It looked like they were giving away food.
The crowd was practically euphoric at the recent opening of Costco’s third Tokyo-area store along the bay in Yokohama. The aisles were filled with shoppers who marveled at the almost cartoonish quantities of produce and formed polite lines in front of the more popular food samples. Customers were checking out the non-food items – the cookbooks and clothes and even the shiny new snowmobile – but when it came to filling their shopping carts, they reached for the enormous frozen pizzas and bags of onions.
“We have fun here, that’s why we come,” said one couple, who were sharing pizza and hotdogs with their child in the cafeteria. “It’s like a theme park.”
The theme of Costco, whether in Japan or the United States, is consumption to the max. The newest Costco in Japan might differ in some particulars from its American version – large containers of Japanese pickles for sale, samples of lychee liqueur on offer – but the overall experience is identical, down to the layout of the store and the fast-food menu at the cafeteria.
For SUV-owning Americans, with our extra freezers and basement pantries, such consumption fuels a super-sized, high caloric lifestyle. But how exactly were these Japanese customers cooking those enormous pizzas, storing those giant mustard jars, and eating those gigantic cuts of meat?
After all, the average Tokyo apartment is so small that it can make even a New Yorker feel like a caged animal. And only a cooking-averse undergraduate could love the typical Japanese kitchenette with its half-size refrigerator and an oven that can grill fish but not much more. To get around the lack of storage space, Tokyo shoppers shop more frequently than their American counterparts and tend to buy a lot of fresh food at local stores. The size of the classic Japanese meal – a few pieces of raw fish or a modest bowl of noodle soup – contrasts sharply with such American faves as the double bacon cheeseburger or the all-you-can-eat breakfast buffet.
“That was always the fear that the large packs wouldn’t sell,” says Richard Chavez, who once ran the Asian operations for Costco. “But I have to say, they do very well.”
Ken Theriault, manager of the new Yokohama store, agrees. When the first store opened, he says, “People didn’t know Costco. Obviously the foreigners came in, they knew how to shop. The Japanese had to learn how to shop.”
During the trade wars of the 1980s between the United States and Japan, legislators in Washington sledge-hammered Japanese-made televisions and politicians in Tokyo claimed that the Japanese digestive system couldn’t handle American-grown rice. Where Americans saw protectionism, Japanese asserted simply a different system of producing and selling goods. Until the 1990s, mom-and-pop stores still ruled the consumer landscape, and Japanese legislators locked arms to keep out “big box” retailers. As a result, Japanese continue to spend about twice as much for food, which has helped to keep small retailers in business and small farmers on the land.
The Japanese have also pointed to a different way of consuming. Japanese tourists in the United States are appalled at the huge portions at the restaurants, the amount of wasted food, and the way suburbanites fill their shopping carts every week as if they were closet survivalists.
Not to mention the sheer size of Americans themselves.
Thanks to an influx of American-style food, Japan is changing. In the 20 years from 1980 to 1999, Japanese spending on fresh produce dropped 10 percent, while expenditures on Western processed foods jumped 20 percent. Over the same two decades, obesity figures for Japanese males rose 40 percent. In the last 40 years, obesity in the population as a whole has more than tripled.
Despite these changes, obesity rates in Japan remain the lowest in the industrialized world. Relatively thin people who are spending a lot on food? Talk about opportunities for growth. After the United States pressured Japan to change its Large Scale Retail Store Law in 1990, food discounters like Costco and the French giant Carrefour rushed in to teach Japanese how to consume properly.
Costco gets high marks for good corporate citizenship, especially when compared to its rival Wal-Mart. In the United States, Costco pays its workers a living wage (average hourly wage is about $16 compared to $11.50 at Wal-Mart), and doesn’t stand in the way of union organizing (13 percent of the U.S. workforce is unionized compared to Wal-Mart’s zero percent). As a result, Costco has a turnover rate that is about one-third the industry average.
Despite the barrier of a membership fee, Costco has attracted quite a fan base in Japan, among foreigners and natives alike. But in the way that it pushes super-sized portions, Costco is also changing the way Japanese shop and eat, and that may not be an entirely healthy thing.
The strategy is simple: provide large volume at a good price and people will buy. The key part, though, is to provide only the super size. At McDonald’s, as long as you’re not Morgan Spurlock (maker of the documentary “Super-Size Me”) you at least have a choice. Not so at Costco. “If you give people a choice, they’ll buy the smaller quantity,” Richard Chavez points out. “If you have the cheaper size, the consumer will choose that.”
For now, Japanese shoppers have figured out a way around the Costco strategy. They buy Costco’s large quantities and split them up among friends and families. In the United States, analysts refer to Costco’s “treasure hunt” dynamic, for you never know what you might find for sale. In Japan, it’s more like a big game hunt, with the prey divvied up at home among the inner circle.
At the Costco café, Japanese consumers did not seem aware of any changes in their lives. One couple, eating huge slices of pizza that are generally not available in Japan, insisted that shopping at Costco had not changed their diet. When pushed, however, the woman admitted, “Now that I think about it, now that I have more meat, I might cook more than I would ordinarily.” After some prodding, another woman confessed in a quiet voice to the cardinal Japanese sin of throwing out food.
The big-box way of shopping has not won universal approval. Some customers reported that the novelty had worn off and they would let their membership lapse. Others refused to buy produce at Costco because of concerns over chemical additives and genetic modification.
“I won’t buy the fresh vegetables here,” one mother said, “because I don’t know about the pesticides and I’m concerned about my child.” Meanwhile, in November, news leaked out that Carrefour, the world’s second largest retailer, was negotiating with Wal-Mart and others over the sale of its eight Japanese stores.
Despite these indications that the hypermarket model may have hit its limits, both the volume of sales figures at Costco and the types of products the Japanese are buying suggest otherwise. The company is set to move into the black this year in its overall Japanese operations. And, in a sign that bigger sales volumes are ahead, Ken Theriault reports that freezers and storage units are big Costco sellers. Today the Japanese are engaging in the un-American habit of sharing; tomorrow they won’t have to.
It was once common for Americans to dismiss the high Japanese standard of living because Japanese didn’t live in big houses, drive big cars, or use such essentials as clothes dryers or central air conditioning. They worked hard but didn’t know how to consume hard. With the triumph of Costco in Japan, however, the Japanese are becoming more like us – to the detriment of their health and inevitably, the world’s health.
Alternet, December 17, 2004