Wal-Mart increases stake in Japanese retailer

Thursday, December 12th 2002, 12:00 am

By: News On 6

TOKYO (AP) _ Wal-Mart Stores, which made its first investment in Japan in March by partnering with a supermarket chain, is raising its stake in the retailer to 34 percent from 6 percent.

Seiyu, the Japanese chain, said Thursday the deal will make Wal-Mart the top shareholder this month.

Wal-Mart, based in Bentonville, Ark., has been eager to add the world's second-richest consumer market to its global reach. Wal-Mart already has stores in Argentina, Germany, the United Kingdom and Mexico.

Wal-Mart, the world's biggest retailer with more than 2,700 discount stores in the United States, is making a detailed study on how to set up shop here, a notoriously difficult market for retail.

Wal-Mart has an option to raise its Seiyu ownership to a two-thirds stake by the end of 2007.

Some analysts say Wal-Mart's aggressive discounting formula might catch on in Japan, which is undergoing a long economic slowdown. But it will face heavy competition as domestic retailers slash prices to woo buyers.

Wal-Mart's biggest advantage is its global scale, which dwarfs Japanese retailers. But it is unclear how the advantage of size will play out in a market like Japan, where retail distribution has tended to be tightly controlled.

Some American brands such as Coca-Cola, McDonald's and Disney have caught on while others have failed here. Japanese shoppers are famous for being particular about quality.

The Wal-Mart team has been inspecting the more than 400 Seiyu stores in Japan this year to assess possible changes in merchandising and store management. Wal-Mart is introducing its inventory monitoring methods and system of electronic links with wholesalers and suppliers to raise efficiency.

Wal-Mart's partnership in Japan also includes Sumitomo Corp., a major trading house.