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. Last Updated: 07/27/2016

100 Yen Stores Boom in Japan Gloom




HIGASHI HIROSHIMA, Japan -- Politicians are pumping $171 billion into yet another gargantuan stimulus package aimed at jump-starting the anemic Japanese economy. But one retailer is making his own economic miracle come true a buck at a time.


Daiso Industries Co., one of the few booming chains in Japan these days, sells every item in its stores for 100 yen - slightly less than $1. It already packs more than 1,300 outlets, known as 100 Yen Plazas, into a country roughly the size of California, but it's growing exponentially. On average, two new stores are added every day.


Some are bigger than football fields, brimming with merchandise ranging from the sublime to the ridiculous: from surprisingly decent wine glasses and china to silly strap-on breasts. Brightly colored plastic bins, enough gadgets and tableware to stock a kitchen almost completely, tools, alarm clocks, neckties, office supplies, along with battery-operated massagers you never knew you needed, create a "video arcade for housewives" - a description coined by the chain's founder, Hirotake Yano.


That Yano can sell 40,000 products for a standard 100 yen is all the more surprising in Japan, where little can be purchased anywhere for a buck: not candy bars, not morning newspapers, not even a can of Coca-Cola. Indeed, competitors sell many of the same things for several times the price. "At first, I was shocked when I saw the prices here," college student Minako Ofuchi said as she loaded up on nail polish and hair accessories at the always bustling four-floor store in Tokyo's trendy Shibuya section. "What's really great about it is that I can buy so much and it makes me feel like I'm spending a lot of money when I'm not."


Her bill: $8.


At Daiso's equivalent of the 99 Cents Only chain, revenues were expected to top $1.03 billion in 1999, a huge boost over the $743.6 million in sales the privately held company made in 1998. Daiso's rock-bottom pricing is testament to the extraordinary zeal of Yano, 56, who is as jarring in the staid Japanese business world as his prices are. In fact, until he struck gold with Daiso, nearly everything he touched went bust.


For a while, he supported his family by what is known in Japan as "toilet paper exchange," in which he collected newspapers to recycle, giving donors token rolls of toilet paper in return. It was one of nine jobs he has held over the years, and his failures were all the more humiliating because his father and two of his brothers are successful physicians.


"I learned that good times don't last," Yano said. "Since I haven't been successful, I'm not greedy or rich."


Daiso had humble beginnings. In 1977, Yano began hawking 100-yen items from a truck, parking it on vacant properties or streets just outside town. By 1991, when he opened his first retail space in the corner of a supermarket, 92 trucks were prowling Hiroshima-area streets.


In the early days, he overheard a homemaker hesitate to shell out a dollar for a sugar bowl because her friend advised, "You get what you pay for." From then on, Yano vowed to offer decent quality along with low prices. That philosophy has helped propel his recent growth rate of about 60 new stores or franchises per month.


But Yano does more than just offer low prices. He also makes sure merchandise is changing constantly, to keep repeat customers from getting bored.


"We are aiming to sell 500 yen worth of goods to customers who drop in for 30 minutes," he said. "That's better than paying 2,000 yen [admission] for a movie."


The 100 Yen Plazas even provide a form of entertainment. At one huge store in northern Tokyo, about 5,000 customers stroll through each day, the company says.


"I just come to kill time and look around - sometimes I buy many things, and sometimes I buy nothing," said Miyoko Terada, who recently walked out of the Hiroshima store with 88 items, including five big ramen bowls, a dozen soy-sauce dishes and about a dozen rice bowls for her small restaurant.


"Don't you have enough now?" her husband could be overheard asking, even as he tossed an item into the shopping basket.


At company headquarters in rural Higashi Hiroshima, Yano can't seem to sit still for more than a few seconds at a time, taking care of the most minor details - even though the headquarters staff now numbers 300.


During a recent hourlong interview at a conference table set amid the office hubbub, Yano got up at least 25 times.


Just how profitable Daiso is, however, is anyone's guess. Yano isn't saying. But he does say that other Japanese companies are too greedy. Picking up a mirror with a wooden-platform base, he said: "This sells in Tokyu Hands [a popular household products store] for 1,500 yen, and they must earn a 500-yen profit. But Daiso sells 10,000 units per day, so a 10-yen profit is enough for us."


Yano acknowledged that some of the items he sells are loss leaders to pull people into the store. Which ones? "I don't know," he said.


In some ways, Daiso seems an accident waiting to happen. If Yano is to be believed, the company has no budget and no business plan. It doesn't take inventory through cash-register receipts to see what's moving: The army of part-time cashiers simply count the number of items in each shopper's basket and multiply by 100. Of its 8,000 employees, 7,500 are part-timers, including many store managers.


Moreover, it is expanding so rapidly that even Yano is troubled: He has urged his employees to slow the pace of new store openings.


For the time being, however, Daiso is making hay while the sun shines.


"I'm dreaming now," Yano said. "I'm just hoping I won't wake up from this dream. Things shouldn't be working this well."