Japan’s Reward Point Market To Exceed Y1tln In FY09

TOKYO (Nikkei)–More than 1 trillion yen worth of shopping points will likely be issued in Japan in the current year through March 2010, with more businesses offering rewards programs for a wider range of products and services.

A reward point card from Yodobashi Camera Co. With more products and services purchasable via reward points, these plastic cards are now as good as cash at many stores and online.

According to Nomura Research Institute estimates, nearly 790 billion yen of points were electronically issued at a minimum in fiscal 2008 by stores, credit card companies, airlines and others. The estimated total reaches roughly 820 billion yen with the addition of point rewards issued by Culture Convenience Club Co. group rental DVD and CD stores, as well as virtual malls run by Rakuten Inc. and Yahoo Japan Corp.

With the government earmarking roughly 290 billion yen for its eco-point economic stimulus measure, the total for fiscal 2009 is expected to exceed 1 trillion yen — equivalent to about 1.5% of the 72.2 trillion yen in cash in circulation as of June.

Aiming to leverage the popularity of point programs and fence in customers, some companies have tied up with others and made their points more useful.

For example, Yamada Denki Co., a major consumer electronics discount store chain operator, has created a virtual mall by joining forces with Takashimaya Co., Ryohin Keikaku Co., and 220 or so other firms. Shoppers at the virtual mall receive points from both Yamada and the virtual store operators from which they make their purchases.

Yamada has also tied up with All Nippon Airways Co. and other firms to allow one company’s points to be exchanged for points from another.

Bic Camera Inc., a major rival of Yamada, lets its points be converted into East Japan Railway Co.’s Suica e-cash.

Yahoo Japan points are expected to become exchangeable for Seven & i Holdings Co.’s nanaco electronic money this autumn.

(The Nikkei July 30 morning edition)