Toys 'R' Us is a big hit in Japan Retailer overcame trade obstacles

December 20, 1991|By John E. Woodruff | John E. Woodruff,Tokyo Bureau of The Sun

AMIMACHI, Japan -- Takao Iioka had more reason than he could have known for his wide eyes and jumpy feet.

He was not just shopping for his sixth birthday but was also having an unwitting rendezvous with U.S.-Japanese history.

Takao's mother gave him today off from kindergarten and took him to join more than 1,000 people who lined up for the 10 a.m. opening as Toys "R" Us launched Japan's first full-scale foreign-owned discount retail store.

The store hadn't been open 3 minutes when Takao's eyes and the reaching hands of parents, grandparents and children, piling toys into shopping carts, melted away any notions that Japanese would shop only for quality and service, not for price. That has long been a favorite argument of Tokyo trade negotiators, defending this country's tenacious resistance to imported goods and foreign companies.

Takao and scores of other children jumped up and down, peered into TV camera lenses and proudly displayed the big box holding what he will get Monday for his birthday. Raijino -- the name of his new Japanese-made plastic robot toy -- was the only word on his mind, and he said it a few hundred times for the TV crews.

Most of the shoppers arrived clutching full-color fliers Toys "R" Us had distributed in newspapers all week.

Many paused only long enough to ask a clerk for directions before making a beeline to the items they wanted. Once they had it, most spent a few minutes getting the feel of the 44,000-square-foot store, located in this community a one-hour train ride northeast of Tokyo.

With its broad aisles, low prices, 8,000 items on display, and hundreds of American-sized shopping carts, it was unlike anything ever seen in Japan's toy industry.

Getting the store open in the face of myriad Japanese obstacles took not only work by the company but also repeated public and private pushes by President Bush, Secretary of State James A. Baker III, Secretary of Commerce Robert A. Mosbacher Sr., Trade Representative Carla A. Hills and U.S. Ambassador Michael H. Armacost, as well as the influence of three prime ministers and this country's powerful Ministry of International Trade and Industry.

Terms like "revolutionary" and "challenge to the establishment" dominated a press conference just before the opening of the store today.

The store opened against a background of continuing complaints from fearful Japanese toy wholesalers and retailers, who have often described Toys "R" Us as a modern-day equivalent of the "black ships" of U.S. Commodore Matthew C. Perry. The "black ships" threw a scare into this country's 19th-century warlords and forced the opening of Japan to Western influence.

Those comparisons have become part of the symbolism of the two-year fight Toys "R" Us has waged to make good on its vow to be selling bicycles and baby cribs in Japan by the end of the year.

Japan has tens of thousands of toy retailers. Overwhelmingly they are "papa-mama" shops, few of them as much as one-twentieth as big as the new American shop here. A relative handful of discounters operate stores one-fifth or less of the size of the new U.S. store.

The U.S. company's drive to open 100 outlets here became nnTC focus of trade frictions between Japan and the United States almost as soon as Toys "R" Us started applying for permits under this country's deeply restrictive large-retail-stores law.

That law, which was designed to protect the nation's endless ranks of family shops from supermarket and department store competition, is regarded by U.S. negotiators as a key bottleneck blocking imported goods here.

"When we started out, there were a lot of people who said we'd never get a decent selection of toys, we'd never get a store open by 1991, and we'd have all kinds of trouble getting imports into Japan," Larry D. Bouts, president of Toys "R" Us Japan Ltd., said at a press conference yesterday.

He didn't deny that there had been problems, and he said Japan "still has a long way to go" to call itself a country that is open to foreign businesses.

"But here we are, and we'll be opening more stores soon," he said.

The company said it plans to open a second store Jan. 4 in Nara, near Kyoto, and at least two more in 1992.

"We heard about the difficulty of bringing in manufactured imports, and at first we thought we might have to start with only 20 or 25 percent of our stock from outside Japan," he said. "But over 40 percent of the stock in this store is imported, and we know now that we will hit our target, which is 50 percent imported."

But Japan should rewrite its testing and safety rules for imported toys, "to emulate those that are actually more strict in other parts of the world, like Europe," he said.

Toys "R" Us also had to struggle maker-by-maker for the right to buy in quantity directly from Japanese toy manufacturers rather than work through the traditional labyrinth of distributors, jobbers, suppliers and other middlemen who run up the prices paid by consumers by the time an item gets to a retail shop in this country.

Most manufacturers are willing to sell directly, and many associations of "papa-mama" toys stores say their members, like Toys "R" Us, also want to buy direct.

But the Paramus, N.J.-based toy supermarketers are the first to cut real openings through the lock middlemen have had on the distribution not only of toys but of most consumer goods here.

The company says it now has direct-purchase deals with more than 50 Japanese toy makers, most notably Nintendo -- which proved easier than expected, partly because "we are Nintendo's biggest single customer in the world," Mr. Bouts said.

It operates a distribution center that can handle merchandise for 20 outlets, restocking as it does in the United States, based on readouts from its computer-linked point-of-sale cash registers.

Founded in 1978, the firm revolutionized toy distribution in the United States and did $5.5 billion in sales worldwide last year.

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