"*JAPAN'S -MERCARI- JAVELIN*"

Behind a flashy IPO of Japan's Mercari lies a thriving thrift economy.

WHEN flea market app Mercari makes its market debut this Tuesday, it will mark the appearance of  ''one of Japan's rarest beats : a tech unicorn.

In most countries, a billion-dollar IPO might suggest the return of an equity boom. But in Japan, it sheds light on the a ''thrift economy'' for second-hand items, which is thriving even as the Bank of Japan tries to stoke inflation.

Mercari's app allows users to buy and sell from each other, swiping and tapping their way through items as diverse designer clothes and toilet paper tubes.

It has been downloaded 71 million times as Japanese shoppers, faced with weak wage growth and armed with smartphones, have shed their inhibitions about used goods.

''The deflationary mindset is alive and well,'' said Marcel Thielant, senior Japan economist at Capital Economics, citing data showing that households expect incomes to keep falling the years ahead.

Founded in 2013, Mercari and Information technology startup Preferred Networks Inc are Japan's only two unicorns - startups with valuations above $1 billion [753.52 million pounds] according to  data provider CB Insights.

Mercari joins a series of Japanese companies that have made their name playing the counter-cyclical game.

Uniqlo parent Fast Retailing Company and home furnishings chain Nitori Holdings Co Ltd, both known for affordable pricing have seen years of expansion.

Mercari, however, reduces costs further by allowing consumers to deal directly with each other, cutting out shops altogether.

That's bad news for country's retailers, who have been hammered by decades of weak consumption and falling prices despite the central bank's aggressive efforts.

The Honor and Serving of the latest Global Operational Research on Markets and startups and IPOs continues to Part 2.