Business

As population ages, Japan's convenience stores find future in funerals

by Tomohiro Osaki

Staff Writer

It might escape the notice of a passerby that Davius Living Yamato, a one-story building standing unassumingly on a street in Kanagawa Prefecture, is a funeral parlor.

Little about the exterior of this no-frills facility suggests anything funereal inside. In fact, if you mistook it for just another convenience store you would be close to the truth.

Where Davius Living Yamato, run by local funeral firm Kanagawa Cosmos Co., stands today, there used to be a struggling Lawson Inc. store. When the Lawson closed, the building was renovated to become a small funeral home focusing on elderly people who have few neighbors or friends left to attend their send-off.

The life expectancy of both men and women in Japan tops 80, and when an individual has lived this long, “it is often the case that they were hardly in touch with anyone beyond their own family members when they died, so naturally not so many people would attend their funeral,” said Hirohiko Ishii, a marketing director of Life & Design Group, which owns Kanagawa Cosmos.

“Amid soaring demand for small-sized funerals in this rapidly aging society, a property the size of a convenience store was just what we were looking for,” Ishii said.

Changing norms

Kazokuso (funerals mostly attended by family and relatives) have traditionally been common in urban areas, where community networks are sometimes so weak neighbors hardly know each other, let alone attend each other’s funerals. Ishii says this trend has also spread recently to rural areas, where families increasingly ask for smaller ceremonies just for themselves, not for the neighbors, colleagues and assorted other acquaintances who typically would have attended in times past.

Despite being a niche business, the remodeling of convenience stores into funeral parlors may have a strong future, experts say, given the tough business conditions facing convenience store operators.

Life & Design Group currently runs about 60 funeral homes nationwide, including in the Kansai region. Of them, 14 operate from buildings that used to be convenience stores.

Ishii says a whopping 80 percent to 90 percent of its clientele now want small kazokuso for their loved ones, instead of what are known as ippanso (general funerals) that used to define Japan’s rituals for the dead.

Ippanso ceremonies were grand. An attendance of 100 mourners would be typical of a larger ippanso, along with dinner and hanawa, expansive displays of costly floral wreaths .

But with many of the deceased now in their 80s or older, “there is an overwhelming trend toward saying goodbye to them with just 20 or 30 people in attendance,” he said.

The nearly 200-square-meter Davius Living Yamato building houses a main room with seating for 20 to 30 people facing an altar. There is also a morgue, and a private room with bathroom for use by the bereaved.

Demand for modestly sized funerals, Ishii said, is buoyed in part by the increasingly widespread phenomenon of “solitary deaths.” In Tokyo’s 23 wards alone, there were 3,179 confirmed cases of people age 65 or older dying alone in their home in 2016, Tokyo Metropolitan Government figures show.

“I don’t think we’ll ever see the need for kazokuso overtaken” by that for traditional ippanso, Ishii said.

Hirohiko Ishii, a marketing director of Life & Design Group, which owns the operator of Davius Living Yamato, speaks during an interview on Aug. 5 in Yamato, Kanagawa Prefecture. | YOSHIAKI MIURA
Hirohiko Ishii, a marketing director of Life & Design Group, which owns the operator of Davius Living Yamato, speaks during an interview on Aug. 5 in Yamato, Kanagawa Prefecture. | YOSHIAKI MIURA

Struggling industry

Rocketing demand for family-only funerals comes at a time of slowing growth in the convenience store industry, whose traditional business model, marked by 24-hour operations and rapid expansion to every street corner, is crumbling.

“What was believed to be a lucrative business model that has long sustained the convenience store industry now needs an urgent rethink due to a labor crunch and the shrinking population,” Naozumi Nishimura, a professor of retailing business studies at Japan University of Economics, said. In recent years, Japan has seen a high job availability ratio, which stores increasingly seek to mitigate by tapping unorthodox labor sources, such as students, to fill shifts.

Signs of stagnation are evident in the latest targets of convenience store giants. This fiscal year, Seven-Eleven Japan Co. and Seven-Eleven Okinawa Co. plan to open 900 new branches nationwide, marking the first time in nine years that the number of intended new additions will fall below 1,000, according to Seven-Eleven Japan’s public relations office. Moreover, the figure will be offset by the planned closure of 750 existing outlets, leaving a net increase of just 150.

Lawson, meanwhile, won’t see any net increase, with the planned opening of 700 outlets set to be canceled out by the same number of closures.

“This year, we won’t set our sights on increasing the number of franchisees but prioritize improving profitability, shutting down and replacing outlets that have grown too old or failed to produce profits,” Lawson’s communications office said in a statement.

The predicament of convenience store owners was brought into focus in February when a 7-Eleven franchisee in Osaka cut its operations to 19 hours a day, closing at midnight, as it was struggling to make hires. The chain’s headquarters reportedly responded by threatening to terminate the contract and fine the owner ¥17 million unless around-the-clock operations resumed.

A slew of calls for a review of the industry followed, and the Ministry of Economy, Trade and Industry set up a panel of experts in June to examine it and draft suggestions on how to achieve sustainable growth.

New opportunities

With the convenience store industry at a crossroads, the renovation of premises as funeral homes could become a hugely successful business, Nishimura said.

“More and more convenience stores, especially those in rural areas, are bound to be driven out of business in the future. When this happens, the responsibility falls on the headquarters of each chain to help the owners — who have for years devoted themselves to the chain — find new jobs, instead of simply ending their contracts and leaving them in the lurch,” he said.

While owners of struggling city convenience stores may easily find a new location to restart the business, this is easier said than done for those in the countryside. Sometimes owners are simply “abandoned” by the headquarters, Nishimura said.

The funeral business, then, is “something the headquarters can arrange for the owners to take up as their next possible occupation as part of its effort to help sustain their employment,” he said, as there is “tremendous” demand for smaller funerals.”There is of course the question of whether the owners will agree to switch to this particular line of work, but I think that’s certainly a possibility.”

Funeral industry insiders say it’s not just the size of convenience stores that they find attractive. Naoya Matsumura, an employee at funeral parlor operator Tear Co., cites their locations. They tend to have parking lots and good access to transportation.

Moreover, they have proper water systems, such as restrooms, and no industrial kitchens that need removing, meaning no complex construction work is needed. This allows for a cheaper initial investment than some would expect, Matsumura said.

In November, Tear opened its first funeral parlor in a renovated convenience store in Nagoya. Feedback has been mostly positive so far, the only minor hitch being that the building’s low ceiling initially prevented the company from installing an altar, which was redesigned to fit.

“It is our policy that as long as we can find new suitable properties, including closed convenience stores, we will accelerate the opening of parlors” for kazokuso funerals, Matsumura said.

But while the business case is clear, potential operators of funeral homes may face opposition from residents.

Hironori Sugawara, president of Sendai-based funeral parlor operator Seigetsuki Co., admits that funeral homes, with their inevitable association with death, have long been something of a taboo.

“Just like you wouldn’t want a garbage disposal site near your home — even though it’s an important facility — it’s often the case that talk of establishing funeral homes is met with resistance from neighbors around the area,” Sugawara said.

Seigetsuki, too, has altered convenience stores into funeral homes to keep up with the rising demand, with its third such facility slated to debut in December, he said.

“What we’ve always been careful about is to ensure our funeral parlors do not look like what they are,” he said. They eschew the display of hanawa wreaths at the entrance.

“We don’t want people to feel their lives are surrounded by death.”