Business / Corporate

Seven-Eleven begins trial of shorter business hours as convenience stores grapple with Japan's labor crunch

JIJI, Reuters

Seven-Eleven Japan Co. has launched an experimental program by shortening business hours at some of its directly run outlets across the country in order to consider whether to revise its policy of operating stores 24 hours a day.

The major convenience store chain operator, a unit of Seven & I Holdings Co., has introduced three sets of business hours — 7 a.m. to 11 p.m., 6 a.m. to midnight, and 5 a.m. to 1 a.m. — through the trial, which started Thursday evening and will be carried out over a few months.

As part of the trial, an outlet in Tokyo’s Adachi Ward closed at 1 a.m. on Friday.

A customer, a 26-year-old civil servant who came to the outlet to buy alcohol said, “I’m sad because I thought the store is open 24 hours a day.” He added that he will shop at a different store from now on.

After closing for four hours for cleaning and restocking, the outlet opened again at 5 a.m.

The latest move by Seven-Eleven, the industry leader, came after company President Kazuki Furuya suggested earlier this week the possibility of allowing shorter business hours depending on each store’s situation.

Owners of the chain’s franchise stores are stepping up a campaign to persuade the chain to allow their outlets to adopt shorter operating hours.

Twenty-four-hour convenience stores are struggling to stay open around the clock as an industry that has continually expanded now finds itself at the sharp end of a labor shortage.

Although the debate has focused on labor issues, it has also raised doubts over the future of the convenience store industry amid an aging population, slow economic growth and fresh competition from online marketplaces such as Amazon Prime.

“The question is, how much demand is there for 24-hour service in an age when online shopping is expanding?” said Takayuki Kurabayashi, a Nomura Research Institute partner who specializes in consulting for the retail industry.

Japanese convenience stores began expanding in the 1970s as their 24-hour accessibility proved to be a perfect match with the country’s dense population and late-night work culture.

The brightly lit konbini are ubiquitous and an essential part of modern Japanese life, offering everything from neckties to packaged bento for city workers.

Residents of rural areas rely on the stores for parcel and ATM services, or even as lifelines during natural disasters.

The franchise system promoted a nationwide expansion that took the total number of stores to roughly 58,000 last year, a majority operated by the big three: Seven-Eleven, originating in the U.S. but now Japanese-owned; FamilyMart, Uny Holdings Co.’s convenience store arm; and Lawson, a subsidiary of trading house Mitsubishi Corp.

For years, the franchise model shielded operations from the direct effects of Japan’s labor crunch. But now, the tightest labor market more than 40 years is hurting store owners, who pay salaries after handing over royalty fees.

A union of convenience store owners said they have been finding it increasingly hard to hire enough employees. Many owners said they work long hours themselves to keep their stores open 24 hours — a requirement in most franchise contracts.

“At the time of the agreement, we could not foresee the current labor shortage or spike in minimum wages,” said Mitoshi Matsumoto, a union member who owns a Seven-Eleven store in Osaka, referring to the deal he and his wife signed with the company.

Struggling to keep the store running after his wife’s death last year, he began closing it for a few hours at night, and was threatened with a fine.

His pleas to management and lawmakers drew widespread sympathy in a country in which “work-life balance” has become a buzzword and employers have come under fire for cases of death by overwork.

Even the pro-business Nikkei newspaper wrote an editorial saying stores should be allowed reasonable working hours even if consumers suffer slight inconveniences.

Roy Larke, who analyses the retail industry as editor of JapanConsuming.com, said he sees the sector as saturated and consolidation inevitable.

“We do have too many convenience stores now, sometimes literally next door to each other. There are probably around 10 percent too many,” he said.

Katsuhiko Shimizu, spokesman for Seven & I Holdings, which also owns general merchandise chain Ito-Yokado, disagreed.

“There’s room for innovation,” he said, citing the company’s efforts to incorporate more automation and artificial intelligence in processes ranging from stocking to check-out.

Chains are also testing new formats such as outlets that combine drugstores, dry cleaners and even gyms. FamilyMart has opened some such stores with the country’s largest discount chain, Don Quijote, to inject excitement.

Analysts warn against underestimating a sector known for maintaining high margins and rarely discounting, helped by constant product renewals and staples like ¥100 coffees.

They also say it’s too early to predict the outcome of Japan’s online grocery delivery race, which is just getting started.

Although Amazon’s grocery and same-day delivery services are considered threats, convenience stores are also launching online platforms; their affiliations with traditional supermarkets and logistics networks are seen as advantages.

“It’s not clear-cut whether Amazon will be overwhelmingly powerful here,” said Larke. “Especially in food, it doesn’t have the game to itself.”

Convenience stores, like other Japanese businesses, have also been expanding abroad. But Nomura Research’s Kurabayashi warned that those foreign markets, including China, are also aging.

“What’s happening in Japan is eventually going to happen elsewhere in Asia,” he said. “It’s just a matter of time.”