New digital technology is playing an increasingly prominent role in the development of the Japanese retailing market, and this trend it set to accelerate over the next few years.

The Euromonitor Digest released by the Department of Trade and Industry-Export Marketing Bureau said major retailers invest in the implementation of technologies such as Virtual Reality (VR), Augmented Reality (AR) and Artificial Intelligence (AI), in an effort to “improve operational efficiency and enhance the consumer experience by tailoring it to individuals’ needs.”

It cited as examples major homewares and home furnishing operators who are incorporating VR technology into their internet retailing sites to enable consumers to explore VR showrooms and purchase the products that they see displayed.

The report said consumers can also use VR goggles to select furniture and furnishings and see how they fit into their own rooms.

Meanwhile, apparel and footwear retailers use AI to offer services tailored to each consumer, such as a size fitting service and fashion coordination, it noted.

“The increasing adoption of new digital technology is serving to blur the boundaries between online and offline retailing,” it added.

The report further cited GU which opened GU Style Studio in Harajuku, where in consumers cannot make physical purchases in-store but can try clothes or make an avatar that resembles them to try clothes of varying sizes, colors and designs.

Consumers can then purchase products online which will be delivered to their homes, allowing GU to trim inventory in the outlet, it said.

The report pointed out the main growth drivers in retailing are those that are most compatible with evolving demographic and lifestyle trends in the market, including convenience stores and internet retailing.

“The rise of e-commerce is encouraging many store-based retailers to invest in the development of online retailing operations and building or enhancing multichannel business structures. This is set to be an ongoing trend and driver of growth during the forecast period,” it said.