This pandemic has hit the world economy hard and one of the keys to recovery is digital transformation. Let’s continue our business focus and today we are talking about just how much an online presence can influence the economic development of Italy and Japan.
The Digital transformation: could it be the key to increasing Japanese consumer spending?
Author: Erika
In recent months, many companies have launched themselves into the digital world and many shops have transported their windows into the area of e-commerce. This clever move has allowed them to continue working even during the months of lockdown, and not to stop their production.
However, in Japan, as well as in Italy, the economic recovery has slowed down considerably. For what reason? The reason for this is that in both countries the spread of e-commerce and online presence is lagging far behind other countries.
During the months of the lockdown, people drastically reduced their visits to shopping areas. However, in OECD (Organisation for Economic Co-operation and Development) countries, retail sales have increased and on average above the pre-pandemic level. This means that the majority of sales were made through online sites and e-commerce.
The situation is different not only in Italy but also in Japan. Here, sales are still below the levels recorded before the pandemic. In these two countries that are so different and yet so similar, people have locked themselves in their homes without spending money. In fact, at the end of June, Japanese households’ cash and bank deposits reached a record figure (1,030,000 billion yen).
However, this did not help the economy, which was already severely affected by the repercussions of COVID-19. According to some, this brake is due to the insufficient development of the e-commerce sector and the scarce online presence of companies in the two countries, both Italy and Japan.
In fact, according to a 2019 statist survey, only 16% of Japanese people said they had purchased online in the previous year. This figure ranks fourth among the 45 developing economies. It is therefore conceivable that once the digital transformation arrives in Japan, the potential for increased household spending could be enormous. In fact now, after months of pandemics and constraints, consumers are tired of staying at home and are willing to spend.
How to get the digital transformation to Japan?
Everything we have said so far, are hypothetical speeches with enormous potential. However, in order to turn this potential into a real economic recovery, the government and firstly the companies themselves would have to invest in digital. We are referring to the creation of e-commerce, websites, social media channels and influencer marketing so that the business linked to these companies can restart.
In support of this theory, leading Japanese companies plan to invest 16% more in digital for the fiscal year 2020. In fact, a total of 765 companies aim to spend 471.8 billion yen ($4.45 billion) on technology, shows a survey Nikkei on listed companies and those with 100 million yen or more capital. This marks a second consecutive year of double-digit growth.
With the pandemic disrupting the flow of people and goods, companies are turning to technology to adapt sales and distribution channels to the new norm. Seven & Holdings, the company behind the 7-Eleven convenience stores, expects technology investment to increase 19.9% to 121.2 billion yen – the largest sum on the list.
Investments in technology have already borne fruit and a return on these investments that can only accelerate. In fact, the companies that have embraced the digital transformation are the ones that are doing the best in this pandemic.
“Business leaders are forced to adapt to the coronavirus, and now they realise the importance of digital transformation,” said Saisuke Sakai of the Mizuho Research Institute. “IT investments could grow even more in the future.” / source: Nikkei
This leads us to understand that now more than ever it is time to invest in digital and create an online presence for your company in both Japan and Italy. Only in this way, companies will be able to keep their work going and have constant sales even in these uncertain times.
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