Old goods may be the new thing

Second-hand retail accounts for 4.36 per cent of Japan's total retail market.
Second-hand retail accounts for 4.36 per cent of Japan's total retail market.PHOTO: BLOOMBERG

Japanese used-goods giant Bookoff Corp introduces South-east Asia to second-hand retail, which is growing into a multibillion-dollar industry

KUALA LUMPUR • On the second floor of a 24,000 sq ft, used-goods superstore in the suburbs of Kuala Lumpur, Mr Koji Onazawa pauses beside some old Japanese surfboards.

He has spent nearly two decades at Bookoff Corp - a corporate legend in Japan that is barely known outside it, with 832 second-hand shops across the country.

Now he is running Jalan Jalan Japan, the company's first true foray into the second-hand market abroad.

"We're not a representative of Bookoff here," he said.

"We're a representative of Japanese second-hand goods."

He is not being melodramatic.

According to data supplied by the Japan Re-use Business Journal, more than two dozen Japanese companies have set up at least 62 shops or distributorships selling second- hand Japanese goods in eight South-east Asian countries in recent years.

Bookoff plans to open four more superstores in Malaysia alone in the next three years.

Those stores receive much of the nearly US$1 billion (S$1.38 billion) in used goods that Japanese companies legally exported in 2015 (illegal shipments were at least as large).

While Japanese second-hand goods will never overtake new ones in South-east Asia or elsewhere, they are rapidly growing into a multibillion-dollar industry - and one of Asia's most surprising export growth stories.

In Japan, public perceptions of second-hand goods soured in the 1950s as consumers embraced Japan's new wealth and flashy products.

By the time Bookoff was founded in 1991, the Japanese were hooked on the upgrade cycle and second- hand goods were synonymous with pawnshops.

After Japan's bubble burst and consumers starting looking for bargains, Bookoff upended that image.

Its stores feature bright lighting, wide aisles and well-organised shelves. To a contemporary American visitor, the shops do not look much different than a Target, Wal-Mart, or - if you squint - a Uniqlo.

Thanks to Bookoff and its many imitators, second-hand retail accounts for 4.36 per cent of Japan's total retail market.

For luxury brands, second-hand accounts for more than 10 per cent of the market.

Bookoff eliminated not only the shame associated with buying used goods, but also that of selling one's unwanted stuff.

Its cheery slogan - "Please sell us your things" - and friendly, customer-centric store clerks eased doubts among middle-class Japanese who would not have been caught dead near a pawnshop.

Today, Bookoff executives consider their ability to source high-quality goods as one of its competitive advantages.

In 2015, it bought 489 million individual items from customers while it sold 331 million.

And a bigger problem is looming: Japan's fading demographics mean fewer people to buy.

To deal with that surplus, Bookoff decided that it needed to export. South-east Asia seemed like the ideal location, given the region's long-standing ties with Japan and - in cities at least - consumers' strong affinity for Japanese products.

Also, the region's large families, big (by Japanese standards) homes, and upwardly mobile consumers mean demand for middle-class consumer goods is growing rapidly.

Sure enough, on a recent weekday visit, Bookoff's first Malaysia store was packed with mothers and young children browsing second-hand women's clothes (averaging US$2.30 an item), handbags and shoes.

Every month, the shop sells 15,000 items of women's clothing alone while 25 per cent of overall sales come from children's items.

Many of these goods were made in China. But, according to Mr Onazawa, that does not matter.

"They were used in Japan, so they're good in the eyes of the Malaysian customers."

Selling 15,000 articles of women's clothing a month will put only a small dent in Bookoff's surplus of used goods. But Jalan Jalan Japan is just the start.

In addition to its four planned stores, the company may open a logistics base for second-hand goods in Malaysia and possibly even begin buying and selling Malaysian items.

For South-east Asians, old stuff may soon be the new thing.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 06, 2017, with the headline 'Old goods may be the new thing'. Print Edition | Subscribe