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.
"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.
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.
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.
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.
(Japanese original by Tomohiro Tsujimoto, Business News Department and Seiya Tateyama, Nagoya News Center)