In Japan’s two largest retailers: uniqlo and 7-eleven, more luxury items are now being introduced to the customers. Cashmere clothing and gourmet ice cream are known to be pricey and extravagant, but they are now showing up in these basic and conventional stores. The companies hope to expand their targeted customers and lift profit margins in hope that the shoppers would splurge once in a while. Even though these products are luxury items, they are still being sold at a fraction of the price they would usually be sold at in department stores. However, these items can also cause an increase in tax, possibly even decreasing the demand for them. Also, the companies are losing their cost leadership strategy yet not exactly embracing the differentiation strategy either, possibly causing a loss of loyal customer. So will these convenient type stores gain a bigger profit from these new items or will they lose it due to the reasons listed above? Only time will give the most accurate feedback now while we await the reactions of the household.
http://www.reuters.com/article/2013/10/06/us-japan-fastretailing-idUSBRE9950H620131006