Tokyo is considered the trend capital of Asia. A product that becomes popular in Tokyo can then be labeled as a Tokyo bestseller and distributed to other major cities in Asia. However, not all products are able to gain footing in the Tokyo market.
Distinct Coffee Cultures in Italy and Japan
COVA, a century-old confectionery brand from Milan, Italy, opened in Taiwan last year, providing gift boxes and dining services. Although COVA has built an unshakeable reputation in Italy, the brand still started from the ground up when it first opened in Tokyo. The different dining cultures and spending habits between Italyand Japan proved to be extremely troubling for Managing Director Kiyohisa Nanri.
In Italy, people are used to enjoying their coffee standing, and they may drink five to ten cups of coffee throughout the day. In comparison, Japanese people prefer to savor their coffee sitting down. Therefore, the first order of business for COVA Japan was to reduce the pre-established standing area within their Milan store. Moreover, the price of coffee in Italy is controlled by a union at roughly one to two euros, which is roughly the price for vendingmachine coffee popular among the working class in Japan. However, Mr. Nanri positioned COVA as a high-end Italian restaurant . Therefore, expanding the reputation of COVA and promoting its elegance became Mr. Nanri’s core objectives.
Business Challenges: Selecting the Right Parties
COVA seized every opportunity for exposure by adopting two primary business strategies: cross-industry collaboration and party catering. It not only co-organized a Valentine’s Day promotion with automobile brand Lexus whereby COVA chocolate was offered as gifts to Lexus customers, but also collaborated with All Nippon Airways in serving affordable luxury meals to ANA passengers. The Italian confectionery brand pulled out all the stops to gain exposure among high-end consumers. The greatest opportunity presented itself with the visitation of the Italian prime minister roughly two years after the launch of COVA Tokyo. The brand was responsible for catering a banquet on behalf of the prime minister, which attracted the attention of many Japanese consumers.
High-end restaurants do not merely offer exquisite ingredients and an elegant dining space, they must also provide excellent consumer service. COVA has modified its service model several times, finally settling on a model that combines new and old service methods and takes into consideration mobility and service quality. COVA employs young service representative to bring vitality to the brand. These representatives respond quickly to different situations, but they lack experience in the high-end dining industry. The brand also employs veterans in the high-end dining and store service industries. Although these representatives are less responsive, they offer valuable experience and lead the less experienced representatives in providing comfortable and effective services.
In terms of selecting suitable partners, many vendors have proposed generous cooperation plans. However, Mr. Nanri is reluctant to randomly engage in partnerships with subpar vendors to protect COVA’s reputation. Although this may seem to hinder development in the short term, COVA’s vivid distribution reputation has nonetheless established a vague impression that a high-end coffee shop has come to town, even if only a handful of locals recognize the brand.
3 Types of Marketplaces in Tokyo:
- Consolidated station marketplace: Marketplaces that are joined and develop with train stations such as the Shinjuku Station LUMINE and NEWoMAN and the Tokyo Station GRANSTA
- Conventional department stores: Marketplaces located on key CBD locations and provide a distinct shopping theme on each floor such as Isetan, Mitsukoshi, Takashimaya, Seibu, Odakyu,and Keio
- Rural shopping centers: Large consolidated commercial compounds largely situated in rural areas such as AEON and LaLaport (operated by the Mitsui Group; estimated launch in Nangang, Taipei)
Consolidated station marketplaces achieve the highest sales because many consumers use public transport every day, increasing the likelihood of purchases. Reputable marketplaces are better able to attract high-quality food vendors. However, vendors should evaluate whether the marketplace is able to attract target consumer groups instead of only looking at overall traffic.
Developing a Dedicated and Thoughtful Product
After extensive evaluation, COVA Japan eventually decided to establish its store in a conventional department store, specifically, the Takashimaya Shinjuku. The decision was based on consumer differences in Tokyo. Consumers that prefer independent stores and consumers that prefer department stores are considerably different, even though they all reside in Tokyo. Those that prefer independent stores are high-spending consumers who are more accepting of high unit prices. This is not the case in department stores. COVA’s chocolate gift boxes easily retail for well over a thousand yen. Directly selling these products in department stores would intimidate most consumers. In response, Mr. Nanri launched 1000-yen department store-specific products and labeled them “Experience Joy for 1,000 Yen” to attract a more diverse group of consumers.
Superior taste is a basic threshold in the Tokyo market. To obtain a balance between quality, taste, and cost and convince consumers that their money is well spent, Food Director Ogawa Hirozumi stated, “The greatest challenge in the future is neither quality, taste, nor packaging. Even the recently popular usage of local ingredients or creating brand stories are not enough to satisfy consumers. The key to success lies in vendors identifying the scenarios and circumstances of their consumers. Such dedicated and thoughtful products can fully express the intentions of the gifter. Only by resonating with consumers will products truly sell.”
Consumer Demand in the Tokyo Market:
- Quality beyond value: Products must demonstrate value for money in taste, quality,and packaging.
- Production transparency: Vendors not only inform consumers on the ingredients and techniques used to create their products but also sincerely share their emotions during the making of their products.
- Scenario creation: In addition to quality and transparency, vendors should inform consumers on scenarios in which their product can be used or with whom their products can be shared, thereby showing consumers the endless possibilities of their products.
Words & Photos｜TGA Consultancy Team