Staff writer

Planes will fly and phones will ring on New Year’s Day, but one big question remains as Japan’s businesses race to stamp out the millennium bug.

Will lunch-box lovers get their Jan. 1 “bento”?

Take heart: Convenience stores, which collectively sell billions of bento and “onigiri” rice balls annually, are confident they can deliver the goods.

“In view of the (Y2K) tests we’ve done, there’s no possibility of there not being bento on the shelves on Jan. 1,” said Yoshiaki Furukawa of Community Store Co.

“Our computer systems are Y2K compliant,” said Hiroyasu Sato of Lawson Co. “We’re now making final checks.”

Convenience stores have been a haven for time-starved Japanese since they first appeared in the 1970s. According to Manufacturer Convenience Researcher, an industry research engine, there are some 48,500 stores in Japan — double the figure 10 years ago.

About 45 percent are operated by industry leaders Seven-Eleven Japan Co., Lawson and FamilyMart Co.

Sales of bento and onigiri represent 30 percent of total sales for am/pm Co.; Seven-Eleven and Lawson alone sold some 1.8 billion units in fiscal 1998.

Yet Japan’s convenience stores are no longer just community refrigerators. Now they’re its nerve center.

Shoppers are also drawn to facilities enabling them to pay bills, book tickets for movies, sports events and overseas vacations; they even serve as pickup and delivery points for golf clubs and parcels. All are IT-intensive services.

Indeed, computer use in the industry is reputedly the most deeply rooted in Japan, making its efforts to tackle the Y2K issue imperative.

Yet questions have been raised about some chains’ Y2K preparedness.

A report published this summer by HSBC Securities Japan, which analyzed Y2K disclosure by 298 Japanese companies, singled out 10 firms considered to be at “high risk” from Y2K.

Among them was FamilyMart, whose disclosure in the survey was “poor,” said HSBC analyst Garry Evans.

Circle K Japan Co. fared little better. Evans termed the chain’s proposed November completion date for its Y2K project as “dangerously late.” If anything goes wrong, “there’s a limit to what can be done in the time available,” he added.

On the other hand, HSBC considered Seven-Eleven to be “highly unlikely to suffer any major problems,” although its Y2K budget of 98 million yen was thought “too low.”

These results do not bode well for some other chains. Just Spot Co., which runs 57 stores in Tokyo and Chiba and Saitama prefectures, is set to complete tests on “a part” of its suppliers by mid-December, official Hidenori Mizumoto said.

Meanwhile, am/pm Co.’s Y2K expenditure is just 10 million yen, according to official Ryoko Maeda.

FamilyMart responded to HSBC’s findings, saying that in 1996, it started developing a computer system to solve the Y2K problem. The process of shifting to the new system, it said at the time, “is expected to take five years.”

Said HSBC’s Evans: “It doesn’t take a rocket scientist to work out that 1996 plus five does not equal 2000.”

However, Kiyoshi Baba, general manager of FamilyMart’s information systems division, was adamant the firm’s Y2K project, which has so far cost some 500 million yen, is all but complete.

“I believe the computer problems will be ironed out, and we have instructed each supplier to verify their compliance,” Baba said.

Stores are one thing, suppliers are another.

Ensuring suppliers’ compliance is a lengthy process for chains such as Lawson, whose vendors number over 300, according to Sato.

Community Store’s Furukawa expressed concerns about having to rely on vendors’ “goodwill” to supply information on compliance.

One supplier, he said, refused to test its computer system, saying it was unnecessary. “We’ve made repeated requests, but not once have they been taken up.”

Seven-Eleven, which began replacing its general informations systems in 1996 at a cost of 60 billion yen, has already completed several checks of its suppliers and warehouses.

It has also outlined contingency plans, which include the provision of alternative transportation, such as helicopters and boats, should roads become jammed or traffic signals fail, official Nobuyuki Miyaji said.

However, there are few signs that Seven-Eleven here will follow the lead of its U.S. namesake and turn the Y2K problem into an opportunity.

Seven-Eleven stores in the United States reportedly will hang banners proclaiming their Y2K readiness — “7-11: Y2K OK 4U,” or some such catch-phrase.

In addition to water, canned food and flashlights, bottles of the store’s own-brand champagne will be sold for millennium revelers.

The retailer also plans to have gasoline trucks on standby, in case consumers drain the gas pumps.

While some chains outlined plans to increase stocks of more essential items such as water and noodle cups, only Seven-Eleven and FamilyMart plan to take it any further.

Seven-Eleven’s Miyaji said the retailer plans to stock wine and champagne. FamilyMart meanwhile is thinking of stocking millennium goods, such as a Year 2000 bento.

Lawson will advise some store owners, particularly those in business districts, to increase inventory, Lawson’s Sato said.

Although sales over New Year’s are generally good, business districts are normally empty during the period, when many offices are closed and employees return to their hometowns, Sato said.

This year, however, will be a different story.

“Many employees, especially those working at electric power-related firms, will be working,” he said. “Thanks to the Y2K issue, I think sales will be relatively good.”

The same can be said for stores located near downtown hotels, FamilyMart’s Baba said. Such hotels, he has heard, are already fully booked with employees whose companies fear the worst.

“There’s no way these people will be eating hotel meals. They’ll likely be frequenting the nearest convenience store,” he said.

Both am/pm and Just Spot said they had not yet decided on any in-store strategies, but were in the process, like many convenience store chains, of developing a “crisis” manual listing ways to deal with potential problems.

The overriding opinion of officials of the chains, however, is that the rollover will come and go without incident, and even if there is a problem, people won’t be making a beeline for bento.

Many stressed that the chains’ efforts combined with a recent government announcement advising people to stock up on emergency goods and the tradition in Japanese households of preparing “osechi” — preserved dishes made in advance for the New Year’s holiday — will mean there shouldn’t be any crisis.

However, Nathan Rhoden, an official at the nonprofit Crisis Management and Preparedness Organization, believes “only a small percentage” of people will have made provisions.

“If there’s enough news to warrant people saying ‘maybe I should have stocked up,’ those people will go to their local convenience store and buy all the bento and onigiri,” he said.

“It probably wouldn’t take very much to empty the shelves of every convenience store in Japan.”

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