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Tuesday, Nov. 25, 2008
¥100 shops — consumers' common denominator
With the economy in recession, it should be no surprise that ¥100 stores are thriving, wowing shoppers both local and from far afield with their variety of goods all set at one price, plus the ¥5 consumption tax.
How can those shops sell what they sell, and when and how did this business start up?
Following are questions and answers about the popular low-price retailers:
What are ¥100 shops?
They are retailers that basically sell all items for ¥100. Their shelves are lined with various goods and food items used in everyday life and even kitsch items for fun.
¥100 shops are found nationwide, but no official data on their actual number are available because many are small mom-and-pop enterprises.
The largest ¥100 shop franchise, Daiso-Sangyo, says it has 2,500 outlets from Hokkaido to Okinawa.
In addition, the company runs about 500 similar low-price outlets in 21 other countries mainly in Asia, North America and the Middle East. It plans to open outlets in Jordan and Lebanon after late November.
The Can Do Co. chain estimates the overall market size of ¥100 stores at around ¥500 billion.
When did ¥100 shops start up?
Daiso, one of the first on the scene, had ¥100 shops up and running in the mid-1970s.
According to a Daiso spokesman, the company started selling low-priced household goods in 1974 on a temporary basis by renting sales space at supermarkets and community centers.
At that time, the number of goods the shops handled was rather limited, the spokesman said.
Daiso opened its first dedicated ¥100 outlet in Takamatsu, Kagawa Prefecture, in 1991.
Now it sells about 90,000 different items and develops about 1,000 new goods every month in an effort to keep attracting customers.
How can the shops sell their wares at such a low price?
They keep production costs low. In many cases, major ¥100 shop chains develop products on their own, and have them mass-produced overseas where labor costs are lower than in Japan.
They also sell the items at a large number of outlets, and retailers minimize advertising costs by not bothering with TV commercials.
In Daiso's case, it produces goods in Japan and 40 other countries, depending on where it can limit production costs.
"Some say we sell defective articles from production plants at low prices. But we do not," the Daiso spokesman said. "We limit procurement costs because we produce a large lot and sell them through our large network."
What kinds of goods are available?
Kitchenware, tableware, simple tools, stationery, cosmetics, batteries, toys, planting pots, utensils and light bulbs are just a tip of the iceberg.
At shops near airports, seaports and tourist spots, including the Harajuku district in Tokyo and the Hakata district in Fukuoka Prefecture, souvenir chopsticks and fans are available for tourists, according to Daiso.
Some stores sell goods costing more than ¥100, including shirts, bags and gloves, as they widen their product lineup.
Convenience-store-style ¥100 shops are a recent phenomenon. Ninety-nine Plus Inc. started the forerunner of Shop 99 in 1996, selling groceries, snacks and ready-to-eat meals.
It has now more than 500 outlets in Japan.
Will ¥100 shops keep growing?
Operators think it will happen.
Can Do says the size of the market is still less than one-tenth that of convenience stores. This means ¥100 shops have much room to bite into the convenience store market, the company says on its Web site.
Officials at Ninety-nine Plus meanwhile say that demand for low-priced food in small portions will increase amid the graying population and the trend toward the nuclear family.