Thrifty shoppers grow Japan’s 100-yen store market

Japan’s 100-yen store market topped one trillion yen for the first time in 2023, growing on the back of a thrifty consumer mindset, according to a recent report. 

In terms of sales, the size of the market generated by the nearly 9,000 100 yen stores in Japan was estimated to have reached around 1.2 trillion yen in FY2023, according to the report from credit research firm Teikoku Databank Ltd.

Record high prices, including annual hikes on more than 30,000 items in recent years, have led to shoppers here increasingly keen to seek out cost-friendly items across a wide range of the categories, including the daily essentials, according to the researcher.

Over the decade leading up to 2023 the number of 100-yen stores in Japan grew from nearly 6,000 in 2013 to an estimated 8,900 stores in 2023. There was a particularly sharp increase, however, during the pandemic with around 800 new stores established in 2021.

From one coin to three coins, in image at least, the number of 300-yen stores in Japan has also increased of late - 2.8 times over five years with stores from the main operators estimated to have surpassed 1,000 in 2023, according to the researcher. Evidence perhaps that sometimes 100-yen-store quality doesn’t quite cut it. 

By offering products that cover a wide range of fields including DIY, gardening, and campaign at accessible prices operators have been successful in establishing their 100-yen stores as a kind of “entry model” for shoppers.  

Teikoku Databank said that going forward operators can expect to expand sales by attracting a diverse customer base. 

Thus far the report paints a favorable picture. Good news then for anyone resident in Japan for more than a few months for whom it might be hard to imagine life without the cost-friendly convenience of the 100-yen store.

But these are testing times too for operators with the rapid depreciation of the yen, which in April plummeted to the 160 range against the dollar, an over 30-year low. The weak yen has left shoppers questioning just what 100 yen (or 105 yen) is actually worth and store operators struggling to maintain profits.

Many of the products offered by 100-yen stores are manufactured overseas. With the weak yen resulting in increased import and raw material costs some of these products have become unprofitable, while for others manufacturers and buyers have exhausted all options for cost reductions making it difficult to manufacture to normal standards, according to the researcher.

As a result, 100-yen store operators are seeking profits elsewhere by expanding their lineups of value-added products sold at the 300-500 yen price range. Doing so, however, comes at the cost of having to bring with them a customer base which has long found comfort and convenience in what they could expect in return for a solitary coin. 

Teikoku Databank said that Japan's 100-yen store operators may be presented with the difficult decision as to whether or not they should continue to develop their businesses based on 100-yen products or to broaden their strategy, move away from the comforts of 100-yen, and expand their range of products priced at 300 yen or more.

Would you welcome a shift from 100 yen to 300 yen products?  Let us know in the comments.