Market Scene : The Mom-Pop Shop--and the Trade Fracas : Japan protects its neighborhood stores against the giants, and Americans cry foul. But in little Shingu, where marketing is a family affair, it’s hard to identify the villains.


This remote sawmill and paper-pulp town on the mouth of the Shingu River considers itself trendy. Folks still pride themselves on how they once imported the latest Tokyo fashions--far ahead of the big regional cities like Osaka and Nagoya--aboard the lumber boats that sailed regularly to and from the capital.

Now, an aggressive local entrepreneur is trying to keep that tradition intact, introducing modern, Tokyo-style marketing to this rural patch of Wakayama prefecture (state) with his Okuwa chain of supermarkets, discount stores and big clothing shops.

And that makes his country cousins mad. Shingu, population 36,000, was the stage to a drama that has played itself out hundreds of times across Japan since the central government’s Large-Scale Retailing Law went into effect in 1974, protecting small store owners from sophisticated competition.

That law protecting Japan’s small stores has become a bone of transpacific contention. American trade negotiators think more big stores would help reduce the big U.S. trade deficit with Japan because big stores are much more likely to handle foreign goods than are small ones. They charge that delays and red tape have kept Japan’s distribution system inefficient and have discouraged imports.


The Americans say that the law protecting small stores is a big part of the problem, and they want the law abolished. The question was hotly debated in the latest round of U.S.-Japanese trade negotiations over so-called “structural impediments” to trade, and Japan grudgingly agreed to revise the retailing law.

But as the example of Shingu suggests, it may be wrong to assume that larger stores devote more shelf space to imported American goods. Likewise, it is not clear that having a big store nearby necessarily spells disaster for the tiny shops that clutter the Japanese streets, their numbers waning but their political clout still strong.

Shingu’s Mom & Pop retailers, for their part, fought a tenacious battle against plans by the Okuwa chain to expand its outlet on the city’s main shopping street. They held things up for eight years and seven months, and construction went ahead only after Okuwa agreed to cut the size of its proposed addition by nearly 90%.

“The idea is to reach peaceful coexistence and mutual prosperity,” said Suehiro Wada, leader of a campaign mounted against Okuwa by the local merchants’ association. “It’s a beautiful idea, but it doesn’t work when one guy tries to take everything for himself, making arguments about how he represents the interests of the consumers.”

Wada, 67, owns a small clothing store for men called Suehiro on Shingu’s Eki-mae Hon-dori, literally the Main Street in Front of the Rail Station. It is a family affair, which he runs with his wife and son and two or three hired hands, keeping the store open long hours, seven days a week. Wada, the son of a printer, started the business 35 years ago selling used clothing out of a street stall.

These are good times, Wada admits, despite the opening of the Okuwa extension in 1988 with its interior of sparkling mirrors and skylights and its astonishing 600-car parking garage. Wada remodeled his little store to attract a younger clientele and said he still manages gross sales of about $600,000 a year.

“I don’t feel like I’m doing any worse now than in the past because of Okuwa,” he said. “But I really suffered to get where I am today.”

What worries Wada now is an Okuwa subsidiary chain specializing in men’s clothing, “Fashion Life, Lacter,” which opened an outlet March 1 just around the corner. Because the store’s total floor space was less than 5,400 square feet, it was not subject to review under the Large-Scale Retail Law. Yet the store has about four times the floor space of Wada’s.

Wada’s potential nemesis has been placing advertising inserts in the local newspaper, making him cringe with full-color photographs of $5 shirts and $65 sports jackets.

“They’re dumping,” said Wada, who figures he lost a good piece of the school spring graduation market to the Lacter shop. His total sales figures haven’t suffered yet, but there is a principle at stake.

“We small shopkeepers spent years developing this district as a place where people came from all over to shop,” he said. “Then all of a sudden a big operator drops in and draws away our customers. Wouldn’t it make you angry?”

U.S. trade negotiators, meanwhile, might be disappointed to learn that neither the aggressive Lacter nor its parent, the big chain-store Okuwa, appear to carry much in the way of foreign goods.

To be fair to the architects of the U.S. “big store law” policy, some nationwide supermarket chains--such as Daiei Inc., Japan’s largest--do indeed stock an impressive quantity of foreign goods, and at reasonable prices. In fact, Daiei came to Shingu with a plan to build a store about the same time Okuwa proposed expanding its operation.

“Daiei didn’t stick around very long,” recalled Shinji Idotsuji, an official with the Shingu Chamber of Commerce and Industry. “They gave up rather quickly.”

Indeed, Daiei withdrew from Shingu after more than five years of presentations, public hearings and deliberation by a panel set up under the Large-Scale Retail Law.