Legislation and retail structure: the Japanese example

The structure of the retail sector in Japan has been the subject of considerable research interest. For such a developed country, Japan has a large number of independently owned, physically small retail outlets, a situation that has been promoted historically by legislation designed to protect small-scale business. The legislative environment changed in the late 1980s in a way that should have promoted both a growth in the number of larger stores and an increase in retail concentration. The purpose of this paper is to test the impact of the legislative changes. Using a model of legislative effect and data on retail concentration, the change in legislation can be seen to be associated with a change in the Japanese retail structure. However, the change is small when compared with what could have been expected from trends in a comparable market. Further change will be needed to promote any rapid shift towards the retail structures existing in other developed markets. An analysis is made of the patterns of new store development by leading retailers to explain in part why the change in retail structure has been slower than might have been expected.