Companies Defy Recession, Post Record Profits
Bucking the trend of poor business performances amid the global slump, some Japanese companies are posting their largest-ever profits by emphasizing special features of their low-priced products.
At a time when salaries are being slashed and anxiety is spreading over employment, "cheapness" has apparently become an essential condition to win over penny-pinching consumers.
In addition, retailers and restaurant chains thriving in the recession are providing "easy-to-understand" or "convenient" products.
On Monday, Lawson Inc., Japan's second-largest convenience store chain operator, announced operating profits of 49.1 billion yen for the year that ended in February, up 5.5 percent from the previous year. It marked the sixth straight year for Lawson's core business profits to reach a new high.
Seven-Eleven Japan Co., the largest convenience store chain operator, and FamilyMart Co., the third biggest, also posted record-setting operating profits.
One big reason behind the surge in profits was the introduction of the taspo age-verification cards needed to buy cigarettes at vending machines. The number of people who bought cigarettes at convenience stores soared as a result.
But convenience store chains also attracted customers by increasing the volume in bento lunch boxes and sozai side dishes and introducing cheaper goods.
"It is important not only to lower prices but also to offer goods that match the changes in lifestyles," said Lawson President Takeshi Niinami.
In the restaurant industry, family restaurants have been hit by a business slump. But Saitama-based Hiday Co., which specializes in inexpensive ramen noodles, marked operating profits of 1.81 billion yen on sales of about 20 billion yen in the year that ended in February.
Hiday's operating profits hit a record high for the sixth consecutive year.
The company's bowls of ramen cost as little as 390 yen, and its Hidakaya outlets are set up in front of railway stations in the Tokyo metropolitan area. Those strategies have attracted students and company employees.
Kyoto-based Ohsho Food Service Corp., which operates restaurants specializing in gyoza dumplings throughout the country, is projecting record high operating profits of 6.03 billion yen for the year that ended in March.
One attraction for families with children is that the dishes are cooked in front of customers at Gyoza no Ohsho outlets.
"Compared with the recessionary period that followed the collapse of the (late-1980s) 'bubble' economy, customers' preferences have become diversified. So we cannot satisfy them if we offer only standardized tastes," said an Ohsho Food Service official.
Meanwhile, Saitama-based Shimamura Co., a chain operator that sells low-priced women's clothing, posted a 4.5-percent fall in operating profits to 33.42 billion yen in the year through February, ending a streak of profit increases that lasted for several years.
The company said the decline was caused by a steep drop in customer numbers after autumn.
"The slump in sales was larger than we had expected," said Shimamura President Masato Nonaka. "We can come up with competitive products only when we combine high quality and fashionable styles with low prices. We want to devote ourselves more to the development of better products."
Yamaguchi-based Fast Retailing Co., operator of Uniqlo casual clothing store chain, posted record operating profits of 69.8 billion yen for the September-February period, the first six months of its business year.
One of its big hits was Heattech underwear, priced at 1,000-1,500 yen, that helps retain body heat.
"We are in a time when people never buy unnecessary products. We will develop products that still have merit with consumers and sell them on a gigantic scale," Fast Retailing President Tadashi Yanai said.(IHT/Asahi: April 15,2009)
At a time when salaries are being slashed and anxiety is spreading over employment, "cheapness" has apparently become an essential condition to win over penny-pinching consumers.
In addition, retailers and restaurant chains thriving in the recession are providing "easy-to-understand" or "convenient" products.
On Monday, Lawson Inc., Japan's second-largest convenience store chain operator, announced operating profits of 49.1 billion yen for the year that ended in February, up 5.5 percent from the previous year. It marked the sixth straight year for Lawson's core business profits to reach a new high.
Seven-Eleven Japan Co., the largest convenience store chain operator, and FamilyMart Co., the third biggest, also posted record-setting operating profits.
One big reason behind the surge in profits was the introduction of the taspo age-verification cards needed to buy cigarettes at vending machines. The number of people who bought cigarettes at convenience stores soared as a result.
But convenience store chains also attracted customers by increasing the volume in bento lunch boxes and sozai side dishes and introducing cheaper goods.
"It is important not only to lower prices but also to offer goods that match the changes in lifestyles," said Lawson President Takeshi Niinami.
In the restaurant industry, family restaurants have been hit by a business slump. But Saitama-based Hiday Co., which specializes in inexpensive ramen noodles, marked operating profits of 1.81 billion yen on sales of about 20 billion yen in the year that ended in February.
Hiday's operating profits hit a record high for the sixth consecutive year.
The company's bowls of ramen cost as little as 390 yen, and its Hidakaya outlets are set up in front of railway stations in the Tokyo metropolitan area. Those strategies have attracted students and company employees.
Kyoto-based Ohsho Food Service Corp., which operates restaurants specializing in gyoza dumplings throughout the country, is projecting record high operating profits of 6.03 billion yen for the year that ended in March.
One attraction for families with children is that the dishes are cooked in front of customers at Gyoza no Ohsho outlets.
"Compared with the recessionary period that followed the collapse of the (late-1980s) 'bubble' economy, customers' preferences have become diversified. So we cannot satisfy them if we offer only standardized tastes," said an Ohsho Food Service official.
Meanwhile, Saitama-based Shimamura Co., a chain operator that sells low-priced women's clothing, posted a 4.5-percent fall in operating profits to 33.42 billion yen in the year through February, ending a streak of profit increases that lasted for several years.
The company said the decline was caused by a steep drop in customer numbers after autumn.
"The slump in sales was larger than we had expected," said Shimamura President Masato Nonaka. "We can come up with competitive products only when we combine high quality and fashionable styles with low prices. We want to devote ourselves more to the development of better products."
Yamaguchi-based Fast Retailing Co., operator of Uniqlo casual clothing store chain, posted record operating profits of 69.8 billion yen for the September-February period, the first six months of its business year.
One of its big hits was Heattech underwear, priced at 1,000-1,500 yen, that helps retain body heat.
"We are in a time when people never buy unnecessary products. We will develop products that still have merit with consumers and sell them on a gigantic scale," Fast Retailing President Tadashi Yanai said.(IHT/Asahi: April 15,2009)
quoted from: The Asahi Shimbun
