National / Media | BIG IN JAPAN

Japan's convenience stores work hard to stay relevant

by Mark Schreiber

Contributing Writer

Ride the Seibu Shinjuku Line to Iriso Station in the city of Sayama, Saitama Prefecture, and you can enjoy shopping at Japan’s oldest franchise convenience store, a Family Mart that opened in September 1973. The following May, the nation’s first 7-Eleven outlet was opened in Toyosu, Koto Ward — not far from the site of Tokyo’s new central fish market.

The father of the most successful retailing model in the past half century is 86-year-old Toshifumi Suzuki, who resigned as CEO of Seven and I Holdings Co. in 2016. Credited with building 7-Eleven into Japan’s largest convenience store chain, Suzuki was convinced that such outlets could co-exist with large supermarkets and his vision up to now proved correct.

Operated by Seven and I Holdings, 7-Eleven is the industry leader in Japan with 20,925 outlets, followed by FamilyMart (16,426 outlets) and Lawson (14,659 outlets). Minor players in the game include MiniStop (2,183), Poplar (475), New Days, which are operated inside stations by East Japan Railway Co. (more than 900), Daily Yamazaki (1,493) and Seikomart (1,195).

“The other day I was on assignment to one of the outer islands, which did not have a single convenience store,” writes telejournalist Jiro Shinbo in Flash (June 18). “I was thinking I’d pick up a magazine to read while eating dessert, maybe some gelatin with fruit, but these were not to be had. A convenience store would have provided an immediate solution.”

Shinbo is not to be blamed if he appears a bit jaded as far as access to a retail outlet; in the early 1990s, an ad agency determined that the average resident of Tokyo’s 23 wards lived 4½ minutes on foot from the nearest convenience store. Over the past three decades, that period of time has probably been considerably reduced.

Whatever else you might say about convenience stores, they’ve had an amazing run over the past 46 years. Before 1985, Japan still had no 24-hour ATMs and even in Tokyo late-night and all-night businesses were a relative rarity, confined mainly to scattered pockets of “neon” entertainment areas.

Then came the vaunted bubble economy and, with it, globalization of financial markets, spurring the need for traders and IT technicians to man keyboards round the clock. Businesses sprang up to serve them — bookstores, restaurants, barber shops, health spas, dentists and so on — spearheading Tokyo’s emergence as a 24-hour city.

One by-product of the bubble economy was so-called koshoku (literally “solitary eating”), with parents and children taking more of their meals separately. As the number of single-person households continues to rise, convenience stores have thrived by specializing in small volume or single-portion meals.

In its May 24 edition, the Nikkei Marketing Journal, a thrice-weekly newspaper covering retailing and distribution, published the results of a survey conducted by internet survey firm Macromill on convenience store utilization. Valid responses were obtained from 4,841 adults in Japan’s 47 prefectures. The results appeared in an article titled “Twenty-four-hour businesses: What will happen?”

Among the reasons respondents gave for entering a convenience store, in second place, named by 43.8 percent, was to use the toilet. And in fourth place, given by 29.6 percent, was to make withdrawals from an ATM.

Convenience stores have been in the headlines lately because of the tug-of-war between store owners who want to get off the 24-hour treadmill, and the franchising firms who insist as a condition that they stay open round the clock.

Do customers care that much? According to the aforementioned Nikkei survey, those who habitually make purchases between 1 a.m. and 5 a.m. accounted for just 3 percent of all customer traffic. And 72.6 percent of respondents — even in large cities where night owls are known to proliferate — agreed that 24-hour store operations should be reconsidered. In contrast to only 8.2 percent of respondents strongly opposed to stores closing during late night/early morning hours, almost 3 out of 4 said they’d be content with operating hours of between 6 a.m. and midnight.

A resident of Tokyo’s Bunkyo Ward told the Nikkei: “Let the shop decide whether it should operate for 24 hours or not. It should depend on the location.”

Meanwhile in a wide-ranging 38-page section titled “Convenience Store Hell,” Weekly Diamond (June 1) examined the various difficulties store franchisers face, along with the two key threats to their wellbeing — the labor shortage and high costs of discarding food items that have passed their consume-by dates.

Diamond produced a simulated breakdown of revenue versus expenditure for outlets belonging to the three major chains. In all three cases, while reducing the operating hours resulted in a drop in total sales, franchise owners were still able to realize a slight boost in store profits by closing the store for the night.

Among the more notable items in the Diamond issue was a two-page spread of “inside information” on six popular products and services that “torment” store owners, which are unrelated to hours of operation. Each was humorously tagged with the label “maru-hi” — with the encircled character “hi,” also read kanashii (sad), intended as a pun for a different maru-hi character, meaning “secret.”

These include corn dogs on a stick (“It takes two hours to drain off the oil after frying”); handling parcel deliveries (“especially difficult for part-time foreign workers, and the store only earns ¥50 per parcel”); daily products that must be kept in constant supply; oden (hodgepodge stew, due to short shelf life of only six hours before discarding); eat-in counters (“require more cleanup efforts, with coffee spills particularly aggravating”); people who come to pay large denomination tax or utility bills (“a counting error can prove costly”); and in-house coffee dispensers (“customers try to cheat by using a bigger cup”; “machines also malfunction often, requiring more attention from staff”).

Big in Japan is a weekly column that focuses on issues being discussed by domestic media organizations.