In the UK the big supermarkets are often criticised for squeezing suppliers and putting smaller shops out of business but take one look at the prices in their Japanese equivalents and it becomes a little easier to see what the customer gets out of this arrangement.
Take vegetables, for example. Here a few comparisons, using Tesco Price Check for the UK prices:
3 Pack of onions (600g) – 158 yen (£1.18)
The same price as a 2kg bag of ‘Market Value brown onions’ and 18p more than an 810g bag of ‘Organic Onions’
Cherry tomatoes (about 200g) – 198 yen (£1.48)
In England that would buy you 280g of ‘Sun dried tomatoes’ or 800g of ‘Cherry Tomatoes’
2 Leeks (about 250g) – 198 yen (£1.48)
In England you can get 400g of Organic leeks for £1.65 – and leeks are pretty much a staple food here!
I could go on…
There are a few relative bargains to be had – bean sprouts and enoki mushrooms should be on any budget conscious shopping list – but in general prices are higher than at home. Vegetables seem particularly expensive but the same is true throughout the store, no matter which aisle.
Why should that be?
The high yen takes some of the blame but there’s more to the story than just exchange rates.
First off, the agricultural industry holds enormous lobbying power with the government, reflected in generous tariffs for local produce – up to nearly 800% on polished rice. According to the Guardian, the OECD have estimated that this has led to a near doubling of food prices for Japanese shoppers. Ouch.
In contrast, the supermarkets wield comparatively little power. The chains are smaller, as are the shops themselves. There’s no real equivalent to Tesco or Asda. And that means less bargaining power with suppliers. They’ve also been slow to innovate with no equivalent to the UK supermarket point schemes amongst any of the chains. Love them or loathe them, Tesco’s Club Card and their ilk help supermarkets to understand what customers are likely to buy and therefore plan more efficiently, meaning cheaper prices as the big chains compete to undercut each other.
So on the one hand – in the UK – we have an all-powerful retail sector, able to call the shots with suppliers and out-compete smaller shops, leading to further consolidation and a reduction of diversity. On the other hand – in Japan – we have a protectionist agricultural regime that controls trade and keeps prices high for the end customer.
Not much of a choice!
However, there does seem to be an alternative emerging…
Thanks to a company called Zen Nippon, a new scheme is springing up at independent shops across Tokyo that could offer a happy medium. Their new grocery club ironically quotes Tesco as on of its models but is actually allowing small family-run stores to consolidate their sales data to gain extra leverage with suppliers, enabling them to undercut the bigger supermarket chains.
If the new free trade deals that Prime Minister Kan is currently trying to get through the Diet become a reality then they could eventually spell the end of the high tariffs that have so far kept the power in the hands of Japanese food producers. If that is the case, then this new technology could help Japan’s independent grocery stores stay one step ahead of their larger rivals.
Let’s hope so because it sounds like the best of both worlds – personal service, supermarket prices.