Viking Drops One Million Books in First Japanese Campaign; Market Rebound Seen
Despite the economic downturn, Chairman Irwin Helford predicted that "over time" Viking's business in Japan would be better than in Germany, where the company romped to a near $100-million start in its first year of operation.
"The potential is there," he said, "and it is larger than Germany's. The overall Japanese economy won't have a major impact on our business. There is plenty of business to be had here and we just have to earn our share of it with merchandise and commitment."
Viking mailed a 56-page catalog to selected lists, rolling out without first testing the market. "We don't test in a new country," he said. "We plan thoroughly and then roll out immediately."
As in other countries where the company is active, the new catalog is in the local language with only the name "Vi-king Office Products" and the word "sale" in English. Prices are in yen.
Viking's operations in Japan are independent of parent Office Depot, but Helford said part of the plan was to work together, "merging much of our infrastructure, delivery, marketing and corporate offices."
As for the Web, Helford thinks it is too early to take the catalog online in Japan as the company did last month in the UK.
"We're doing extremely well in the UK and have had very good response from our customers. The system is working nicely. It is completely interactive with our order system getting overnight delivery out."
In three major British cities - London, Manchester and Leicester - deliveries are made the day the order is placed via phone or the Web.
While Viking is one of the few new American entrants into the Japanese market - catalogers started to leave in droves when the economy tanked and the dollar hit 145 yen -- Americans who stayed are beginning to do much better.
"The lower exchange rate (the dollar currently trades at 118 to 120 yen) has been helpful in terms of our mail order sales and we are on track for opening a retail store in April 2000," said REI's PR manager Mike Collins.
"When the dollar hit 145 yen our sales began to taper down," he said, adding that once the dollar was below 125 yen "our value proposition became favorable and spurred orders."
REI maintains a five-person service desk in Japan to help customers place orders and with sizing and shipping questions. Orders on the Web are up. The print catalog is in Japanese and part of the Web site is too.
"There is a low point and a coming-out point and we hope the coming out point will be when we have a physical presence with our store in Tokyo," he said.
Hanna Andersson is "seeing strength over our plan right now and hopefully the positive signs will continue throughout the year. Currency is a big factor here," said international marketing analyst Evan Denhart.
So is the pullout of "some of our competitors who have left the country, diminishing consumer choice. Also our customer service and commitment to the market is beginning to pay off a little bit.
"We're ahead of plan. It's been conservative but we're exceeding it. We would hope to continue to ramp back up maybe by the end of the year. But you have to see how things play out in the economy. They're not out of the woods yet."
Garnet Hill reported much the same thing. "Recently we have seen our business bounce back," COO Brad Williams said. "Currently we are running 27 percent ahead of projections even though we didn't have a very aggressive plan going into Japan this year."
The company has been in Japan for five years, entering the market largely in response to unsolicited orders. By 1997 it had a successful phone operation that took 53 percent of all orders.
The slump hurt since last year Japan accounted for 7 percent of Garnet Hill's business. But it decided to stay largely because "we realized that if we pulled out, we were not going to go back. That's primarily because of the level of trust you have to establish with Japanese customers in order to be successful there. If you betray that trust it is very difficult to go back and regain it."
Cabela's, however, reports it is still treading water in Japan. "It's pretty much the status quo for us," said international director Sharon Robison. "We're mirroring what we did last year, working our house file and maintaining the customers we had."