JAPAN: For a Change, Consumers are Enjoying Bargains

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Jul 11 2001 (IPS) - When Machiko Saso, 36, goes out for lunch these days, it costs her less than 7 U.S. dollars at a restaurant in Tokyo’s upscale Ginza district.

“I am paying half of what I used to ten years ago, and my meal now includes even a salad and a cup of freshly brewed coffee at the end,” says the young woman who works as a travel agent. “It’s cheaper to eat out now than at home.”

A recent survey by the Economist Intelligence Unit (EIU), a think-tank affiliated with the Economist Magazine, listed Tokyo and Osaka, Japan’s second largest city, as the world’s most expensive places in the world.

So as Saso’s experience illustrates, the ongoing price war among stores in Tokyo — where the cost of living is cited by the EIU to be at least 40 percent higher than New York — are a welcome change to consumers.

Take the case of the hugely popular fast-food beef bowl sold by the chain operator Yoshinoya D&C.

When the company decided to slash its regular 400 yen (about 3.5 U.S. dollar) price to 250 yen (two dollars) per bowl last April, the campaign was so successful that sales reached five million yen (40,000 dollars) across its 770 stories nationwide on the first day alone.

The emergence of the “price war” as it is called in Japan, is traced to a new sourcing and distribution “revolution” in the country.

By ushering in new reforms in the country, the old homogenous pricing system based on the once unchallenged inefficient distribution system is fast losing its clout, say analysts.

The new picture emerging, says business analyst Takayuki Suzuki, is turning Japan into a “normal” country.

With more companies importing directly from companies in Asia, goods are much cheaper and foreign companies are likewise gaining a foothold in the Japanese consumer market.

A host of new discount stories has joined the bandwagon. American discount stories, Toys R Us, Costco and Carrefour have entered the retail market, establishing huge warehouse stores in the suburbs of Tokyo.

The stores are packed with customers pushing mammoth shopping carts stuffed with goods from frozen pizzas to curtains which are at least 20 percent cheaper than those in regular upscale Japanese department stores.

“Survival today means increasing customers not the price,” says Kunhiko Takahashi, spokesperson for Daiei Supermarket chain, a major retailer in Japan.

Daiei stores introduced last September a chain of sundry goods stores selling everything on display for 88 yen or about 70 U.S. cents.

The shops proved to be a instant hit, says Takahashi. The 88 yen-shops, as they are called, sell clothes, make-up, food items such as spices and drinks and household goods.

Daiei says that sourcing lower-priced products manufactured in Asia has paved the way for the the debut of the new shops, which are able to sell at bargain prices.

Almost all supplies at the Daiei shops come from Taiwan, China, and Vietnam, and are half the price of goods made in Japan.

A survey by the Economic Planning Agency indicates that another factor in the price cuts is the expansion of computer technology that has helped reduce labour costs.

The Ministry of International Trade and Industry predicts the e- commerce market for consumers will reach 3.1 billion yen in 2003, accounting for about one-third of the sales at department stores across the country in 1999.

Japanese consumers, contrary to their reputation of being fastidious shoppers, are loving the new trend.

“Bargain hunting is like treasure hunting,” says Asako Nakano, 42, a company employee. She bought two Yves Saint Laurent bags on the Internet for half the price sold in regular department stores.

Retailers also say that discount stores are helping raise awareness among consumers of the need to save in the face of the long economic recession.

“With people insecure about their future as a result of company restructuring, they are on the look out for bargains. As a result we see the huge popularity of cheap shops in Japan,” says Suzuki.

The new trend has even forced a price war in the ultimate in Japanese cuisine, sushi.

Joining the top notch sushi restaurants are a host of new ones that are making a name for themselves by pricing a dish — a pair of slivers of choice raw fish — at 100 yen or less than a dollar.

“It wasn’t that long ago when sushi priced at even 50 dollars a piece was being snapped up by the average Japanese who was bloated with cash and didn’t know what to do with it,” reminisces sushi chef Ryoichi Ishinori, referring to Japan’s bubble years in the 1980s.

He adds: “Today those sushi shops are bankrupt or have brought their prices down drastically.”

The weakening of the yen, which closed at 124.50 to a dollar on Wednesday, is also another contributor to the low prices in Japan.

A McDonald hamburger sold here, for instance, is now hovering around one U.S. dollar, cheaper than in the US.

“Imagine,” says Toru Wakai, a young businessman munching on his BigMac, “I am spending just three dollars for a lunch that includes a hamburger, fries and a drink. I wouldn’t be able to do this in the US.”

Analysts predict that the trend is here to stay. “Even if Japan’s economy starts to grow again, Japanese consumers are not going to give up their new-found taste for a good bargain,” says one.