¥100 stores

Japanese 100-Yen Shop President Says Penny-Pinching Mindset Persists

As Japan’s economic landscape shifts, Eiji Kawai, president of Seria, one of the country's prominent 100-yen store chains, remains confident that the demand for affordable goods will persist. Despite various efforts by businesses and the government to rejuvenate the economy and combat deflation, Kawai believes that consumers will continue to seek out low-cost options for their daily needs.

Japan has been undergoing significant economic changes. The government, led by Prime Minister Fumio Kishida, has pushed for substantial wage increases as part of his "new capitalism" initiative. This year’s wage negotiations resulted in the highest pay raises in 33 years. Additionally, the Bank of Japan raised interest rates for the first time in 17 years on March 19, aiming to control inflation and stabilize the economy. Despite these measures, core inflation has remained above the 2% target for 23 consecutive months, reflecting ongoing economic pressures.

Consumer behavior in Japan shows a marked shift. With the post-pandemic resurgence of travel and dining out, people are becoming more selective about their spending. While occasional expenditures like dining out may be accepted with higher prices, daily expenses are being scrutinized more closely. “People will probably accept price hikes for occasional activities, but they are economizing on day-to-day expenses,” Kawai told Nikkei Asia.

Seria operates around 2,000 stores nationwide, offering a range of items priced at 100 yen (about 65 cents). These stores, known for their affordability, have become emblematic of Japan’s historical deflationary environment. While competitors like Daiso and Can Do have adjusted their pricing strategies in response to rising costs and a weakening yen, Seria remains committed to its 100-yen price point.

Daiso, another major player in the 100-yen store market, has begun to expand its product range beyond the 100-yen threshold. With many items now priced around 300 yen, Daiso aims to cater to a broader range of customer needs. Can Do, another competitor, has similarly introduced products at higher price points, reflecting the industry-wide trend towards more expensive items.

Despite the industry trend, Seria has stayed true to its low-cost model, even as its net profit decreased by 13.9% to 7.4 billion yen ($48 million) from April to December 2023. This drop comes amid rising prices across various sectors. Seria’s commitment to maintaining a 100-yen pricing structure is part of its strategy to attract price-sensitive consumers who are looking for value amidst economic uncertainty.

Kawai acknowledges the competitive landscape but believes that Seria’s approach will continue to resonate with consumers. “There is still a large market for 100-yen products,” he said. “I think our features are standing out compared to our rivals.”

In this challenging economic climate, 100-yen stores like Seria, Daiso, and Can Do play a crucial role in offering affordable options to Japanese consumers. These stores are adapting to economic changes while striving to meet the needs of budget-conscious shoppers, demonstrating the enduring appeal of low-cost goods in a fluctuating market.