The Japanese have encountered an unlikely foe in their fight against the deflation that has ravaged their economy over the last 20 years: the urban housewife. Close on 8,000 Japanese supermarkets are now under the spotlight of the Mainichi Tokubai (everyday bargaining) mobile website. This scrutinises their prices (via the visits and voucher-scouring of 25,000 enthusiastic ‘regional correspondents’) and uploads every single one to the site. The result? Tens of thousands of users of the site have at their fingertips what the Wall Street Journal calls a “devastating weapon” in the battle for bargains.
They rush to the cheapest places to do their shopping, leaving the supermarkets with no choice but to keep dropping their prices to “compete with the lowest price on offer in any given region”. It’s a nightmare for any retailer who was hoping that the signs of recovery in the Japanese economy might mean they could finally get away with a few itsy weeny price rises. They can’t. That might be good for the individual, trying to stretch a wage that’s barely risen in real terms for two decades, but it isn’t so good for the economy.
But before you start thanking your lucky stars that crowds of bargain-surfing housewives are one economic problem we don’t have, cast your eye over the list of newish apps available for the iPhone (to which I am a relatively new and very happy convert). The one that should be getting retailers thinking is Vouchercloud. For a relatively small monthly subscription fee (or for free if you’re happy with limited access) you download this app then use it to ensure you’re getting the best deals you can when you are out and about. The app uses GPS to get your location and then tells you where the bargains are on any given day – then you simply show your phone with its downloaded voucher to the restaurant or retailer in question to bag your discount. As an app, this doesn’t have quite the integrity of Mainichi Tokubai, in that the discounts are put about by the business, not the consumer, but the effect should be much the same.
If you’re strolling along, wondering what to have for lunch and your phone tells you that you can have 25% off at Feng Sushi, 20% at Carluccios, and 25% at Café Rouge, you simply aren’t going to choose anywhere not offering something similar. The point being that as more people download this kind of software (as I have), service providers will be forced into competitive price cuts. It’s deflation in action.
Here at MoneyWeek we still think the end result of the financial crisis will be inflation – and that is particularly the case as it becomes clear that no politicians can bring themselves to talk about how they would really cut the growth in our national debt. But this kind of thing, along with the weakness of our recovery and the fact that we have already had a pretty dramatic sterling crash, rather suggests there will be a bout of deflation first.