July 6, 2009
Rising low-end consumers, deflationary depression returns?
| Japan's Consumer Price Index (CPI) report, published on June 26, illustrated a record decline of 1.1 percent in May from the same month last year. This was a drop for three consecutive months beginning in March when the CPI declined for the first time in one and a half years. Retail stores and chain restaurants are in a price war feeling pressure from consumers demanding further discounts. Private brand (PB) merchandise, which sells in major retail chains, led the industry into the price war. AEON CO. LTD., one of Japan’s biggest group companies in the field of general merchandise stores (GMS) and supermarkets, sell PB items in their 1,500 stores nationwide at prices that are 30% to 50% lower than ordinary brand items. Seven-Eleven Japan Co., Ltd., another retail and convenience store giant, implemented a 20% discount sales on their 74 hot-selling lines of food and beverage products June 22nd. Convenience stores were against price cutting in the past because they were reluctant to squeeze margins or to give the impression of being a discounter. The price war within the consumer electronics market is also growing. According to BCN, a private research company, in the month of May the average retail price of consumer PCs, among 2,292 electronics retail stores across the country, was 84,700 yen. This was approximately 30% lower when compared to last year. The reason is because the netbook, a low-budget laptop with less functionality, is increasing their market share due to the economic slowdown. The average price of the netbook in May was 41,900 yen which was a half the price of conventional laptops. |
