Builders See Market For Megamalls In Japan Americans Want To Introduce Japanese To Large-Scale Shopping

Yuri Kageyama Associated Press

Size. It worked before for U.S. retailers, when the megastore Toys R Us debuted in Japan in the early 1990s and brought the end of store size regulations that had long protected mom-and-pop stores.

Now American retailers hope size will work to their advantage again in a new foray into the Japanese market: supermalls.

Two U.S. developers, American Malls International of Washington, D.C., and California-based Koll, plan to open more than a dozen giant supermalls in Japan in the next few years.

Each megamall will be about 10 times the size of the few large-scale shopping malls now in Japan.

Although details remain sketchy, the mammoth malls will include parking for 10,000 cars, popular U.S. theme restaurants, movie theaters and a whole variety of American retailers that are already proving a big hit with the Japanese.

“Japan has a vast unrealized retail and entertainment potential,” said American Malls International President Herbert Miller in Tokyo recently. “Now, Japanese consumers are demanding quality at better pricing.”

American mall developers in Japan still have a fight ahead. One of their biggest hurdles will be finding suitable plots in this land-scarce country to build their sprawling consumer paradises. And slow-moving bureaucracy that’s resistant to new ideas will be another problem.

But malls are one area where Americans have an edge over the Japanese retailers, who have long had shoppers moving from cramped store to cramped store for their purchases.

“The Americans excel at making shopping a fun experience,” said Hideaki Yajima, spokesman for Jusco Co., a major supermarket operator which also runs smaller shopping centers.

The American developers can fall back on their network of U.S. “category killer” retailers pushing products that are still novel in Japan, like home furnishings and personal computer paraphernalia.

The Americans can also count on the track record of an array of retailers that have successfully cracked a market known as one of the world’s toughest - The Sports Authority, Office Depot, the Gap, Pier 1 Imports, Eddie Bauer.

The secret to the American success has always been quality and selection at reasonable prices. And the secret behind that is sheer store size, which translates into savings in labor and inventory.

A visit to Japan’s first Sports Authority outlet gives a glimpse into mall-shopping transported across the Pacific. The store is part of a Japanese-style shopping mall in Nagoya, 170 miles west of Tokyo.

“We believe the U.S. style will become the standard in the 21st Century,” said Shigeru Sato, a spokesman in Japan for the Fort Lauderdale, Fla.-based The Sports Authority. “The future lies in large-scale shopping.”

Converted from a shutdown textile mill, the 4,330-square-meter (3,600-square-yard) store, built just like The Sports Authority stores back home, is average in size by American standards.

But it’s anything but average in Japan.

“It’s so big. It’s like a warehouse,” said an impressed Kenji Kawara, a 24-year-old clerk who drove a half-hour looking for a good deal on running shoes.

Shoppers say they also enjoy the store’s casual all-American feel. The music filtering through the stacks of Air Jordans and racks of Miami Dolphins jackets is rock ‘n’ roll mixed with disc jockey jabber off American radio stations. And the signs are in English: “If you find a lower price, we’ll match it.”

Such touches may seem like silly gimmicks. But they have produced solid business results.

Since its opening a year ago, the outlet is projected to sell more than $15 million worth of merchandise. Retailers are betting that type of success could be repeated in a bigger mall.

Government approval for malls is slow in coming. In Moriya, a northeastern Tokyo suburb, American Malls International has run into opposition from the Agriculture Ministry, which has decreed malls off-limits on designated farm land.

But overall the timing for American-size malls may be right.

The burst in the early 1990s of the “bubble economy,” characterized by soaring stock prices and speculative lending, has finally brought down land prices.

The demand for leisure pastimes is gradually growing as well. Younger Japanese are spending less time in the office and more time with their families.

“Japanese retailing is starting to become more international in a big way,” said Yasuaki Sawamura, spokesman for the Japan Council of Shopping Centers, made up of 950 businesses. “We need to get used to that as quickly as possible.”

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