I am a fan of large bookstores with wide collections of books and magazines where I can sit in comfortable sofas and spend my lazy weekend afternoons catching up on my reading. You can imagine my delight when I discovered Tsutaya’s Daikanyama T-Site which has been called one of the most attractive bookstores in the world due to the award winning architectural design by Klein Dytham. Intrigued by its innovative retail model of catering to “premium age” consumers who are over 50, I investigated the rationale behind the customer base and its value to the targeted customers.

Capitalizing on the economic potential of the Japanese aging population

Based on research reports by Nomura and Dentsu, there are three distinct categories of seniors in Japan, namely the “hyper seniors”, the “seniors” (mid 50s to late 60s), and the “elderly” (over 75). Among these three categories, the “hyper seniors” account for around 30% of the total senior population and they are active trendsetting consumers with a high capacity for absorbing information. With an aging population that accounts for 23.3% (29.75 million) of the total population in 2011 and analyst predicting that the Japanese population will fall to 108 million by 2050, retailers can no longer afford to ignore the seniors market which accounts for more than 40% of total consumption in 2011. According to statistics, the “seniors” average monthly expenditure is over ¥300,000 yen in 2011 compared to ¥260,000 for individuals under 39. The “seniors” spend around 94% of their disposable income in 2011 compared to less than 70% for individuals between 30s and 40s.

With an estimated market worth of ¥100 Trillion a year, Japanese companies are slowly developing products and services to cater to Japan’s aging population. For example, Aeon has established medical clinics in some of its supermarkets, while Daiei is slowing the speed of its escalators and using lighter aluminium shopping carts. Muneaki Masuda, founder of Tsutaya, has also noticed the economic potential of the aging consumer market and has established Daikanyama T-Site as one of the company’s key strategic initiative to bridge the gap between the digital age and the long-term sustainability of physical bookstores.

Increasing the customer value of its bookstore by combining the analog and digital space

Daikanyama T-Site increases the customer value of its physical bookstore as follows:

– Co-locating various products and services in a single location to meet customer needs.

Besides its flagship bookstore, a wide variety of products and services are located within Daikanyama T-Site, including Starbucks, a FamilyMart convenience store, a beauty clinic which offers anti-aging treatments, cafes, a camera store, a travel concierge, and an animal hospital for dogs. It helps to establish Daikanyama T-Site as a one-stop service centre for its targeted clientele.

– Organizing products based on themes.

The bookstore stocks more than 140,000 fiction and non-fiction titles, 30,000 magazines, 80,000 DVDs, and 100,000 CDs. To increase the ease of locating products in the bookstore, its sections are grouped based on themes. One of its most notable themed sections is the “magazine street” which contains hundreds of magazines and extends across all three buildings of the bookstore.

– Providing personalized services and establishing relationships.

Each section in the bookstore contains a concierge desk and a subject matter expert. These subject matter experts have been carefully selected by Masuda-san and consist of personalities, such as Michiko Mamuro (Literature), Takeshi Morimoto (Travel), and Ryoko Oikawa (Jazz). The aim is to facilitate communication between these experts and its customers in order to deliver personalized services and establish long-term relationships.

– Embracing the digital age.

Based on research reports by Nomura, there is a significant increase in the “digital senior” population, from 3.9 million in 2010 to 5.35 million in 2011. The “digital senior” population is expected to grow by several hundred thousand per year. To cater to the needs of these “digital senior”, there are around 225 iPads scattered throughout Daikanyama T-Site. The bookstore uses 111 tablets which serve as self-checkout and point-of-sales (POS) kiosk systems, while the cafe uses 80 iPads to allow its customers to order drinks and browse the product catalogue. These tablets not only allow customers to easily search, reserve, and purchase products, it also allows Tsutaya to track and analyze the consumer’s usage patterns. On the Daikanyama T-Site website, customers can also purchase and rent cameras, shop for the latest bicycles, and order snacks and supplements for their pet dogs.

Although critics have questioned the long-term profitability of Daikanyama T-Site, the site has managed to establish itself as a unique community space for everyone to enjoy in Tokyo. Thousands of people visit the site daily, and there are no signs that this trend will be declining anytime soon. The next time you are in Tokyo, visit Daikanyama T-Site and draw your own conclusions on whether this is a viable and sustainable retail model for future bookstores.

What do you think about Daikanyama T-Site and its retail model to cater to the “premium age” demographic? Do share with us your thoughts and experiences!

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