Summary
Seiyu is the fifth largest national retailer in Japan so the news is important from a brand and a distribution perspective. The clientèle of Seiyu, which is not a premium brand, do match the Wal-Mart clientèle in the US. From Wal-Mart's perspective this is the final stage of their re branding of Seiyu to Wal-Mart. In my opinion this will be a very long term transition, at least 5-10 more years prior to breaking even.
Analysis
On the surface, the entry of a fully owned Wal-Mart subsidiary in Japan should be news. However the condition of Seiyu makes it less than exciting. It reads more like a bail-out.
Seiyu has not turned around in the years since 2002 that Wal-Mart has had a minority and majority share of the company.
The Seiyu Co., Ltd. doesn't sell many Wal-Mart products and isn't a destination like the Wal-Mart stores in the U.S. If you compare Seiyu Stores to other foreign owned stores such as IKEA, the experience is 100% Japanese at Seiyu.
The Seiyu Co., Ltd. doesn't sell many Wal-Mart products and isn't a destination like the Wal-Mart stores in the U.S. If you compare Seiyu Stores to other foreign owned stores such as IKEA, the experience is 100% Japanese at Seiyu.
Sourcing from Japanese manufacturers means the look of the store is Japanese, not American.
Japanese housewives tend to shop daily, because they don't drive to the store as much as U.S. housewives do. Therefore the large sizes are not attractive.
In my opinion, if Wal-Mart doesn't learn from Starbucks and IKEA the re branding will take a lot longer to succeed.
In my opinion, if Wal-Mart doesn't learn from Starbucks and IKEA the re branding will take a lot longer to succeed.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
