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100-yen shops look to Middle East markets

Publication Date : 13-02-2014

 

An increasing number of Japanese retailers, including a chain of so-called 100 yen shops, have entered the markets of the United Arab Emirates (UAE) and other Middle East countries.

Among parts of the Middle East where economic growth is continuing, Dubai has been especially remarkable in becoming a commercial hub city where internationalisation has been rapidly progressing.

Many of the Japanese retailers have expanded their business in the Middle East with Dubai serving as their base.

The UAE is a federal state comprising seven emirates including Abu Dhabi, where its capital city is located, and Dubai. There are about 9 million people living in the UAE. The UAE faces the Persian Gulf and is on the Arabian Peninsula, supported by abundant petroleum resources. The livelihoods of its citizens are prosperous, and the political situation is stable.

Development in Dubai has been rapidly progressing for about 10 years as the city has become a hub of commercial and transportation businesses in the Middle East.

In Lamcy Plaza, a commercial facility in Dubai, the Daiso chain, which is known as an operator of 100 yen shops in Japan, runs a “7 dirham shop”. Seven dirham is about 200 yen.

Though the uniform price is higher than that in Japan, a teacher at a local school bought kitchen items and other goods, saying, “The price is reasonable. Because this shop has a lineup of many products and there are not similar shops, I have come here at least twice a month.”

The shop is managed by a local company that signed a franchise contract with Daiso Sangyo Inc. based in Higashi-Hiroshima, Hiroshima Prefecture, which operates the Daiso chain.

The first shop opened in Dubai in 2004 and three or four new shops have been opened every year. Now there are nearly 40 shops of the chain in the UAE and in nearby countries.

The chief operating officer of the local company aims to open more shops, saying, “Our shops’ popularity is spreading because of an image that Japanese products are of high quality.”

Due to surging oil prices in the wake of the Iraq War in 2003, a huge amount of oil money flowed into the Middle East. In the UAE and other oil-producing countries in the region, consumers’ buying power has risen.

The UAE maintained political stability when nearby countries fell into disarray due to the Arab Spring, a wave of antigovernment rallies that began spreading in 2010.

As Dubai was enthusiastic in accepting foreign capital, the emirate has been attracting increasing attention as a commercial and trading hub in the Middle East.

The population in the Middle East exceeds 300 million and is predicted to surpass 500 million in 2050. Thus, the region is a new emerging market where economic growth is continuing.

Many tourists visit Dubai from nearby countries, and some Japanese companies aim to expand their businesses in the Middle East with Dubai as their business base.

Last year, Ryohin Keikaku Co. opened its Mujirushi Ryohin stores, which sell clothing and other general merchandise products, in Kuwait and Dubai, aiming to expand its business in the Middle East.

“In Dubai, where a large number of tourists visit, the effects of advertising are expected to spread to the whole of the Middle East,” a spokesman of the company said.

Yellow Hat Ltd., an auto supply store chain, entered Dubai’s market in 2008 and now operates four stores in the UAE and Saudi Arabia.

Automobiles, home electronics and other Japanese-made products are already sold widely in the Middle East. But Japanese companies with unique business models, such as 100 yen shops, also aim to enter the Middle East markets.

While the market for consumer products in Japan may not easily grow due to the low birthrate and graying population, the attractiveness of Japanese products and services in the Middle East will become even more important.

 

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