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The Japanese market is a tough nut to crack: how did Ikea, H&M, Zara do it?

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Ikea, Shein, Zara all learned the hard way: why the Japanese market is a tough nut to crack, and expert tips on doing so

Many retailers have failed to establish a foothold in the Japanese market, though some successfully do so after adjusting their strategies and trying againIndustry insiders break down the difficulties, from partnerships and government regulations to local tastes, and give tips on the best steps to successFashionJulian RyallPublished: 4:15am, 20 Sep, 2023Why you can trust SCMP

A number of successful foreign retailers have famously flopped in their initial attempts to establish a foothold in Japan, with some of the biggest names withdrawing from a potentially lucrative market – but one fraught with idiosyncrasies.

Walmart walked away, as did Ikea and American Eagle Outfitters, after failing to make the cultural leap. But the fact that the latter two returned suggests that retailers that can learn from their mistakes can indeed be big in Japan.Given local consumers’ obsessions, fashion is arguably one of the most promising sectors for overseas firms, with all the big names – from Shein to H&M, Gap and LightInTheBox – firmly established in Japan and others considering the market, in bricks-and-mortar outlets, e-commerce, or a hybrid of the two approaches.

And while Japanese ministries do not resist foreign fashion firms entering the market, analysts say that local legal requirements must be met and there is a subtle preference for domestic companies in the sector.

“There has been promotion of local champions, of course, going back to significant backing of [retail company] Fast Retailing in the 1990s after Gap entered the market in 1994, via Mitsubishi Shoji,” says Michael Causton, co-founder of research firm JapanConsuming and an expert on Japanese distribution and marketing.

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