• According to a survey published by the Ministry of Economy, Trade and Industry (METI), in 2017, the domestic consumer e-commerce market expanded by 9.1% y-o-y to JPY 16,505.4 billion. The "EC ratio", which indicates the extent of penetration of e-commerce*1, also rose by 0.36 pts to 5.79%. Brick and mortar retail sales remains much larger, at approximately 7.6 times the size of the e-commerce market.

  *1 EC sales as a percentage of total retail sales, published by METI
 

  • It has been suggested that the increase in consumers making purchases via e-commerce has led to products not selling in brick and mortar shops, and has therefore transformed stores – a traditionally sales transaction-based location - into “showrooms”. This however does not seem to be a great concern for Japanese retailers. In CBRE’s survey, only around 20% of retailers answered that they were concerned about consumers treating their stores like "showrooms" and therefore the prospect of lower sales. With EC sales only being a fraction of brick and mortar sales, this is most likely the reason behind their confident stance.
     
  • Results from the survey also showed that the expansion of e-commerce is not having a significant effect on the floor area, location, and format of new stores. Only a limited number of retailers said that they would reduce the number of existing stores and new store openings. However, some of the answers suggest that a significant change in the format of brick and mortar shops may be on the horizon.