Japan: Economics in Everyday Life

17. Why Is Japan a Paradise of Vending Machines?

17 Why Is Japan a Paradise of Vending Machines? Robert Parry Hike to some of Japan’s oldest Buddhist temples secluded among dense alpine forests, stroll along the shores of Okinawa’s coral islands, or indeed go anywhere in Japan and it soon becomes clear that, regardless of all the clichés and stereotypes about the country, Japan should actually be known as the paradise of vending machines on Earth. Indeed , there are so many machines that they soon blend into the landscape and get taken for granted as a part of everyday life. Apart from the enormous number of machines selling soft drinks and cigarettes, it is also possible to buy alcohol, candy and ice cream, instant soup noodles (ra -men), pornographic magazines and videotapes, towels and underwear (in case you forget to take some with you to a public bath), flowers, batteries , photographic film, and fresh (?) eggs. Some shrines even have machines that, for 200 yen (about 2 U.S. dollars), will issue a slip of paper purporting to tell your fortune, surely the next best thing to owning presses to print money. There are currently around 5.4 million vending machines in Japan, about one for every twenty-two people. Placed next to each other, they would practically form two rows from the 123 southern tip of Kyushu to the northern tip of Hokkaido. The total annual sales from the machines are in excess of 6.4 trillion yen (about 64 billion U.S. dollars). Only half the machines sell drinks. Japan has twice as many vending machines dispensing drinks and four times as much sales volume per person as the United States, the runner-up in the vending machine race. Why Are Vending Machines So Popular? A good part of the popularity of vending machines is a consequence of high land prices, high labor costs, and low crime rates. Japan’s mountainous geography and protectionist agricul124 Japan: Why It Works, Why It Doesn’t tural policy keep urban land prices high (see chapter 8). Vending machines produce more revenue from each square meter of scarce land than a retail store can. With spectacular postwar economic growth, labor costs in Japan sky-rocketed. Even the cheapest labor for hire (students working part-time) costs about 800 yen (8 U.S. dollars) per hour. Vending machines need only a periodic visit from the operator to replenish the supplies and empty the cash. Close observation of the vending machine business, however, suggests that a major factor accounting for such a huge number of machines is simply the remarkable lack of crime in Japan. The incidence of vandalism and theft is so low in Japan that even though most machines are located outdoors, often on sidewalks , it is rare to see a vandalized machine. Though a large machine may contain up to 80,000 yen (800 U.S. dollars) in cash, even in isolated areas where alarm systems are hardly effective and the machines themselves can be carted away for resale, vending machines are not targets. Japan does not assemble data on machine-related crime, but one operator of two thousand machines reported only five (or 0.25 percent) incidents of vandalism in 1994. For fear of vandalism, American vending machine companies don’t even consider operating stand-alone, street-side units. Adaptation of vending machines to dispense a broad range of merchandise is another factor that helps explain their popularity . Canned coffee, a product unique to Japan, provides a good example. Sales of cold drinks, the mainstay of vending machines in Japan’s sweltering summer heat, not surprisingly sag in winter. However, in 1969, the UCC company produced coffee in a can that could be sold either hot or cold. This technological breakthrough freed the coffee machines from the need for water supply. The idea quickly caught on with the public, as well as with UCC’s competitors. The innovation helped triple the number of machines in five years, with a sixfold increase in fifteen years. But today, Coca-Cola’s Georgia has become the dominant brand in the Japanese canned coffee market. Why Is Japan a Paradise of Vending Machines? 125 Uniform Prices In the United States, a vending machine located at a gas station might sell its soft drinks for a different price than one located at a supermarket. By contrast, many visitors to Japan are surprised that vending machines almost everywhere sell canned drinks...