronavirus has hit the world hard and it’s not slowing down. While the number of confirmed COVID19 cases in Japan has been relatively low compared to some other countries, the impact on the Japanese economy has been significant and has been spurring significant changes in the food service and retail industries over the past few months. Many of these changes are likely to have long-reaching impact.

Above: Family restaurant chain Saizeriya now offers delivery as well as other measures to reduce staff and customer interaction.

Food delivery services are booming in Japan

As people refrain from going out, Japanese consumers have increasingly started to use food delivery apps such as Uber Eats. Uber Eats had about 1.6 million users this January, but jumped to almost 2 million by March and even higher in the following months. Other delivery apps include Demae-can, dDelivery and Rakuten Delivery, and the competition in the delivery market has been fierce. In response to the growing number of people using restaurant delivery services, family restaurant giant Saizeriya decided to start delivery too this month. As recently as the end of last year, the president of Saizeriya said that he was not considering offering a delivery option- the impact of the coronavirus has been enormous enough to cause a 180-degree turnaround in corporate policy.

The online supermarket industry has a very small share of food sales in Japan, but new consumer shopping habits brought on by corona have provided a tailwind for this industry. According to a recent survey, about 60% of online supermarket users say that the frequency of their online supermarket use has increased in the last three months (January to March, 2020). As the number of users grow, retailers have started to focus more on their online supermarkets. The largest retail company in Japan, AEON, has announced that it will increase its online supermarket sales by 50% YoY by early next year, which would grow online sales to about 10% of its in-store food sales. Supermarket giant, Ito-Yokado has also just started full-scale operation of its online supermarket app. These market leaders’ moves are worth paying attention to as they could well inspire other players and bring significant changes to the online supermarket industry.

Infection control measures are changing the restaurant and retail landscape 

There are currently no standardized Japanese government requirements for infection control in stores, so shops and restaurants are on their own to find ways to make consumers feel safe. To ensure that guests feel comfortable eating, many restaurants have taken various measures against coronavirus. This can include plastic shields between the tables or a reduced number of chairs to prevent customers from getting too close to each other. What the major food service chains do always draw attention. Some are trying fairly analog ideas – Saizeriya has stopped having staff take orders and started letting customers to fill out their own orders on paper to minimize the contact between customers and staff.

Kichiri, however, is more extreme. Kichiri is an izakaya pub chain with around 40 restaurants in Japan. A walk-through sanitizing gate was installed at the entrance. When customers pass through, hypochlorous acid water (HAW) is sprayed all over the body from four pipes installed at both ends of the gate. The number of customers entering the restaurant is checked through a monitor. Customers are then asked to take a piece of paper with a map of the restaurant with table numbers written on it and move to their seats by themselves. Customers can then use their smartphones to order food by scanning a QR code on the table to access a website and check a menu.

There are changes on the retail side as well. Lines are drawn on the ground at regular intervals in front of the cash register to encourage social distancing. Transparent shields hang in front of cash registers to prevent infections between clerks and customers. But the most significant change has been the rapid shift to cashless payment. While Japan’s government had made some effort to promote cashless payment systems before corona arrived, Japan has been I famously reluctant to give up its love of cash and had been lagging in the Asian region in terms of cashless payments. But once again, coronavirus is pushing the adoption of new technologies. Various prepaid smart cards and mobile phone payment apps are accepted in stores, taxis and restaurants, with some even offering discounts for using cashless options.

Izakayas have been forced to venture into new business models and revenue streams

Coronavirus has had an impact on all types of restaurants, but the impact on izakayas has been particularly significant. Significant enough that some izakaya chains have even decided to branch out into new services. For example, Watami, the second largest izakaya chain in Japan, with many different izakaya brands in its portfolio, has entered the human resource staffing business. As a result of corona, Watami closed its outlets for a period of time, leaving many of its employees without jobs. To support these employees, Watami is planning to arrange placements for 780 of its full-time and 10,000 of its part-time employees with supermarkets, farms and elderly care facilities which are facing labor shortages. Another example is the Ap Company which runs Tsukada Farm, an izakaya chain operating mainly in the Tokyo metropolitan area. Since the sales of izakaya dropped significantly, Ap Company has decided to reduce the number of izakaya and start something new. Tsukada Farm has opted for a full renovation of some of its izakayas from pubs into a teishoku set-meal restaurant concept called Tsukada Shokudo.

Retail innovation includes a growth in unmanned convenience stores

Another corona era innovation is seen in JR East’s launch of unmanned convenience stores. The advantage of unmanned convenience stores is that they do not require face-to-face interaction with customers, as they use a camera in the store to identify the products customers pick up. At the exit, details of the purchase will be displayed on the touch screen and customers just need to hold a prepaid transportation card over a device to complete the payment and the exit gate will open. The company plans to expand its store network to 100 stores within four years, taking advantage of growing desire for less contact with people at stores. The first store was opened at Takanawa Gateway Station, the newest station on Tokyo’s central Yamanote Line in March of this year.

With the coronavirus showing no signs of settling soon, we expect the Japan restaurant and retail industries will be forced to continue to innovate and react quickly to the changing market.

CBD Products Making a Move into Mainstream Channels in Japan

CBD products are increasing in the Japanese market, taking steps to move from a niche product into mainstream channels. Although the Japanese government hasn’t explicitly legalized CBD (and continues to strictly ban cannabis itself and any trace of THC),  Japan allows importation of some types of CBD products as long as the products remain within the guidelines of several key relevant laws. CBD products first entered Japan around 2016 and have been continually expanding their market. Now, some mainstream retail chains have begun to handle CBD products and a CBD specialty store opened just this year in Tokyo’s trendy Harajuku.

cbd products in japan

Discount retailer Don Quijote has shelves of CBD vape liquid and HealthyTOKYO cafe in Harajuku offers original CBD beverages.

Don Quijote, one of the largest discount chain stores in Japan, with almost 400 branches nationally, sells a large variety of CBD vape products such as CBD vape liquids, cartridges, and disposable vaping devices. Don Quijote handles overseas brands such as NATUuR CBD, as well as domestic CBD vape liquid brands like Kamikaze and Tsukinoha. Not all branches of Don Quijote handle CBD products, but the fact that this kind of mega-chain has started to sell CBD indicates that CBD awareness has moved to the next level in the Japanese market.

Vape products are not the only CBD products that you can find in Japan. Biople by CosmeKitchen, a shop that sells natural and organic cosmetics, sells foreign branded health and beauty CBD products such as EliXinol’s CBD oil, Endoca’s CBD capsules and Medeterra’s CBD cream. Biople has 18 stores in Japan and some outlets are located in well-known department stores such as Lumine and OIOI (Marui).

While Don Quijote and Biople sell a variety of CBD products, they don’t have their own branded products. HealthyTOKYO CBD Shop & Café, the first CBD specialty store in Japan just opened this year, sells its own branded CBD products. HealthyTOKYO not only sells CBD oil, cream, and capsules but also CBD snacks, coffees, teas and cocoa in their café.  According to the manager, their own private brand HealthyTOKYO CBD is the best-selling of their product lines. The store’s main customers are non-Japanese people and travelers, and therefore sales have unfortunately dropped recently due to COVID19 and the decline in tourists.

With CBD products beginning to appear in popular discount chains and well-known department stores, as well as many online channels, it is clear that CBD has entered a new phase of market expansion. As more people become aware of what CBD is, we expect further domestic product development, increased imports and potentially new usages in health, beauty and food products.

Interested in understanding more about the CBD market in Japan or understanding the steps that exporters have to take in order to export CBD products to Japan? Reach out to us at inquiry@merosconsulting.com


What is CBD?

CBD (Cannabidiol) is a chemical compound found in cannabis. Unlike the cannabis compound THC (Tetrahydrocannabinol) that makes a user feel “high”, the chemical compound CBD is associated with health benefits such as relaxation of the mind and body and relief of anxiety and worry. Products such as oils, cosmetics, and even snacks that contain CBD are increasingly popular in many countries around the world.

 

Farming in the US during a Pandemic: Video “Report from the Farm” in Iowa

Iowa corn and soybean farmer April Hemmes gives a quick video update here on farming in May 2020, as she deals with both planting a corn crop and juggling the social distancing needs during corona restrictions. It’s a peek at her field, a look at her tractor and discusses changes brought to farming families and farmers by COVID19.

May 2020 is a time when farmers are planting crops, despite knowing that the harvest prices are likely to be low. They are watching the heartbreaking choices that livestock farmers are making when there are few channels to send their livestock.

April Hemmes is an award-winning farmer-leader in Iowa and advocate for agriculture, for women in agribusiness and enthusiastic about sharing her insights from the field in the US. Her energy and practical optimism is something we at Meros really appreciate.

Our friends at Women in Agriculture (WIA) in the US produced this report from the field as part of their new Women in Agriculture Resource Center, which offers current insights and responses from US farmers and agribusinesses on the impact of COVID19 on global food and agriculture supply chains. WIA has kindly added Japanese subtitles to this video for us! 日本語字幕付き!

https://www.youtube.com/watch?v=Wkiy2MmFu0M&t=3s&fbclid=IwAR3_rLjbJf_XxlECNe6Mak0mGGKkXsXowphWzWqxu8cJF83leB69jx-ITPw