Japanese firms use new methods to lift prices

TOKYO: After years of soggy inflation and the long reign of Japan’s tight-fisted shoppers, businesses in the world’s third-largest economy are adopting new methods to lift prices, from artificial intelligence to simple packaging tweaks.

Despite many rounds of stimulus, Japan’s policymakers have failed to jolt households out of the deflationary mindset that followed the 1990s property crash, which meant businesses refused to raise prices for fear of losing customers.

Demand-based dynamic pricing, however, has allowed some Japanese retailers to discretely bump up prices without triggering the kind of customer backlash seen in more blatant attempts at repricing in the past.

Yokohama Marinos, for example, a club in Japan’s top football league, introduced artificial intelligence last year to more closely align ticket prices with demand.

Using the technology, the Marinos sold tickets for a popular seating area for a March 2 match at 7,400 yen, two weeks before the game, but cut prices to as low as 4,000 yen to fill empty seats as the match approached.

Koji Kawashimo, a 34-year old who has been a Marinos fan for more than a decade, said he had no problem with his team adopting dynamic pricing.

“I would pay for what I like. I want to pay if it’s worth it,” he said.

Hotels are also introducing dynamic pricing in their room rates including Centurion International, which operates over 20 hotels in Japan.

Centurion began using AI to collect information to charge higher prices when demand is strong, and offer discounts when demand falls to reduce vacancies. —