Japan: Economics in Everyday Life

7. Why Are There So Many Small Shops in Japan?

7 Why Are There So Many Small Shops in Japan? James Mak and Shyam Sunder Strolling around Motomachi in Kobe and along Shinsaibashi-suji in Osaka or near Kawaramachi-dori in the historic Imperial capital of Kyoto, a visitor to Japan is impressed by the large number of small specialty shops and restaurants that line the streets. Surely, Japan must be a nation of small shopkeepers. Despite the country’s high prices, one of the most enjoyable activities for visitors to Japan is shopping, or at least “window shopping.” The Japanese also love shopping. On any Sunday in any of Japan’s cities, you can barely make your way through the throngs of people on its “shopping streets.” Best not be in a hurry to get anywhere! Shops are not only found in shopping streets and arcades in city centers; they are everywhere. You can buy most daily necessities within a short distance from home. Most of the shops are small, and many are mom-and-pop operated, located in small spaces on the ground floor of the owners’ private residence. When a visitor, having bought a bag of Japanese rice, wanted to know the appropriate amount of water to cook it in, the middleaged shopkeeper went upstairs to get the answer from his wife. 45 Compared to the United States, Japan has over twice as many retail stores per thousand population and Japanese shops average about one-third as many employees and annual sales. In 1994, over half the retail stores in Japan had only one or two employees and over three-quarters of them had less than five employees. Individual ownership accounted for 61 percent of the country’s retail stores, but those stores accounted for only 16 percent of total retail sales. Japan has many large multistory department stores. In recent years, big discount chain stores have begun to proliferate. Large stores that combine a supermarket and a general merchandise department store have emerged under the moniker of “superstores.” Growing even more rapidly are the modern, efficient convenience stores (known as konbini), like 7-Eleven. These new, brightly lit stores employ state-of-the art computer technology for monitoring instantaneously the point of sale of each item in each store in order to determine what needs to be restocked. With such sophisticated equipment, the stores can operate efficiently even with relatively untrained, temporary, and part-time workers. Though small in terms of space, the convenience stores enjoy a high volume of business, selling a surprisingly large assortment of goods as well as services, such as payment of utility bills, photocopying, parcel delivery, discount theater tickets , and even travel reservations. The versatility of the convenience stores, along with a twenty-four hour operating schedule , is pushing large numbers of mom-and-pop stores out of business. They are also taking business away from large department stores. Why Small Stores? Compared to the United States, Japan has many more small food stores in relationship to its population. In part, this is because Japanese homes are smaller with limited storage, necessi46 Japan: Why It Works, Why It Doesn’t tating more frequent visits to stores for buying in smaller quantities . Fresh food, primarily fish and vegetables, which are especially important constituents of the Japanese diet, also call for frequent purchasing. On average, a housewife in Japan visits a food store five times per week, compared to 1.8 times in the United States. In the United States, better highways and a higher rate of private car ownership encourage the development of suburban malls and large discount stores along highways in areas of low population density. By contrast, the Japanese rely heavily on public transportation and walking, and so stores are built near train and subway stations and in higher-density residential neighborhoods within walking (or biking) distance from private homes and apartment complexes. Having large numbers of people living nearby also makes it easier for small stores to be profitable in Japan. Small stores are popular because they are easily accessible, provide a high level of personal service and offer easier return policies for defective goods. It is not surprising that Japan’s retail industry is dominated by large numbers of small shops. As for the small mom-and-pop stores, they require modest amounts of start-up capital and employ a large number of retirees . Their employment function is particularly important for Japan because social security benefits...