With Mail Order Sales Flat REI to Open Tokyo Store
But the co-op company plans to open a retail store in Tokyo within the next year in hopes of revitalizing its Japanese business.
This has been a growing trend among American catalogers feeling the pinch of the Japanese recession. (See Cynthia Miyashita's column on page 24). Dropping real estate prices have made retail outlets a more attractive option in Japan.
Like many American catalogers REI backed into the Japanese market in the mid-nineties when Japanese tourists brought home the company's catalog and began placing orders.
"It kind of built to its own critical mass," REI's public affairs manager Mike Collins said, "and that began our focusing more direct marketing efforts on Japan.
"Three years ago we opened a catalog show room in Ebisu, a region in the Tokyo metropolitan region. We have about five people working there and they help customers with purchasing and ordering.
"We still run what we call JSD - our Japan Service Desk - and while times are different and the mail order business is much tougher to do than when we first came in we intend to keep the service desk going."
REI has 80,000 "members" in Japan and while all are not active "we have a real strong customer base out there that is an extension of our strategy here at home," Collins said.
He explained that as a co-op REI invites customers to become members. They pay a one time lifetime fee of $15 and receive a variety of benefits including a share in company profits based on the size of their purchase.
"We have a corporate goal of trying to return a 10 percent dividend to our customers. So if you buy $100 backpack you get a $10 dividend you can use for merchandise or, after six months, turn the bonus in for cash."
Japanese mail order buyers get their dividend in dollars, not yen, because the REI catalog is priced in dollars, although the text was translated into Japanese last year.
Customers do business directly with REI in Seattle, usually faxing orders to the US or talking to the Japanese speakers the company maintains in its Sumner, WA call center.
Japan remains REI's most lucrative foreign market and one the company has no intention of abandoning. But like many US catalogers it has cut back on prospecting although it did run some coupon print ads to gain catalog requests.
As for the current recession, Collins said "I think we look at it more in terms of cycles and there is still a lot of really positive things about Japan."
The sheer size of the Japanese economy - the world's second largest --- is one, and the interest people have in leisure and an outdoor lifestyle is another.
"So we feel that even though things are in a downturn now we can expect to see that swing around."