AT the door to his tiny mom-and-pop store in Tokyo's Toshima Ward, Yasushi Takamoto stands shaking his head. ``Our sales have been dropping every year for the past five,'' he says. ``When we retire, that'll be it for our shop.''
Across Japan, the same sort of drama is being played out in small local stores that have served a generation of shoppers. General retailers and specialist outlets are being squeezed out by 24-hour convenience stores and discount outlets offering cheaper prices.
But not only small retailers are hurting. Sales at Japan's 420 department stores have fallen every month for the past two years. Supermarket sales in March were down 1.5 percent from the same month in 1993, the 20th consecutive monthly decline.
The world's second biggest retail market is undergoing a sea change - it's opening up. This is good news for consumers paying the world's highest prices and importers frustrated by bureaucratic obstacles to trade. Commentators see price and service replacing quality and presentation in consumer preference.
Japan's Ministry of International Trade and Industry blames the 3 percent decline in large retailers' sales over the past year on ``consumer inclination toward lower-priced goods.''
Sales results for Japan's growing ranks of discount stores bear out MITI's assessment: up 8.5 percent in fiscal 1992, and expected to top that for the last fiscal year. Consumer electronics, clothing, and liquor are showing fastest growth in turnover and numbers of stores.
Through the early '90s, quality was the watchword. Consumers distrusted price-led marketing. These attitudes helped to prop up an overcrowded marketplace. Despite a steady decline in store numbers since the early 1980s, Japan has about 1.55 million shops. At 1 for 80 people, that's double the ratio in the United States or European Union.
Almost 40 percent of these stores are mom-and-pops or specialist outlets handling products of one or two major manufacturers. Electronics giant Matsushita, for example, distributes through 19,000 specialist shops that stock little aside from its National Panasonic brand.
Manufacturers traditionally made most marketing decisions for these outlets, including insistence upon recommended prices. Now changing consumer profiles are eroding their hold over the market. The recession is driving Japanese consumers to bargains. ``Inexpensive'' has acquired an inverted chic among urbanites.
Meanwhile, legal restrictions that limited competition for small stores have softened. Pressure from US trade negotiators has brought reforms to the Large-Scale Retail Law, allowing expansion of chain stores and the entry of others, including Toys `R' Us. May 1 brought the latest revisions to the law, cutting bureaucratic obstacles to opening stores up to 1,000 square meters, extending legal operating hours, and reducing the number of mandatory holidays. To cap off changes, the stronger yen is playing into the hands of discounters who generally source products offshore.
A February survey by the Economic Planning Agency revealed that 25 percent of Japanese are buying imports more often, while 65 percent saw prices falling due to the strong yen.
Major chains also are importing more and lobbying for freer operating rules. Leading the charge is the Daiei Group, Japan's largest supermarket chain. Isao Nakauchi, its president, said his company would stock only imports if it meant lower prices for customers. Daiei now imports more than $2 billion worth of goods from around the world.
A recent agreement with trading house Marubeni will increase the percentage of foreign clothing, food, and sporting goods in Daiei stores. Similar sourcing deals with food manufacturer Ajinomoto and cosmetics maker Kanebo are coming into effect. ``Our strategic focus is on how to close the gap between wholesale and retail prices,'' says Yo Suzuki, Daiei Group Council director.
The strong yen is helping. ``In 1993, imports increased 118 percent from the US, mainly for fish and meat,'' he says. Daiei aims to offer US-level prices by 2010. Yet, competition will keep the Japanese market moving in the right direction. All major supermarkets announced price cuts on liquor last month. Department stores are welcoming discount operators into food sections; mail order importing is booming.
Japan's retail market is evolving toward convenience or discounting, says Nakauchi. ``The situation here is slowly becoming more ... like that of the [US].''