One of the star retail players in Japan’s deflation-ridden economy has been the ¥100 shop. Referred to in the trade as hyakkin (“100 average”, referring to the retail price of most items) for short, the firms are regarded as the winners in the long-running deflationary spiral, as opposed to the nation’s department stores, the main losers.
While total department store revenue is in the neighbourhood of ¥5.95tn—10 times that of the hyakkin—Shukan Jitsuwa (29 March) reports that, with sales last year of around ¥420bn, Hiroshima-based Daiso Industries Co., Ltd. is ranked number one overall, with 3,150 outlets in Japan and nearly 1,900 overseas, giving it an approximately 60% share of the market. In second place is Seria Co., Ltd., based in Gifu Prefecture, whose revenues increased from ¥20.4bn in 2000 to ¥145.3bn at the end of fiscal 2016. In third and fourth places, respectively, are Can Do Co., Ltd. and Watts Co., Ltd.
The writer expresses concern about the hyakkin’s future, however. For one thing, from 1 March, 75-year-old Hirotake Yano assumed the post of Daiso’s chairman, effectively passing control of the company to his son Seiji, who became president. An unnamed business consultant noted that Daiso appears to be planning to go public, and with its large number of stores overseas, expects to face more severe governance requirements.
There is a view that the lifespan of firms whose business model undergoes minimal evolution—such as hyakkin shops—may only last 20 to 30 years. Already there have been recent examples of diversification, such as “leisure lands” that allow visitors to enjoy themselves for ¥500 for 30 minutes. Some 90% of the 70,000 items on display are said to be original products not sold in rival stores. The huge Arukukitto store operated by Daiso in Kinshicho, Sumida Ward in Tokyo, is said to average a turnover of ¥120mn per month.
An authority on retailing told the magazine, “Overall, the hyakkin stores are enjoying a huge level of support from foreign tourists. They particularly appreciate the cheap prices for fans, handkerchiefs and other items bearing motifs from old woodblock prints.
“The current number of inbound visitors is about 28mn a year, accounting for an economic boost of ¥5tn, and by the year of the Olympics—
2020—these figures are projected to jump to 40mn and ¥8tn, respectively. The hyakkin shops are certain to be one of the main beneficiaries, and the ones that will do the best will be those putting proactive policies in place to meet the demand”.
Another authority on business management, however, noted that consumers who patronise the hyakkin tend to be fickle and that the business can be unusually capricious.
“We’re already seeing a tendency towards merchandise with greater value-added, with the product mix including items for ¥200 each”, he noted. “A business that succeeds thanks to deflation is also one that depends on deflation, and that will place even greater demands on the people at the helm of such retailers”.