Nothing gets more customers flocking to a shop on a whim than a “going out of business” sign, according to the Sunday Mainichi (8 March). It was reporting on a famous discount shop, near Tokyo Station, that for 16 years has been marketing itself as going out of business.
Now, however, the shop’s owner has attested the sign to be true, and has marked down to “¥3,000 plus consumption tax” every item in the shop—including pricey designer handbags.
In February, a survey by a student at Rikkyo University’s College of Law and Politics made the news after it found instances of shops in Tokyo claiming to be preparing to close down, while actually having no intention of doing so. The student appealed to the government’s Consumer Affairs Agency, asking it to issue an advisory that the stores should cease such deceptive practices.
While many stores complied, expunging the term heiten (going out of business) from their signs, they are said still to be engaged in informing customers that special deals are available “today only”—for many days.
How do such shops manage to maintain profitability? Based on the assumption that 96 customers enter the shop each hour (resulting in a total of 768 in the course of an 8-hour day), if 3% made a ¥3,000 purchase, 23 customers would spend ¥69,000.
If this figure were increased to 5%, 38 customers would together spend ¥114,000 a day.
The secret to the operations of these shops, according to an inside source, is that they procure merchandise in large quantities from wholesale operators that have gone bankrupt.
The goods are then moved from the warehouse to one outlet after another, giving customers the impression that merchandise is undergoing a regular turnover.
“In such cases”, said the source, “a daily sales turnover of ¥100,000 will realise a decent profit”.
However, “overdoing the claims may lead to charges of false advertising”, attorney Takeshi Ozaki told the Sunday Mainichi. “So it’s important that buyers feel satisfied and do not lose money on their transactions”, he said.