Despite the novelty of the mega store, most Japanese still prefer frequent shopping at smaller local shops rather than weekly one-stop shopping to stock up their small refrigerators and pantries.

And fashion-conscious young Japanese are more likely to buy clothing at upscale department stores or less expensive specialty shops like GAP, Uniqlo and Muji.

``The only clothing I buy at a big supermarket store is stockings. Their clothes are not cool at all,'' a young female shopper in Tokyo's posh Ginza district said.

The nation's top retailers in the mega store or general merchandising category are also struggling to lure shoppers to their food sections.

``I go to smaller shops in the old shopping arcades where you can often find cheaper and fresher food and good quality clothes,'' Daisuke Odagiri, 33, who lives near a Seiyu store, said.

Carrefour of France, the world's second-largest retailer, has pulled out of Japan after four years in the red, selling all of its eight mega stores to Japan's biggest retail group, Aeon.

Wal-Mart, has seen its ``everyday low price'' philosophy flop with Japanese shoppers who demand a wider range of higher quality goods.

Wal-Mart holds a 37.8 percent stake in the medium-sized supermarket chain Seiyu, which has posted net losses in the past two years of Wal-Mart style merchandising in Japan.

Responding to consumer's preferences, Japanese retailer Ito-Yokado has set up a research center to create new brands and merchandising, headed by Yukio Fujimaki, known for his successful purchasing strategy at the upscale department store Isetan.

Ito-Yokado, Japan's second-largest retailer has grown into a group that includes 180 superstores in Japan and China, the 7-Eleven convenience store chain and a bank.

``In the past it was said that Japanese [stores] needed lower-priced merchandise, modeling the success of discount outlets in the US,'' Toshifumi Suzuki, chairman and chief executive officer of Ito-Yokado group, said.

``But emulating the US style will not lead to success in Japan due to the totally different economic structures in the two countries.''

The current front-runner, Aeon, operates over 300 Jusco stores in Japan, China, Thailand and Malaysia.

It remains in expansionist mode with its takeover of Carrefour's hypermarkets.

But Aeon is also responding to calls for improved quality.

``We will concentrate more on malls, and in merchandising policy we will pursue quality as well as low prices,'' Manabu Ohshima, an Aeon spokesman, said.

Easing deflation and an increase in jobs in Japan would seem to bode well for consumer spending, but retailers operating general merchandise or mega stores have been struggling to achieve stable profits.

Seiyu has resumed its strategy of limited-time offers on select goods at some of its outlets following the failure of the Wal-Mart sales approach.

``Wal-Mart's system in itself is a remarkable architecture and I think what Seiyu is doing is basically right,'' Yasuyuki Sasaki, retail-sector analyst at Credit Suisse First Boston Securities, said.

``But the thing is, Japanese consumers don't like `cheap' merchandise, even though they love low prices.''