Japan consumers shift to discount shopping amid rising inflation

Japanese consumers are increasingly adopting thriftier shopping habits as the cost of living rises, posing risks to both the convenience store sector and the broader economy. Data from the Japan Franchise Association shows that customer numbers at convenience stores have declined for 15 consecutive months, with a 3.8 percent year-on-year drop in September, the largest decline since the COVID-19 pandemic.

Underlying inflation rose in September at the fastest annual pace in three years, exceeding the Bank of Japan’s 2 percent target. This shift in behavior is particularly notable as many Japanese citizens have not experienced widespread price increases in their lifetimes. Analysts warn that because private consumption accounts for approximately half of Japan’s GDP, increased household belt-tightening could weigh heavily on national economic growth.

Retailers like Seven & i, which operates approximately 23,000 outlets, have noted that consumer desire to save has exceeded expectations. As companies face pressure from a weak yen and higher costs, the Bank of Japan may signal potential interest rate hikes as early as December.