Japan’s 100-Yen Shops Boom In Pandemic But The Model Faces Challenges

thenewsmotion.com -- Jan 03
While Japan has a reputation as one of the most expensive countries in the world, there are still bargains to be had, most notably at the country’s ubiquitous “100 Yen” shops, where most of the goods cost less than a dollar each.
With the pandemic biting into many people’s salaries and allowances, Japanese shoppers have turned to the discount stores to buy everyday goods. There are over 8,000 of the stores and they brought in 900 billion yen (nearly $9 billion) for the first time in FY2020 according to a Yahoo News report from the Teikoku Data Bank.

The number of stores of the five major companies running 100-yen shops increased by 40 percent over the past 10 years. In addition to continuing aggressive store openings, demand for a wide range of items, including kitchen utensils, daily necessities, interior goods and stationery, has rapidly expanded since the pandemic began.

The number of products has diversified during this period of expansion but the quality of goods is surprisingly high and analysts are predicting further expansion in the years to come.

Seria, which is popular among female customers for its fashionable miscellaneous goods, posted 51.991 billion yen in sales (a 6.9% increase from the same period last year). In addition to focusing on product development under the theme of “pursue attractiveness as a 100-yen shop,” the company is also promoting the introduction of self-checkout stores. Seria’s operating profit ratio is the highest among the three listed companies, with a business model that generates high profits.

Watts was the only company among the three listed conglomerates to lose revenue and profits this year. The company is trying to differentiate itself from other companies by introducing products other than 100-yen items, mainly household goods. The company has also entered the mail order business, which is said to be unsuitable for 100-yen items.

But while business is booming, the increased competition is starting to show in the companies’ results, and it seems the business model, which has supported growth due to the increase in the number of stores and customers, has become saturated.