Japan Co-ops Endure Recession, Innovate

Years of recession have led to shrinking sales for most of the grocery industry in Japan. Consumer food co-ops, the largest such sector in the world, reflected this pattern but not as markedly; total sales for FY 2000 and 2001 were 98.3 and 99.2 percent of the previous year, respectively. However, tighter management has enabled Japanese consumer co-ops to increase membership number and share capital, and a higher percent of the co-ops showed a profit in the past year.

Recession aside, Japan's amazing co-op numbers continue to make the U.S. look underdeveloped. Membership nationally totals over 21,000,000; members of retail co-ops account for 90 percent of that total. Of the retail members, more than one-third are in Han groups, three or more neighbors who order together. Like U.S. buying clubs only more urban and smaller, Han (joint purchase) groups number over 1,500,000 and have some 7,000,000 members. There also are 2.4 million members of medical co-ops and over 800,000 members of housing and insurance co-ops.

JCCU Member Results for FY 2001
(4/2001 - 3/2002)

 Unit200101/00(Divide by 125 for approx. dollar equivalent)Number of member co-ops57898.5   Retail co-ops45098.9   Medical co-ops11899.2   Housing & insurance co-ops1076.9Membershipthousand21,350101.5   Retail co-opsthousand18,123102.4   Medical co-opsthousand2,389105.7   Housing & insurance co-opsthousand83877.6Han groups (*1999 figures)thousand *1,634Han membersthousand *7,184Han members ÷ total membership% *36.7%Total turnoverbillion yen3,25799.2   Retail salesbillion yen2,90599.1   Service and other salesbillion yen352100.4Total turnover of retail co-opsbillion yen2,98799.0   (Purchase/month/member)yen13,89697.8   Retail sales, all retail co-opsbillion yen2,90599.2   (Retail outlets sales)billion yen1,31796.5   (Joint buying sales)billion yen1,510102.0   Service and other salesbillion yen8292.4Total turnover, medical co-opsbillion yen262102.6Total turnover: housing, insur.billion yen8.776.9Share capitalbillion yen533104.9   Retail co-opsbillion yen480105.0   Medical co-opsbillion yen51107.1   Housing & insur. co-opsbillion yen376.9Share capital/memberyen24,986103.4   Retail co-opsyen26,470102.5   Medical co-opsyen21,227101.3   Housing & insur. co-opsyen3,62099.1Co-op bondsbillion yen10496.0Number of retail outlets2,36496.7Sales areasquare m.1,549,88398.8Number of full-time employees54,32398.1JCCU wholesale amountbillion yen283101.5

Total turnover (revenue) by these co-ops was 3,257 billion yen or over 25 billion dollars. There are about 450 retail co-ops with 2,364 outlets.

Mostly located in dense, urban settings, Japanese food co-ops have seen strong growth in the relatively new fields of home delivery services and Internet ordering. Sales through Han groups, the traditional non-store sales outlet, actually are decreasing and are at their lowest in more than ten years. Home deliveries are growing and account for a total of 300 billion yen (over 2 billion dollars) annually. Delivery fees have been reduced over time; in Tokyo the fee is only 180 yen. A minimum of 60 deliveries per day is said to be the break-even point.

Internet operations work for the co-ops because members are able to procure through established home delivery and joint purchasing systems. An Internet platform offered by JCCU to co-op members in 2000 now has 55,000 registered members in 13 co-ops. Kyoto Co-op in its first year of joint purchase orders via the Internet had 350 million yen in sales through the system. Ordering, product information, member comments, co-op news and activities -- all are transmitted to or from home or work or mobile phone.