Article Source: https://mainichi.jp/english/articles/20220521/p2a/00m/0bu/023000c
Article:
Rising raw material costs coupled with the yen's historic drop to a two-decade low against the U.S. dollar have driven up prices in Japan. The Mainichi Shimbun interviewed a discount store and cafe that have been hit hard by the sudden shift.
Japan's consumer price index (CPI) for April rose by 2.1% from the previous year, the Ministry of Internal Affairs and Communications announced May 20. This marks the largest increase in over 13 years since September 2008, excluding effects of the consumption tax hike, and consumers' daily lives are being impacted.
During Japan's prolonged period of deflation, 100-yen stores -- equivalent to dollar stores -- expanded quickly. They have consistently posted high sales figures and their store numbers have continued to grow over the past decade, and the market is about to reach 1 trillion yen, or roughly $7.82 billion. But the business model is facing a major turning point.
Ideas:
Because of the yen and because of the global increase in raw material costs, costs in the Japan are going to continue to increase.
For some it good be a challenge but for some maybe not. Most likely many small businesses its a major challenge for them, as they are always very reluctant to pass on thier costs to the next in the supply chain, which could be the final consumer.
The 100-yen stores are not going to have decide what do to. Do they keep some of their offering at 100 yen or do they just across the board increase prices to cover their costs.
I don't think the business model has to change that much but most likely they need to be more strategic and decide which products or offereings to they keep at a low price and which products to increase.
Article:
"It's the toughest situation we've ever been in. At this rate, the delivery of stock for our stores will come to a stop. If things go on like this for more than a year, the store's continued existence will be in danger." So said Takeshi Miyagi, 54, senior managing director of Initial One Hundred, which manages nine "The 100 Stores" discount shops in Tokyo.
Of the some 10,000 products handled at the shops, 90% are imported. As import costs rise amid the spike in raw material prices and the weak yen, the only way to sell products at 100 yen is to buy stock at lower prices. However, Miyagi said that distributors say they, too, are in a pinch and can't cut prices any further.
Lately, the company has been unable to procure goods at 100 yen, and has increased its stock of items costing some hundred yen, including an A4-size plastic case that was raised from 100 yen to 200 yen. Soil for gardening, which sells well in the spring, is procured from China. As it has many fans, the company has tried to keep it at 100 yen. But the shops' profit on the soil has been squeezed to nearly nothing, and they will likely need to raise prices soon.
Ideas:
The yen shops are definetely being challenged now. But this is a situation that maybe the government should step in, like during the pandemic and help the 100-yen shops with some kind of subsidies to help them get through the situation.
There are probably too many stores, too many employees that are are going to have major challenges and ultimately could hurt the economy overall if this discount store sector become a crisis situation.
Again another option might be to increase the prices on some of the products a select group but not all of the products a store might sell. And of course put up signs that apologize for the challenges it might bring to the customers and explain we hope this is just a temporary situation.
Article:
Major 100-yen shop operators have also given up on selling all products at 100 yen, raising prices for more goods. One distributor for a major operator said that "shops and makers are scrambling for profit, which was slim in the first place."
100-yen shops sell a rich variety of cheap daily items, from food and tableware to stationery and toys, and so are both very popular and a necessity for consumers. However, one industry source said that more shops have been cutting products as many of them are no longer profitable when considering the wholesale price.
Meanwhile, inflation has also affected a cafe in Gifu Prefecture, which boasts one of Japan's highest coffee shop counts per 1,000 people. Many locals eat breakfast at such cafes, which offer "morning" menus of toast, salad and other food with an order of coffee.
Ideas:
In the US, for example, the dollar stores don't sell all of their product offerings as one dollar so maybe the Japanese 100-yen stores can do the same, but at the same time keep the model of the store on the main or popular items at 100 yen.
And yes, they can cut or reduce the products that are just not profitable anymore. Another way to do it is to have some items as loss-leaders, meaning sell them at below cost as a way to keep customers coming to the store. But of course stores will need to be very selective in how they do it.
There might be many ways for store to continue as a 100-yen store by finding strategies to keep the focus on the 100-yen idea but increase the prices on some products too.
Article:
Yukihiko Kojima, 75, is the owner of Saiwai, a 112-year-old cafe in the prefectural city of Tajimi. Though its prices have remained the same for 24 years -- even after 2019's consumption tax hike -- the shop had no choice but to raise the price of a cup of coffee from 400 yen to 450 yen.
The international price of coffee beans is high due to bad weather in major producer Brazil, and the weak yen has made matters worse. The coffee shop's signature handmade doughnuts have also been affected by climbing flour and cooking oil prices.
One 71-year-old regular said, "The recent price rises are tough for those of us living on a pension, but this place has endured (by keeping prices the same) for a long time. This time, it just can't be helped." Many regulars continue to visit the cafe, which makes Kojima feel even more sorry for his customers.
Ideas:
The coffee shop seems to have a lot of loyal customers that might be willing to accept the increase in prices. But of course not everyone is going to be so generous.
And for some an increase from 400 to 450 might be a lot and some some they might not even notice or even care.
But the coffee shop, like many other places probably have no choice and most likely they waited for as long as they could and then eventually and had to increase prices.
Hopefully like during the pandemic the Japanese government can find a way to help small shops and the 100-yen shops with the increase in material costs.
Article:
In a very unusual move, the prefecture's coffee shop union called on member establishments not to hesitate to raise prices. The union explained, "By keeping prices the same, more shops may ultimately be forced to close down." The region's coffee shop breakfast culture is wavering amid the nationwide price increases.
Ideas:
Yes, shops and stores might not have a choice and will need to increase prices to survive. Unfortunately there might be some shops that won't make it like in the pandemic.
But again the government should find ways to help as many stores and shops as possible with subsidies or whatever as a way to keep them going.
This is not the time to just let the market be or let the market run its course. Like in the pandemic society and small businesses are the first to be hit hard and they should be the first to be helped as they are the back-bone of the economy and society.
The Japanese government is not going to run out of money if can somehow find a way to provide enough subsidies for every small business such as the coffee shop to make it through the inflation pandemic.
Have a nice day and be safe!
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