Japan as a "Repeater" Economy: Implications for Sustainability
Hari Srinivas
Policy Analysis Series C-053.
Abstract:
This document discusses the concept of a "Repeater" Economy, where customers repeatedly purchase products and services from the same business, focusing on Japan as a prominent example. The article explores the implications of the Repeater Economy for sustainability, emphasizing how it can contribute to resource efficiency, reduced environmental impact, local development, and eco-conscious consumer behavior.
It highlights the role of customer satisfaction, loyalty programs, and continuous improvement in fostering a successful repeater economy. The text also provides examples of Japanese businesses that have successfully adopted this model and its alignment with sustainable development goals.
The term "repeater economy" means that customers often repeatedly buy the same products and services, and/or from the same business. This economic model has the potential to contribute to the success of the business by increasing strong trust and satisfaction with customers and building long-term partnerships with customers. Even in Japan, many companies are striving to provide services and reliable products that increase customer satisfaction in order to promote the repeater economy.
This type of economy is built on the premise of creating loyal customers who will return to the business repeatedly over time, providing a steady stream of revenue. A business that is able to create a strong repeater economy can benefit from the repeat purchases, word-of-mouth referrals, and reduced marketing costs associated with retaining existing customers.
(Note: The term "repeater" to signify loyal customers who return to a business location frequently is popular domestically in Japan, though not used outside the country in this context. The reason for the term's popularity is simple: with a smaller domestic market, the survuval of businesses can be ensured only by providing high quality products and services that encourage repeaters.)
Developing a Repeater Economy
To create a successful repeater economy, a business must focus on a number of key areas, including:
Customer Satisfaction
The business must consistently deliver high-quality products or services, as well as a positive customer experience. This is essential to encourage customers to return and make repeat purchases.
Customer Loyalty Programs
Offering incentives and rewards for repeat business can help create a sense of loyalty and encourage customers to return.
Consistent Quality
Maintaining a consistent level of quality in products and services is important to build trust and establish a strong reputation.
Personalization
Providing personalized experiences, such as tailored recommendations and promotions, can create a stronger emotional connection with customers.
Communication
Maintaining open and transparent communication with customers helps to build trust and a sense of community, making them more likely to return.
Continuous Improvement
Regularly seeking customer feedback and continuously improving products and services will keep customers engaged and coming back.
By focusing on these key areas, businesses can create a strong repeater economy and benefit from the repeat purchases, word-of-mouth referrals, and reduced marketing costs associated with retaining existing customers.
Characteristics of a Repeater Economy in Japan
Figure 1: Repeater interactions
Japan is famous for the Repeater Economy concept due to several cultural, economic, and business factors that have contributed to the prevalence of repeat customers and loyal brand relationships. Some key reasons why Japan is associated with the Repeater Economy include:
Customer Loyalty:
Japanese consumers tend to value loyalty and long-term relationships with businesses. They prioritize trust and reliability when making purchasing decisions. As a result, businesses in Japan have focused on building strong customer loyalty, encouraging repeat purchases.
High-Quality Products and Services:
Japan has a reputation for producing high-quality products and services. This commitment to quality has earned trust from customers, who are more inclined to become repeat buyers when they know they can rely on consistent excellence.
Customer-Centric Approach:
Japanese businesses often adopt a customer-centric approach, seeking to understand and fulfill customer needs and preferences. By continuously improving products and services based on customer feedback, they enhance customer satisfaction and loyalty.
"Omotenashi" Culture:
Omotenashi refers to the Japanese concept of exceptional hospitality and service. Businesses in Japan strive to provide outstanding customer experiences, leaving a positive and lasting impression on customers, which encourages them to return.
Lifetime Employment and Stability:
Historically, lifetime employment was a common practice in Japan. This led to stable incomes and job security for employees, allowing and fostering long-term relationships between businesses and their customers.
Strong Sense of Community:
Japan has a strong sense of community and social cohesion. Consumers often feel a sense of belonging to certain brands or businesses, which leads to repeat patronage as a way to support their community.
Word-of-Mouth Marketing:
Satisfied Japanese customers are more likely to spread positive word-of-mouth referrals. Positive recommendations from friends, family, or colleagues can significantly influence the purchasing decisions of others, contributing to a repeater economy.
Conservative Consumption Patterns:
Japanese consumers tend to be more conservative in their consumption habits. They are cautious spenders and prefer established brands with proven track records, leading to repeat purchases from familiar and trusted businesses.
Loyalty Programs:
Many Japanese businesses offer loyalty programs and rewards to incentivize repeat purchases. These programs encourage customers to keep returning to the same businesses to accumulate points or benefits.
Respect for Tradition:
Japan has a deep-rooted respect for tradition and continuity. This cultural aspect extends to consumer behavior, with many Japanese customers choosing to maintain their loyalty to long-standing brands and businesses.
These factors, combined with the Japanese emphasis on trust, reliability, and customer satisfaction, have created an environment conducive to fostering a Repeater Economy in Japan. The concept has become an integral part of Japanese business culture and plays a significant role in the country's economic success.
Examples of businesses in Japan that have successfully created a repeater economy include:
Convenience Stores: 🍹 Convenience stores in Japan, such as 7-Eleven and FamilyMart, are famous for their high-quality products and services, and their ability to create loyal customers.
Fast Food Chains: 🍔 Fast food chains like McDonald's and KFC have also created a strong repeater economy by consistently delivering high-quality food and a positive customer experience.
Department Stores: 🛒 Department stores like Mitsukoshi and Isetan have built a strong reputation for high-quality products and services, making them popular destinations for repeat customers.
Online Retailers: 📱 Online retailers in Japan, such as Rakuten and Amazon, have built strong relationships with customers through personalized recommendations and a focus on customer satisfaction.
Such businesses in Japan have successfully aim to create repeat visits by focusing on customer satisfaction, quality, personalization, and continuous improvement.
A Repeater Economy Facilitating Sustainability
A repeater economy can play an important role in facilitating sustainable development. Sustainability - including sustainable and environmentally friendly products, eco-certification and eco-branded products/services (typically the national
green labelling programmeMany countries around the world have green labelling programmes. See list), buy-back programmes etc. - can be important criteria to not only ensure repeat visits by customers, but also to communicate the message of sustainability to them. Some of the key issues in the contribution of a repeater economy to sustainability is outlined in Figure 2 below.
Resource Efficiency:
In a repeater economy, businesses focus on retaining and satisfying existing customers rather than constantly acquiring new ones. This leads to more efficient resource utilization, as businesses can better predict customer demand and avoid overproduction, reducing waste and conserving resources.
Reduced Environmental Impacts:
By encouraging customers to make repeat purchases, a repeater economy can discourage the culture of disposable products and promote the use of durable, long-lasting items. This can reduce overall waste generation and minimize the environmental impact associated with the production and disposal of products.
Local and Ethical Sourcing:
To maintain customer loyalty, businesses may prioritize local and ethical sourcing of materials. This can support local economies, reduce transportation-related emissions, and ensure that the supply chain adheres to ethical labor and environmental practices.
Repeater Economy and Sustainability
Investment in Innovation:
To keep customers coming back, businesses may invest in research and innovation to improve their products and services continually. This emphasis on innovation can lead to the development of more sustainable technologies and practices, benefiting the environment and society.
Community Development:
Building long-term relationships with customers fosters a sense of community and connection. Sustainable development is not just about environmental considerations; it also involves social and economic aspects. A strong repeater economy can contribute to community development by supporting local businesses and creating stable employment opportunities.
Empowerment of Local Businesses:
Small and local businesses can thrive in a repeater economy as they build loyal customer bases. Empowering such businesses can lead to a more diverse and resilient local economy, supporting sustainable development at the community level.
Education and Awareness:
In a repeater economy, businesses have an opportunity to educate and raise awareness among their repeat customers about sustainable practices. By promoting environmentally friendly choices, businesses can influence consumer behavior and contribute to a more sustainable society.
Social Responsibility Initiatives:
A repeater economy can provide businesses with a stable platform to initiate and sustain social responsibility programs. Companies with strong repeat customer bases may be more likely to invest in initiatives that benefit society, such as supporting education, healthcare, or environmental conservation efforts.
Figure 2: Repeater Economy and Sustainability
A repeater economy can therefore foster sustainable development by promoting responsible consumption, resource efficiency, community engagement, and ethical business practices. By aligning business goals with sustainable principles, companies can contribute positively to the well-being of both present and future generations.
A Repeater Economy Fostering Eco-Lifestyles
A Repeater Economy can indeed foster eco-friendly lifestyles by encouraging sustainable consumption patterns and promoting environmentally friendly choices among consumers - as a part of its strategy to create repeaters.
As sustainability and sustainable choices have become increasingly important for a wider spectrum of customers (and a desire to lead eco-lifestyles), such criteria could be used to foster a repeater culture by offering more sustainable product and service choices to customers. Some of the actions that business can take in this direction are illustrated in Figure 3, and explained below.
Figure 3: Actions to Foster Eco-lifestyles
Offering Eco-Friendly Products and Services: Businesses operating within a repeater economy can prioritize offering eco-friendly and sustainable products and services. By providing customers with green alternatives, such as energy-efficient appliances, eco-friendly cleaning products, or sustainable fashion options, they can influence consumer behavior towards more environmentally conscious choices.
Educating Consumers: A repeater economy allows businesses to establish long-term relationships with their customers. This provides an opportunity for businesses to educate their repeat customers about the environmental impact of various products and services. Companies can use marketing materials, product labeling, and online platforms to raise awareness and provide information about sustainable choices.
Rewards and Incentives: Businesses can incentivize eco-friendly behavior among their repeat customers by offering rewards or loyalty programs tied to sustainable actions. For example, customers could earn points for choosing reusable products, opting for electronic receipts, or participating in recycling programs. These incentives can motivate consumers to adopt eco-friendly habits.
Collaboration with Environmental Organizations: Companies in a repeater economy can collaborate with environmental organizations to support conservation efforts and sustainability initiatives. These collaborations can include joint marketing campaigns, fundraising events, or participation in environmental projects. Such partnerships demonstrate a commitment to environmental causes and can inspire customers to align with eco-friendly values.
Sustainable Packaging and Delivery: Businesses can reduce their environmental impact by adopting eco-friendly packaging materials and optimizing delivery processes to minimize carbon emissions. Communicating these efforts to customers can reinforce the company's commitment to sustainability and encourage customers to support environmentally responsible businesses.
Transparency and Ethical Practices: In a repeater economy, businesses have the opportunity to establish trust and credibility with their customers. Being transparent about their environmental efforts and ethical practices can build customer loyalty and attract eco-conscious consumers who prioritize supporting responsible businesses.
Engaging Customers in Sustainability Initiatives: Companies can involve their repeat customers in sustainability initiatives. For instance, they could encourage customers to participate in eco-friendly challenges, community clean-up events, or tree-planting campaigns. Engaging customers in these activities fosters a sense of ownership and shared responsibility for environmental preservation.
Continuous Improvement: Businesses operating in a repeater economy can use customer feedback and data to continually improve their sustainability practices. By responding to customer suggestions and concerns, companies can demonstrate their commitment to sustainability and adapt their offerings to better align with customer preferences.
By embracing eco-friendly practices and engaging customers in sustainable actions, a Repeater Economy can effectively promote and foster eco lifestyles. It creates a positive feedback loop where businesses and consumers collaborate to make more sustainable choices, leading to a healthier environment and a more sustainable future.
This type of economy is built on the premise of creating loyal customers who will return to the business repeatedly over time, providing a steady stream of revenue. A business that is able to create a strong repeater economy can benefit from the repeat purchases, word-of-mouth referrals, and reduced marketing costs associated with retaining existing customers.
