Creating A Consumer-Oriented Distribution System
2. Background to Structural Change in the Distribution System
Significant structural change has been brought about by a series of major developments in the
distribution, manufacturing and transportation industries, among others, in response to
broader trends such as global integration, information technology, sharp increase in private
ownership of motorized vehicles and regulatory reform within Japan.
- Global Integration
Global economic integration has encouraged expansion and technology transfer by Japanese
industries into a variety of new markets, including many Asian nations. Goods for domestic
use can be procured more cheaply in overseas markets than in Japan's markets. As a result
of continuing efforts to liberalize imports and reduce tariffs, coupled with the rise of the yen in
recent years, overseas procurement in the distribution industry and in certain manufacturing
industries is on the rise.
- Information Technology and Sharp Increase in Private Ownership of Motorized Vehicles
Systems such as the Point-of-Sale (POS) and Electronic Data Interchange (EDI) are coming
into widespread use as a result of rapid advances in information processing and
communication technology, the development of the associated hardware infrastructure and,
the increasing acceptance of this technology within society. POS statistics enable
businesses to maintain accurate inventory and production management, while EDI shortens
lead time for procurement and makes it possible to reduce personnel overhead. In these and
other ways, technology advances have helped to reduce costs throughout the distribution
At the same time, motorization enlarges the overall trading area and allows the retail sales
industry greater freedom in choosing sales locations and boosts the profitability of larger
- Modifications to the Large-Scale Retail Stores Law
Since 1990, Japan's Large-Scale Retail Stores Law has been amended three times to make it
easier for large retailers to open new stores and to own a larger number of outlets nationwide.
Together with sharp increase in private ownership of motorized vehicles these reforms have
encouraged the emergence of new retailers and the establishment of new retail locations by
existing retailers, particularly in suburbs which can accommodate larger parking facilities.
Falling land prices and interest rates coupled with the decline in the ratio of job offers to
applicants, has encouraged the establishment of new firms in the distribution industry. This
is particularly noticeable among those firms specializing in large retail outlets.
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