The supremacy of Japan’s ¥100 shops, long a symbol of an economy stuck with flat to falling prices for almost three decades, is beginning to crumble.
A weaker yen pushing up the cost of imported goods, spiking energy prices and climbing raw material costs are making it harder for Daiso Industries Co., Seria Co. and other ¥100 store operators to operate in an inflationary environment.
Japan’s ¥950 billion ($7 billion) ¥100 shop market is struggling to figure out how to pass on increased costs without turning away an entire generation of consumers accustomed to deflation. It’s an especially tough challenge because wages aren’t increasing. The Bank of Japan’s efforts to kick-start inflation for more than a decade hasn’t delivered a healthy economic cycle of rising incomes and prices for goods and services.