This paper has four purposes. The first is to review some of the characteristics of the Japanese distribution system and to discuss the structure of the retail sector, particularly the trend in national concentration, which was upward between 1979 and 1990 but subsequently levelled off. The second is to identify the determinants of labour productivity in retailing and to present a research design and methodology with which empirical tests can be undertaken. The third is to undertake an empirical analysis of these factors, covering both large stores and small and medium-sized retail outlets. Finally the findings and their implications are summarized, with suggestions for further research.