Convenience store chains should consider shortening their business hours, and help franchise owners cover rising labor costs, a government panel said Thursday.
The recommendations come as some franchise owners are struggling to keep convenience stores open 24 hours a day, despite plateauing demand from consumers and a severe shortage of workers.
The Ministry of Economy, Trade and Industry had tasked the panel, comprised mostly of academics and business leaders, with drawing up a report on measures that will place the industry on a more sustainable path.
Warning that the current business model of convenience stores is “facing a crisis,” the panel urged chains to take a more flexible stance on business hours.
The panel welcomed Ministop Co.’s decision to shoulder part of the cost of paying workers, starting in the business year from April 2021, and called on other major chains such as Seven-Eleven Japan Co., FamilyMart Co. and Lawson Inc. to consider following suit.
“I hope they will look at the report and take steps that allow them to adapt to and succeed in changing times,” industry minister Hiroshi Kajiyama said.
The panel also called for greater flexibility when setting the royalty fees paid by franchise owners, suggesting a revamp of the current practice of collecting a set amount based on gross profit.
It highlighted that long-term contracts, often spanning 10 to 15 years, favor convenience store chains and make it harder for franchise owners to adapt to changing business conditions.
The debate over the future of Japan’s convenience stores comes at a turning point in the industry.
The rapid expansion of the past has become untenable as a shrinking population reduces numbers of both consumers and workers. As of the end of 2019, there were 0.2 percent fewer stores nationwide compared to the previous year — the first decline since comparable data became available in 2005.
The panel urged chains to improve their communication with franchise owners, and to establish ways to settle disputes without taking them to court.
It also encouraged investment in technology such as artificial intelligence and automation, and greater efforts to reduce food waste such as discounts for products nearing the end of their shelf life.