GO TO COSTCO TO UNDERSTAND JAPAN’S CRISIS

 

The Japanese economy is in trouble (which economy isn’t?). You never hear about it unless you seek the information for a few reasons; the Japanese like to keep their problems to themselves, the lack of immigrants means that no one abroad pays close attention as they don’t have family trying to carve out a new life in Japan and Japanese debt is held by Japanese.

So why is it in trouble? I reflected on that as I exited Costco a few weekends ago with my son’s English paper top of mind (He is writing on the economic crisis and we had been discussing supply/demand, the impact of consumer confidence on the economy and the downward spiral that leads to a recession).

In North America you exit a Costco with your fellow shoppers sharing a common concern: how the heck am I going to fit all of this stuff in my vehicle?

In Japan, there are a few of us with a full trolley, but many others are exiting with half a trolley full or more commonly only a few items. How many times in North America do you see someone exit a Costco with 4 items? Almost never …

Also, I have yet to see a single person wrestling out one of those impulses items that stock the middle of the floor of Costco. You know, the items you see couples “discussing” all the time in North America. It goes something like this:

“But we came in here for a brick of cheese and milk. Nothing else.”

“I know. I know. It sounds crazy. But at that price, how can we not buy the trampoline?”

In North America you enter a Costco thinking that you will spend $50 and leave spending $900.

The new Prime Minister is keen on kick starting the economy and getting out of deflation. He has launched another huge debt incurring public works program after a big debt year and is pushing the bank of Japan to weaken the Yen to encourage exports.

But it might not be enough. Economies are fuelled by consumer confidence and spending. If Costco is an indicator … Japanese consumers need to spend more. The question is, can they afford it when living in the most expensive city in the world?

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Comments

  1. the conversation I see/hear most is ‘who can we split this with?’ ..neighbors, friends, somebody who will share that huge ass bag of dinner rolls, because nobody can eat all of them before they go moldy, and nobody has room in their tiny freezer for ‘bread’ (and of course very very few have that second freezer to put all that hamburger, frozen bread, box of waffles, chicken nuggets and/or whatever else)
    Luckily, we have plenty of neighbors who go to Costco on a regular basis (including us), so we don’t have to ‘drive’ there just for one or two things, you know somebody is going to go and we can ask them to pick up something if we really need it…. and they might just ask us to split that carton of tiramisu, because, well, it tastes good, and fresh cream doesn’t last half as long as the dinner rolls!
    Oh! I’m going to Costco today…..
    Nice post, by the way…

    • Thanks.

      You make a few good points. The Costco run always leads to some waste (I just threw out some yogurt).

      The interesting thing is that this is a western phenomenon. In Japan you go out for Korean BBQ and you eat everything .. intestines, shoulder, neck. Parts we would never eat in the US or Canada, those parts go into cat food.

      As soon as you walk into Costco you think ‘even if I loose half, it is still cheaper than buying it from National Azabu’ or one of the other shops in Tokyo. Example: 100g of Japanese beef at a downtown supermarket is the same price as 500g of the same quality beef at Costco.

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