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"Between the declining value of the Japanese yen, higher prices for materials and other factors, the cost of procurement of some merchandise has risen sharply," the staff member of a chain of 100-yen shops tells Yukan Fuji (Jun. 17). "Since we're 100-yen shops, we can't raise our prices; it's more likely we'll just stop carrying those types of items."
According to a report from the Teikoku Data Bank in April, the number of store outlets in Japan increased from 7,687 in 2019 to 8,400 at the end of last February. Japan's 100-yen shops' overall turnover in 2021 rose to 950 billion yen, up from 872.2 billion yen in 2019. And the average expenditures per customer increased 1.6-fold over the previous decade, from 390 yen in 2011 to 636 yen last year.
But now the crunch is coming. "Companies that have concentrated their production in China in order to realize low-priced sales are being affected by rising wage levels in China, which have been pushing up prices," says logistics analyst Hiroaki Watanabe. "What's more, factors like the fall in the yen's exchange rate, rise in petroleum prices and so on might make it impossible to adhere to the business model of charging 100 yen for every item in the shop."
The rising cost for procurements has been having a major impact on small and medium-size chains. Prodia, a chain that operated nine outlets in metropolitan Tokyo, shuttered all nine of its stores between April and May of this year.
"One of the weaknesses of the smaller 100-yen store chains are their inability to develop items in-house," said the aforementioned Watanabe. "They rely on wholesale reps from companies around Yiwu City in Zhejiang Province -- known as "the world's capital of small commodities" -- and can procure the items directly. But even then they've been unable to stave off the price increases, and the overall impact has been serious."
The larger outlets have already reacted to pricing trends by raising prices on various items. From July 2000, the Can Do chain raised prices on certain items such as hair irons and wireless earphones to 300 yen.
"We started selling more expensive items in response to customer needs," Can Do's spokesperson put it, adding that reduction in production costs and savings in distribution have made it possible for us to maintain they 100-yen price tags on numerous items."
Last year another chain, Daiso, opened Standard Products, a new store in Shibuya's Mark City complex that sells high-quality items priced from 330 to 1,100 yen.
Watanabe believes this trend may be the wave of the future.
"If products priced between 300 and 500 yen are able to offer good value for money, then will the belief permeate consumers' thinking -- that it's more advantageous to use high-quality products for a longer time, even if they cost more?" he asked.
© Japan Today
16 Comments
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Aly Rustom
If they are doing something similar then they should. Faulty advertising is a crime in the US
thepersoniamnow
It’s about Japan to realize….
We are the 3rd largest economy and the wests biggest ally in the future conflict.
Who may you be?
itsonlyrocknroll
There are already items that upscale the 100 yen bench mark. So the business model can be tweaked to include more items.
Some products 100 yen, whilst others 150, 200 yen plus.
I constantly, politely prod the supervisors, don't have a pop at the assistants or shelf fillers they are on minimum wage.
I hold the 200 yen items up and wave them at the supervisors, look this should be in the 200 yen shop, some dive into the store rooms on my approach.
Maxspeed
If you think that counts as a crime, business owners in America would be going to jail left and right.
Aly Rustom
In Japan its ok to play footsie with the truth.
Take the izakaya chains that claim 1000 or 1500 yen nomihodai AND THEN charge you a seating charge, otoshi charge, AND INSIST that you order at least 2 dishes per person for the nomihodai to work. So you actually end up paying DOUBLE or more for the nomihodai than its advertised
Faulty advertising should be a crime, BUT it is legal in Japan.
Alex
Just change your name to 200 yen or whatever the price is lol
Aly Rustom
Eastman and blue- Excellent excellent posts
purple_depressed_bacon
But technically, stuff in 100 yen shops are not 100 yen. With tax it's either 108 or 110 yen. Calling it a 100 yen shop is a misnomer.
bogva
How very Japanese! Why they can't make it 120-130 yen?
Because customers can't accept even the smallest rise in the price they will make a big rise to sell same value items! Or open 300-1000 yen shop? Thank you very much!
kohakuebisu
The basic business model is about reducing staffing costs by not pricing items and simplifying the checkout. If you can now get customers to self-checkout anyway, this will be less of an issue now. The biggest hit might be on the promotion side, the loss of the 100 yen shop moniker.
Pukey2
For food items, do what they do in the UK - shrink the size of the food.