Kinokuniya moves 'could include Europe'

Japan's 90-branch Kinokuniya book chain "would love to come to Europe if the opportunity arises", Hiroshi Sogo, m.d. of the company's e-commerce arm AsianBasis Corporation, told delegates at the Publishers Association's International Conference in London yesterday (11th December).

Sogo was speaking about the need to boost the chain's international presence, which currently includes South-East Asia, the US, Australia and the Middle East, in the context of the "harsh" trade environment persisting within Japan.

A period of decline across the nation's book industry has seen bookshop numbers falling 37% from their 1999 total of 22,000 to 14,000 in 2013, and book sales down by the same figure from £14.8bn in 1999 to £9.4bn. Publisher numbers and new title publications have also declined significantly. Relatively speaking, Kinokuniya's sales have held up, with a drop of just 0.9% since 1999's total of £325m, to a 2013 figure of £322m, with the chain increasing its market share, but that is only through opening new bookstores, Sogo said, with four domestic bookshops opened this year (though two closed in underperforming locations).

Sogo attributed some of the decline to a general falling-off in reading in the younger generation within Japan. "Among students between 18 and 21, 40% never read for pleasure, only for study," Sogo said. "They read comics, but mostly use social media. Social media is draining their time and their wallets, and they are connecting with their peer group in a flattened way – there is no deep connection, no serious discussion of books. It is very unfortunate."

Unfair competition from online retailers is also a problem, the Kinokuniya senior executive added, with Amazon and Kobo accused of avoiding paying sales tax in Japan on their e-book sales through claiming the use of servers located outside the country. "Our sales tax has risen from 5-8% this year, so it is not a level playing field," the Kinokuniya senior executive said. "We are losing 8% straightaway." Amazon's use of student discounts and a system of earning "points" was also cited as a problem for retailers, with Sogo claiming the e-tailer was "eroding price maintenance."

In a twist that seems a curious one to UK observers, heavy local government investment in Japan's rural public libraries also present a problem for booksellers, Sogo said, as they seek to beef up public services to reverse the population drift towards Tokyo. "The libraries are in luxury buildings, with air con in the summer, and they buy 100-200 copies of bestselling books – so many copies that the general public goes to libraries and gets them free of charge and doesn't buy books; the public libraries are putting pressure on local bookshops and becoming an enemy for us."

The growth of used books retailers like the Book-Off Group, and of convenience stores stocking a very limited range of titles, also came in for criticism, with Sogo observing humorously: "They are convenient, but offer less choice – you just satisfy yourself with a limited range. You numb your brain and don't recognise how silly and stupid you have become." Cultural biodiversity has to be retained, he added, saying: "We have to continue to educate our customers."

Among measures to improve trade conditions in Japan, Sogo said its price maintenance mechanism had to be modified, because it was too flexible. "We need to be more like Germany and France, we need a period of price maintenance – six months, a year, 18 months – and then to be free," he said, saying the ability to sell off stock cheaply after the initial fixed period would help with Japan's 40% returns rate.

Meanwhile Kinokuniya has worked to make its stores exciting venues for events, running regular "Biblio-battles", open events where contestants compete to get their favourite book voted the winner, and making use of new technology, such as iBeacon, which communicates in-store with customers' mobile devices, offering them discount coupons and new book information.

Practising a concept of hospitality – the Japanese word is "omonetashi" - is key, Sogo said. "We invite you in and will treat you well," he said.