In this digital era, what values can physical bookstores still offer? In this post, we’ll look at the Japanese cultural mecca Tsutaya Daikanyama T-Site, which started a revolutionary wave of curated spaces promoting idea exchange, lifestyle exploration and rural revitalization. Its central promise is that visitors can enrich what they already know, and find some new hobbies at the same time. We’ll also look at how the company behind Tsutaya is turning its knowledge capital into a sustaining business advantage in the experience economy.
background
Since the opening of Tsutaya Daikanyama T-site (books/stationery grouped by themes) in 2011, it has become a cultural mecca for those looking for the latest in books, magazines, stationery, food, music, movies, art, and the Japanese zakka. It’s Instagram-worthiness (voted as one of the most beautiful bookstores in the world) also comes from being designed by Klein Dytham Architecture as a meticulously planned cultural complex with upscale lifestyle-oriented shops (camera, motorbike, pet shop, furniture, bar and bakery, etc.) for a mature clientile. Neighboring embassies and posh restaurants, visitors can also enjoy the natural setting with its own gardens and strolling paths.
The vision behind the T-Site separating it from other Tsutaya stores all over Japan is its capability to “propose lifestyle ideas”. The store is divided into many theme corners (owned by their own concierge staff. Each theme is supported by complementary products, e.g., a Japanese cooking theme features careful curation of books on Japanese cooking, plus all the essential food items such as soy sauce, seasoning, utensils, dinnerware, etc. The T-site promotes scenario-based shopping experience in that it’s not selling a particular product, but creates a context where the focused product is used with other objects.
I made a trip there in 2017 and really enjoyed observing how different products were “knitted” together into tight themes that entice you to “surf” from one item to the next. I was able to follow the lead of themes, e.g., from browsing vegetarian cooking books, I gradually moved on to nearby items to explore vegetables in Japan. These include food items that can jumpstart my cooking. I then moved seamlessly to related items in zen or natural living. I also noticed that the store didn’t segregate books by languages, but placed books published around the world on the same subject next to each other.
I was very interested in learning more about Tsutaya’s operating philosopy and what it wanted to accomplish. Back home, I read several books by its CEO Masuda Muneaki in which he described the vision of the company. In this post, I’ll describe what’s behind Tsutaya, which is much more than a company selling books.
CCC, the company behind Tsutaya
CEO Masuda Muneaki in Daikanyama T-Site’s Anjin Lounge. Photo credit: 増田のブログ CCCの社長が、社員だけに語った言葉
Masuda Muneaki opened the first Tsutaya bookstore in Hirakata near Osaka in 1983, to provide a “one stop convenience shop to access cultural entities such as movie, music and books” via rental. He then found Culture Convenience Club) (CCC) in 1985 to manage the cultural conglomerate he was planning to create (in its own words “to cultivate culture, create places for discovery and propose lifestyle ideas). Since day one, Masuda’s mission is to offer a conduit for various cultural products and services he designed and curated, as well as facilitating idea exchange. In 2003, the Tsutaya Roppongi, a renowned bookstore for compiling books around subjects were opened, hinting what would come in the next decade.
Today, CCC designs and operates what they describe as “cultural infrastructure”, including Tsutaya and electronic stores, public and commercial facilities. Its core business include
digital marketing & consulting
- CCC runs the T-Point loyalty program (introduced in 2003), which has over 70 million members (covering over 1/2 the population) and can be used in most places around Japan, collecting consumer data across a broad spectrum of spending. It’s thus not exaggerating to say that CCC has a massive monopoly of data currency in their hand. With first-hand knowledge what different demographic segments like, CCC can use that to drive product/service design for both clients and their own projects. In fact, the birth of T-Sites is due to data mining of mature customers’ need from the T-Point program.
lifestyle idea proposal
- acts as a tastemaker, similar to a trustworthy DJ whom clients and users turn to. Staff select and curate goods, content and experience and propose lifestyle changes to users, helping users navigate in information overload
- produces and publishes lifestyle magazines and books
- sponsors music and film production and host premiere events
- creates “encounters” and discoveries with new cultural happenings or an unknown hobby
property design, operation and management
- CCC completed a landmark project to renovate the rural Takeo City library, which sees a 5X increase in usage. Both residents and visitors find it as a place not just for borrowing books but to relax, meet others, and learn something new regardless of age. The success of the Takeo library project has influenced other rural towns to commission CCC to design and operate new community hubs in train stations. These spaces act as civic exchanges, nurturing hubs for local culture as well as simply a waiting space for trains.
Takeo City Library, photo credit: CCC official site- co-working space) with lounge and library to support individual work and meeting
Shibuya Share Lounge. photo credit: CCC official site
Masuda prides his company in their accrued knowledge capital in the form of the knowhows from concierge staff, designers, the vast dataset from the T-Point program, and its strong branding. He credited the success of many design projects to concierges’ creativity and sensitivity to subjects, combined with user insight gleamed from the T-Point data.
why T-Site?
Masuda wants to create a relaxing and pleasant space for those youth who grew up with Tsutaya in the 1980s, who are now near retirement age and have become a discerning force in discretary spending. According to Masuda, this group has distinguished tastes and care for quality over price and quantity. They like to enrich their post-retirement time with hobbies and lifestyle products, and Daikanyama is an area they frequent. The rapidly aging society has also alerted Masuda and his team that it was not enough to cater to young people like in previous decades anymore.
Masuda also claimed that the T-Site was a risky experiment to validate his hypothesis that people still crave social interaction and offline browsing, when content could now be brought and streamed cheaply online. To support this claim, he positioned the T-Site not just as an emporium for goods, but a place to host cultural events for the community and encourage a free flow of information and ideas. When I browsed the various Tsutaya and community hubs, I saw that many of them did in fact follow this claim for hosting both cultural and community events almost everyday.
The T-Site provides comfortable reading spaces with sofa and chairs all over the complex. During my visit, I saw people working, chatting or just enjoying themselves in different settings. In addition to the largest varieties of products sold in the whole Tsutaya chain, the T-site also boosts a “magazine street” which aims to host the largest magazine collection (2300 kinds) in the world. In fact, to enhance this concept, Masuda challenged the status quos by allowing visitors to take any book or magazine to read freely in the attached coffee shops, including the upscale Anjin lounge serving food and drinks. In Masuda’s own book on management philosophies, he was expecting the Anjin to grow into a salon for people to exchange fresh ideas and bring forward changes to the society.
As the chosen site is far away from train stations with a daily pedestrian number of 1500, Masuda decided that they needed a flashy design to attract foot traffic. To that end, they diverted from the usual model of hiring specific design firms for the regular Tsutaya stores, and instead hosted a design contest to build the flagship store.
The site was only opened after 3 years’ intensive research and development, with Masuda and senior team doing lots of on-site observation and field study, walking in the shoes of a future customer. For example, in his own blog, he recalled visiting the potential site and other Tsutaya stores in different times of the day, weather conditions, day of week and alternated his routes between station and site. He would imagine himself as various customer personas with unique thoughts and sentiments towards Tsutaya. By immersing in foot traffic, he aimed to obtain local perspectives, observe popular and unpopular stores and customer sentiment along the route. As the Daikanyama T-Site’s targeted audience is elderly people who usually drive, he deliberately drove to the complex in a hot day and tried to see if there was any shaded lot to park (the answer was no, and he didn’t elaborate on whether they improved the condition). He would also rent apartments next to future sites for executive to do a short stay and assume the identity of locals so they could get more insights.
concierge staff
To realize his vision of proposing lifestyle ideas, Masuda hired domain experts in literature, car, travel, food, art, architecture, humanities to work as concierges in the store. For example, the literature concierge might be a well known literary critic, and the travel concierge might be a well seasoned traveler all over the world. Each concierge owns his/her own theme corner, and has the autonomy to choose what products to procure, as well as how to present it, and to host events around themes. He/she is able to discover new trends and products in his domain, compile from a wide variety and proposes a selection for each person he meets in store. In doing so, the concierge is able to inspire and provoke intellectual curiosity in the customer.
In Tsutaya’s own words, their “concierges are familiar with each genre such as cooking, travel, and literature serve as guides for discovering and meeting customers, and propose lifestyles that they would like to recommend to customers through books, related goods, and events.”
business model
T-Sites are running on a business model that relies on cross-selling of products within a theme, with an integrated end-to-end experience. As Masuda claims, the goal is to be an “infrastructure and platform for new lives”. It is more attractive to see things in their usage scenario, rather than isolated in own shelf. This promotes a higher single transaction and higher revenue. Through its frequent events, rotating themes, and inviting environment for both work and relax, it also entices more frequent revisits. Sales data reveal that the strategy works very well for CCC, with sales per unit area up to 3x that of other regular Tsutaya bookstores.
However, T-Sites do place a very higher expectation on concierges, as Masuda claimed in his books that experts with curation skills are hard to hire or simply grow in house. Concierges are not just replaceable staff restocking shelf, but are brands of their own as they become trusted advisors to frequent visitors. As the success of such curation shops lie in the availability and vigor of concierges, it becomes risky for the business to rely solely on their expertise to operate. A shop built around themes is also not attractive enough for people who are not casual browsers, but have specific focus on a particular item. They might find it harder to find the things they are looking for.
The success of T-Site and community hub model echoes the book 4th Era in Consumerism) by sociologist Miura Atsushi, who described this era in Japan as moving away from spending on luxurious, tangible and personal items, to exploring the relationship between one’s identity and products/experience. Miura also describes the post-311 (2011 East Japan earthquake and Tsunami) prioritization of social sharing and revitalization of rural areas with their own niches, which aligns with the community hubs CCC are operating.
curation shops in Japan
After the huge success of the Daikanyama T-site which acted like a testing site for various design ideas, 7 more T-sites were opened in Japan, followed by a meticulously curated shop introducing various facets of Japanese culture to foreigner visitors in the upscale Ginza 6 shopping center. The Ginza location also installs art pieces complementing the themes.
Tsutaya Electrics in Futako-Tamagawa, an affluent planned suburb in Tokyo, was then opened in 2015. Unlike a traditional electronic and appliance shop, the appliances are grouped by usage scenario. The store also has a special corner as testing ground for product designers who wants to understand how customers feel about pre-release products. It collects visitor sentiment data via video and mic to measure customer demographic and product metrics. These are then channeled back to product manufacturers for development and placement purpose.
_Tsutaya Electrics Plus, a testing ground for pre-release products. Photo Credit: Tsutaya Electrics official site
CCC’s newer creations including the various T-Sites and Tsutaya Electrics are typical of the Select Store concept in Japan, by curating and introducing quality brands to present in a setting grouped by lifestyles. Curator shops are very common in Japan. The extreme end of it is Morioka Shoten in Ginza, which sells one book item each week, curates art exhibition inspired by the book and hosts meet-n-greet events to facilitate author-reader interaction. The concept is similar, in that owner Morioka aims to promote social exchange around a particular subject, instead of pushing many choices at one time. One particular delight of visiting Tokyo is that you are bound to encounter many mini galleries during random strolling. These boutique galleries are concentrated in the Ginza, Roppongi and Shinjuku districts, and usually only exhibit several items at one time, all around a narrow theme the owner deeply care about. A close analogy would be Japanese restaurants that excel in just 1 item (ramen, tonkatsu, sushi).
Morioka Shoten in Ginza. Photo credit: Morioka Shoten official site
In fact, even large department stores can have their own curation corners. One prominent example is the Design Gallery & Collection in Matsuya Ginza. This gallery was opened in 1964 and is run by the Japan Design Committee, a group of 21 designers, architects and critics. Every time I visit Tokyo, I will make a stop at this place to see the rotating exhibitions that features a designer or around a theme, plus the crafts it curated from around the country.
There are also other lifestyle shops that curate products in Japan. Tokyu Hands is popular among both tourists and locals for its DIY, handicraft and everyday living curations. Nakagawa Masashichi - 中川政七, a brand from Nara and my favorite, curates and produces artisanal and seasonal craftwork from around the country for everyday use. Not to mention the ubiquitous Muji which has a very strong branding for producing minimalist and functional items covering various aspect of living.
going forward
From what sales data revealed, Masuda’s bold hypothesis that people still crave in-personal cultural encounters is validated, as T-Site and the various multi-facet stores are bringing in increased revenue. However, franchise Tsutaya stores that stick with bookselling and DVD/music rental are in a dwindling trend. Facing the headwind from streaming content services and more precised recommendation systems powered by AI, what kind of new experiment would CCC run in the next decade?
combining data science with human knowhow
In the place of recommendation systems fueled by AI, as Tsutaya also owned a massive dataset of 70 million T-point users, what would distinguish its human concierges from AI? What would be the strategy combining its own data with the knowledge capital from experienced curators who can create “lifestyle proposals”? Would it be able to carry out such proposals electronically in addition to the in-person encounters when a user steps into a CCC-owned space?
thriving in the content economy
It will be interesting to observe how Tsutaya fares in the current content streaming economy, where users always reward new offerings. CCC is confident that its combination of physical rental and online streaming service (of its licensed movies, not from its own production) can compete favorably with the seasonal productions from Netflix and Amazon Prime.