Costco: A Trigger for Japan’s Regional Redevelopment

Japan’s Kumamoto Prefecture American membership-only warehouse chain Costco has become a ray of light for faltering local economies in Japan since it first opened for business 25 years ago. Japan’s towns and cities are currently fighting for Costco megastores because they believe they will be essential to their rebirth.

To support their economies, local governments are actively investing in road infrastructure and possible sites, banking on Costco’s ambitious ambitions for development. The advantages are obvious: more jobs, more tax receipts, and even population growth—as demonstrated in Mifune, Kumamoto Prefecture, the location of a Costco store that opened in 2021.

“Our town’s name awareness has quickly increased. The mayor of Mifune, Masayuki Fujiki, compared it to a theme park. In three years, the town’s population—which had been in decline—grew by 300, and municipal property tax receipts also saw a significant boost.

A population of over 500,000 people living within a 10-kilometer radius and enough room for a parking lot to hold more than 800 cars are the strict requirements set by Costco Japan for new locations. Mifune was a prime choice because of its close vicinity to Kumamoto city, which has 736,000 population.

Usually, hundreds of jobs are created by Costco, with hourly pay beginning at 1,500 yen ($9.40), which is substantially more than Japan’s minimum wage. With new locations planned in Higashiomi, Shiga Prefecture; Ogori, Fukuoka Prefecture; and Nanjo, Okinawa Prefecture, Costco currently runs 33 stores in 21 of Japan’s 47 prefectures.

The municipal government of Ogori has obtained pledges from Costco to provide items and hire local labor in the event of calamities. A former tourist attraction in Yamanashi Prefecture’s Minami-Alps is being renovated in preparation for the opening of a Costco in 2025.

The success of Costco’s expansion is in contrast to other foreign merchants’ withdrawal from Japan, such as Tesco and Carrefour. Tokyo Keizai University professor of international marketing Yuichiro Maruya emphasized Costco’s contribution to urban growth and its distinctive product line, which makes shopping a pleasurable experience.

Local shops, however, feel differently about Costco’s expansion. Some see chances to buy goods to resell, while others are concerned about their sales dropping. A mayor of a city in western Japan said, “We cannot ignore the negative consequences on neighborhood merchants. However, if nothing is done, depopulation will make regional commerce unviable.”

In light of the need for regeneration of Japan’s regional economies, Costco’s strategic growth presents a viable albeit intricate answer.