A couple of years ago, Takako Tomura would breeze past the gaudy “Y100 store” close to her home as she went shopping for the little knick-knacks she needed around the house.
But Japan’s retail landscape has changed dramatically in a relatively short space of time, and now she’s a frequent visitor to dollar stores that not long ago were perceived as piled high with cheap products that didn’t last, from a calendar to a kitchen implement, pens or tissues.
“Those shops never used to have a positive image because everything they sold had to be thrown away after being used just a few times,” said Tomura, a 44-year-old homemaker from Yokohama. “So I always thought it was a waste of money.”
She credits her conversion to her daughter, who needed a new eraser for school and a Y100 store was the closest solution. “I was quite surprised. They are still packed with things and they are not laid out well, so it can be hard to find what you are looking for, but they have things I need, the price is low – and the quality has got better, I think, so it’s good enough,” she said.
And that, say analysts, is the critical change: at a time of rising prices as incomes remain stagnant in Japan, the myriad products on the shelves of previously shunned Y100 stores are “good enough”.
The concept of stores that sell items at a low and uniform price dates back as far as the Edo period, the 264 years up to 1867 that saw seismic changes in Japanese society and industry. The growth of Y100 shops over the last decade has been similarly dramatic.
Statistics released by market analysis firm Teikoku Data Bank show there were more than 8,000 Y100 shops across Japan in fiscal 2020 to April 2021, with the number of stores increasing by 40 per cent in the last decade.
Earnings are on a similar upward trajectory, with the four major operators – Daiso, Seria, Watts and Can Do – reporting sales of 900 billion yen (S$9 billion), breaking through that threshold for the first time.
The report cites a number of reasons for the increase in the number of stores and their sales, including a notable increase in the quality of the stock, growing competition in the sector, a wider selection of items, and Japanese consumers being more thrifty.
“There was clear evidence of this trend even before the pandemic, when Japanese consumers were clearly nervous over the government’s policy line on inflation, and demand for discounts in all sectors began to grow, but especially in basics,” said Roy Larke, senior lecturer in marketing at the University of Waikato in New Zealand, and an expert on retailing and consumer behaviour in Japan.
“That was in everything from clothes to food and household goods. In many ways, the Don Quijote chain led the charge,” Larke said, pointing to a wholesale concept that broke the Japanese retailing mould when its first store opened in Tokyo in March 1989.
From those humble beginnings – and a “stack ’em high, sell ’em cheap” corporate philosophy – it has expanded to over 160 locations in Japan, more than a dozen in Singapore, around eight in Hong Kong and other outlets in Hawaii, Malaysia, Bangkok, Taiwan and Macau.
“The Y100 store operators have started to expand to meet the growing demand, but they are also trying new things – such as moving into food – to differentiate themselves,” Larke said. “They are having to expand their appeal as costs have also risen, especially labour costs, and adding new formats is one approach.”
As well as adding new branches, Daiso has grown its presence by linking up with the Seven-Eleven chain of convenience stores and installing a section for its goods in its unmissable bright pink colours. That approach is a win-win for both firms, Larke said, with Daiso gaining new outlets for limited outlays and Seven-Eleven benefiting from additional footfall.
And the relationship is not competitive as by far the most popular products at convenience stores are food and drinks.
Martin Schulz, chief policy economist for Fujitsu’s Global Market Intelligence Unit, said the growth of Y100 shops had ticked up during the pandemic in part because more people worked from home and “traffic to the shops that they were previously visiting – near their offices or commuting routes – has simply declined”.
“People are shopping closer to home and it is a similar story with convenience stores,” he said. “There are more of them, many chains are opening smaller shops and targeting primarily residential districts. The Y100 store operators are following that strategy.
“I also believe that families are economising and trying to reduce their cost-side factors and that makes Y100 stores even more attractive,” Schulz added.
Waikato University’s Larke says Japan’s retail sector will undergo more changes and that the “long history among certain retailers that Japanese consumers are not interested in low prices” is increasingly being exposed as “a myth”.
Along with the emergence of Don Quijote, convenience stores and now Y100 shops, there is a growing trend for cut-price supermarkets, such as the OK chain of outlets, which have grown to become the fourth-largest group in the last couple of years, Larke pointed out.
“With inflation coming, we are going to see the discount operators doing even better,” he said. “Companies that are chained to wholesalers and cannot control their prices are going to struggle.
Now is a great time to be in the discount sector in Japan and now that consumers know that the quality of items in Y100 stores is better, then they will continue to do well.
“It used to be cheap and cheerful and you got what you paid for,” he added. “But better quality is key and now the feeling among consumers is that it’s good enough.”
This article was first published in Asia One . All contents and images are copyright to their respective owners and sources.
Khmer Daily
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