By Kwan Weng Kin, Japan Correspondent

TOKYO, JAPAN - When the going gets tough, small businesses in a Tokyo suburban shopping district go high-tech.

Shop owners in Aomonoyokocho have turned to IT - more precisely, the ubiquitous cellphone - to fight back against huge nationwide chain stores that are eating into their business.

At the Hiranoya Food Market, customers are rewarded with points simply by holding their cellphones against a small reading device after they have checked out their groceries.

Shoppers at 'Aoyoko', as the locals call the area, can also accumulate points in the same way at other participating establishments, from cafes to mom-and-pop confectionery stores.

With the Japanese economy in recession due to the global financial crisis, such innovative strategies have taken on a new urgency.

The system, introduced about a year ago, is the brainchild of Mr Taku Ichinose (right), 34, who heads a small venture outfit called ipoca.

With the system, each shop no longer has to issue its own unique 'points card'. Shoppers need only their cellphones, which become their virtual 'points cards''.

In fact, the firm's name, ipoca, is derived from the initial characters of the three Japanese words 'ichi pointo kado', which means 'one point card'.

Aoyoko is ipoca's first project and is based on its portable customer relations management system, nicknamed Tacchan.

The launching of the system could not have come at a better time for small businesses, which have been fighting a losing battle with retail giants.

Just several minutes' walk from the Aoyoko shops stands a huge Jusco hypermarket-cum-shopping centre, the largest chain of its type in Japan, which has been drawing customers steadily away from the shopping area.

The basic principle of the Tacchan system is simple: Capture a customer's basic demographic data and consumption behaviour via his cellphone by promising points in return. A shop can then use the data to send out news about discounts or specials to customers' cellphones.

Each shop pays only 5,000 yen (S$82) a month to use the system, which is flexible enough to allow messages to be sent out selectively, such as only to all men in their 30s who have not made a purchase for the past month.

The start-up cost of 60,000 yen per shop is taken care of by subsidies provided by the local authorities and the central government.

Mr Toshina Gon, who is in charge of promoting IT usage among Aoyoko's shops, points out that the new system beats preparing and distributing fliers, which cost more in terms of time and money and are far less effective.

At Mr Gon's Korean barbecue restaurant, sales have risen 20per cent since Tacchan was introduced. Using fliers in the past netted only a 3per cent increase at best.

At one participating Aoyoko tavern, the number of repeat customers per month went up after it started sending out thank-you messages to those who patronised the shop.

At a time when Japanese consumers are tightening their belts amid the downturn, Aoyoko's experience has inspired other small businesses in Japan.

Many local authorities have expressed interest in introducing the Tacchan system to their own struggling shopping areas, where many retailers have in recent years been forced to lower their shutters permanently.

'I have been contacted by many local governments, from Miyazaki city in the south to Sendai city in the north,' said ipoca head Mr Ichinose. 'They are willing to provide up to 90per cent subsidies as they are eager to revitalise their own shopping districts.'

Surprisingly, Mr Ichinose is not trained in IT but was a tax consultant for nearly 10 years before setting up ipoca two years ago.

While handling taxes for small businesses, he was able to learn about their management problems first-hand. 'My clients often told me that they did not know how to get their sales messages out to customers,' he said.

Mr Ichinose hit upon the idea of communicating with customers via their cellphones and worked with several IT companies which were also his clients to come up with the Tacchan system.

Thanks to the success of the Aoyoko project, his company has been showered with numerous awards, among them, one from the Tokyo government for giving a boost to shopping districts, and another from the trade and economy ministry for its brilliant use of IT in business.

Mr Ichinose points out that the Tacchan system has applications beyond business.

For instance, the pet industry in the northern prefecture of Hokkaido uses a Tacchan-generated mailing list to send out information to pet-lovers about missing cats or dogs, or when animals are available for adoption.

This article was first published in The Straits Times.