

In Japan small stores (94.1 percent of all stores) sell 50.4 percent. In the US, small stores (81.6 per cent of all stores) sell 32.9 percent of nonfood items. A disproportionate percentage of nonfood sales are made in small stores in Japan as well. In Japan, small stores (95.1 per cent of all retail food stores) account for 57.7 percent of retail food sales in the United States small stores (69.8 percent of all retail food stores) generate 19.2 per cent of food sales. While other countries have large numbers of small retail stores, the major difference between small stores (nine or fewer employees) in Japan and the US is the percentage of total retail sales accounted for by small retailers. It is not unusual for consumer goods to go through three or four intermediaries before reaching the consumer – producer to primary, secondary, regional and local wholesaler and finally to retailer to consumer. An equal density of wholesaler supports the high density of small stores with small inventories.

The traditional Japanese structure serves consumers who make small, frequent purchases at small, conveniently located stores. The density of middlemen retailers and wholesalers in the Japanese market is unparalleled in any western industrialized country. The Japanese system has four distinguishing features: (1) a structure dominated by many small middleman dealing with many small retailers, (2) channel control by manufacturers (3) a business philosophy shaped by a unique culture, and (4) laws that protect the foundation of the system – the small retailer. The Japanese distribution structure is different enough from its US or European counterparts that it should be carefully studied by anyone contemplating entry. Even though the market is becoming more open as many traditional modes of operation are eroding in the face of competition from foreign marketers, it still serves as an excellent case study for the pervasive impact culture plays on economic institutions such as national distribution systems. Distribution in Japan has long been considered the most effective non tariff barrier to the Japanese market.
