Japan’s first Family Mart convenience store sits on a busy stretch of road in Sayama, Saitama Prefecture, without much fanfare.
Aside from an assortment of flowers that sit on display next to a Showa Era (1926-89) telephone box near the entrance, it looks just like any other of the franchise’s 17,000-plus outlets nationwide.
An extensive array of food, drinks and household items sits on the shelves, while a freshly cooked batch of the chain’s signature fried chicken sits in a warming cabinet on the counter.
Two rival franchises — 7-Eleven and Lawson — also operate in the neighborhood a short distance away.
When it opened in September 1973, the Family Mart store in Sayama was something of an experiment at the time.
Opening several years before other U.S. convenience stores arrived in Japan, the outlet in Sayama sought to develop “a Japanese style of convenience,” according to PR materials provided by Family Mart. From the outset, the chain wasn’t satisfied with replicating convenience stores from the United States in Japan but instead wanted to create something new.
Today, convenience stores — konbini, in Japanese — are a common sight nationwide. According to a July report from the Japan Franchise Association, the total number of convenience stores in Japan currently stands at 55,931, an increase of more than 10,000 outlets from a decade ago.
Family Mart has spent much of 2021 celebrating its 40th anniversary. Although the Sayama store first opened its doors in 1973, the company wasn’t technically founded until September 1981, with the company referring to the eight years leading up to the event as its “prehistory.”
To mark its anniversary, the chain has re-released a number of classic Family Mart items while also highlighting how it grew from a humble experiment in Saitama Prefecture to become the second-largest convenience store chain in the world behind 7-Eleven.
Yet, the anniversary comes at a crossroads for the industry as a whole. The potential for further growth in Japan appears limited, owing to a graying population and a shortage of locations in which new stores can be built.
This means international expansion, particularly into the growing economies of Southeast Asia, will be vital, although local players and new Asian competition won’t make it easy.
The COVID-19 pandemic, meanwhile, has accelerated certain consumer trends — cashless payments, a preference for home delivery, less human contact — that are likely to become the norm as the next decade unfolds.
The convenience stores of tomorrow are starting to take shape.
The birth of convenience
Family Mart wasn’t the first attempt at creating a convenience store in Japan. Small local efforts emerged as early as 1962, while chains such as Aichi Prefecture’s Coco and Hokkaido’s Secomart both debuted in 1971.
According to company documents, Family Mart sprang out of years-long research conducted by supermarket group Seiyu, which was trying to fill the space left by the closure of many mom and pop stores across the country. Family Mart was its first attempt, arriving right before U.S.-born names 7-Eleven and Lawson popped up in Tokyo and Osaka, respectively.
“Unlike Lawson and 7-Eleven, Family Mart is a purely Japanese convenience store,” says Hiroaki Watanabe, a journalist covering the industry. “This has allowed the chain to stand out over the years. It has never imitated anyone else.”
”The concept of a domestic convenience store appeared at just the right time in the Japanese marketplace, says Hideko Yoshioka, a journalist who is familiar with the industry and has covered it for Aera magazine since 2000.
“Consumer lifestyles changed in the 1970s,” Yoshioka says. “People became busy with work, and their disposable income increased. Convenience equaled efficiency, and they were successful because they matched the needs of the era.”
Lawson and 7-Eleven became the dominant convenience store franchises in the 1980s, with Family Mart spending the decade slowly expanding and often boasting fewer stores than Daily Yamazaki or once-prevalent chain Hot Spar.
Family Mart established itself as one the nation’s big three convenience stores in the 1990s, and, by the start of the 21st century, had opened just under 5,000 stores (compared to the 8,000-plus stores operated by market leader 7-Eleven at the time).
The 2000s saw major changes to what was expected from a convenience store. The introduction of services such as ticket kiosks turned convenience stores from essential food and drink depots to something even more integral to consumer’s lives.
According to Watanabe, convenience stores also decided to target female customers more strategically, courting women with original cosmetic lines and improved sweets.
It took a natural disaster, though, to show just how vital convenience stores were for communities in Japan.
“While supermarkets and department stores were forced to close following the 2011 Great East Japan Earthquake and tsunami, many convenience stores stayed open thanks to their production systems and distribution networks,” Yoshioka says. “They’ve been recognized as a necessary part of ‘social infrastructure’ because people don’t just shop there, but also access ATMs and other services.”
Eventually, local convenience stores slowly vanished, swallowed up by the major players. Family Mart was no stranger to this approach, and its 2016 merger with Uny Holdings Co. (owner of Circle K Sunkus) vaulted the chain ahead of Lawson to sit just behind 7-Eleven in terms of store volume.
Once a small-time experiment operating next to a highway in Saitama Prefecture, the firm was now the second-largest convenience store chain in all of Japan.
The COVID-19 pandemic hasn’t revealed new cracks in the convenience store marketplace as much as it has accelerated what has already been happening. For the first time in history, convenience stores in Japan have reported a year-on-year decline in revenue that has been attributed directly to the coronavirus pandemic.
“But I think that was more of a reflection of retail in general,” says Melissa Francis, a senior research executive at market researcher Tokyoesque, which has worked with brands to help them make inroads in Japanese convenience stores. “I think people were getting used to working from home or commuting part time to work. Sales started to rise again in April this year.”
Still, convenience stores are preparing for a new, decentralized future brought on a little early by the pandemic. Many consumers don’t want to spend unnecessary time outside, and want consumer transactions to be faster and involve less human interaction.
Francis says that delivery services have emerged as a massive force over the past year.
“Deliveries minimize contact even more,” Francis says. “I know Lawson offers delivery through UberEats, while 7-Eleven announced it plans on offering a more widespread home delivery service in the coming years.”
“But I don’t think that’s just for things like a pandemic or flu season,” she adds. “I think that’s also helpful for an aging population.”
Japan’s rapidly graying demographics — a record 29.1% of the population is aged 65 or older — present an array of problems for convenience stores, and Watanabe says it was becoming harder to find young people to fill part-time positions at many stores even before the pandemic emerged.
Francis says Family Mart sits on the forefront of this issue.
The company aims to open about 1,000 unmanned stores by 2025, with several test stores now open in Tokyo. At such stores, customers walk through a gate, put items in their basket and then pay for their goods with a smartphone without ever having to deal with a person (although most stores have one or two employees on hand to make sure everything operates smoothly).
Watanabe says this could be the future of convenience stores located in business districts — they’ll become smaller, feature fewer items and have a minimal number of staff.
If that all sounds a touch too dystopian, don’t worry, because stores in residential areas will most likely swing the other way.
“Generally, business at convenience stores in work areas dropped by 20% or 30% as remote work became more common,” Watanabe says. “In residential areas, however, customers visited convenience stores instead of supermarkets for daily goods, or they stopped by for meals as restaurants closed early. Overall, sales went up.”
Watanabe believes convenience stores will ultimately feature more daily life products and be more useful for those using them frequently.
Yoshioka goes even further, pointing to Family Mart in particular. She notes the emergence of collaborative efforts, such as Family Mart’s partnership with certain 100-yen stores and the debut of its “Convenience Wear” line of affordable clothes (made possible by parent company Itochu Corp.’s fabric trade).
Sooner, Yoshioka says, convenience stories will become even more central to daily life.
“The changes created during the pandemic will evolve and the quality of the store will change,” Yoshioka says. “With the emergence of deliveries, cashless payments, unmanned stores and even virtual reality, convenience stores will become a life concierge that help with the inconveniences of living by making full use of artificial intelligence.”
Whatever the Japanese convenience store of tomorrow looks like, the growth potential it carries has a ceiling. Japan’s aging population and stagnant economy limit just how much the larger franchises can expand moving forward. That means expansion abroad — specifically, to other parts of Asia — is a must.
“Southeast Asia is the target, because the economic growth in that region is remarkable,” Yoshioka says, comparing it to the “economic miracle” Japan experienced in the 1970s, which helped spur the existence of convenience stores in the country.
Expanding into Asia has long been a priority for Japanese convenience stores. According to publications provided by the company, Family Mart has made global expansion central to its strategy, beginning with a foray into Taiwan in 1988 that proved successful.
Today, more than 3,600 Family Mart outposts can be found in the territory. The next step was expansion into mainland China (which now has more than 1,400 stores) and subsequently North America, although the chain was forced to close all its stores over the other side of the Pacific Ocean by 2015.
Seven-Eleven, Lawson and even smaller franchises such as Ministop have ventured into Asia as well with mixed results. While there have been some notable successes, 7-Eleven failed to establish a foothold in Indonesia and Family Mart has struggled to penetrate the market in Thailand.
“Japanese convenience stores work in other Asian countries for the most part if supported by the systems and processes, such as vertical integration, that make it work,” says Michael Davis, vice president of Member Services for the Association For Convenience and Fuel Retailing (NACS), adding that Japanese stores have demonstrated an ability to tweak the offerings and cultures according to the local market.
On a logistical level, Watanabe says that Japanese convenience stores still need to replicate their distribution model seen at home abroad — where factories aren’t far from stores, resulting in fresher and better tasting food. Just as challenging, though, is staying relevant as local chains expand their business.
In the past, Japanese convenience stores were on the cutting edge of the industry. Now, however, local operators across Asia have learned from them — and, in some cases, have surpassed them.
Jeff Lenard, vice president of strategic industry initiatives for NACS, remembers visiting Shanghai in 2019, and being impressed how convenience stores allowed consumers to do everything through their phones — including grab-and-go purchasing, which is just now popping up in Japan.
Then there’s a new challenge present in every aspect of Japan’s efforts to export culture and commerce abroad — South Korea.
One of the most talked about openings in Kula Lampur this summer was a convenience store. Visitors tweeted about their experience stopping by the spot, was well as how delicious the food was. However, customers were just as rapt by the pop culture that was served in addition to the chips and ice cream.
The brand? South Korea’s Emart24, opening its first location in June. Besides Korean snacks, the company came prepared by tapping into Malaysia’s love of Korean pop culture, featuring Korean beauty products and offerings tied to K-pop, including popular outfit BTS.
It’s one of the growing narratives of 21st-century Asia: Japan, once the coolest country on the block, now finds itself lagging behind South Korea, a nation that has achieved commercial success via music, movies and more.
This trope also plays out in the convenience store game. South Korean brands such as Emart24 and CU — a company that emerged after Family Mart, the market leader on the Korean Peninsula for more than two decades, had to leave the country in 2014 for contractual reasons — have made moves into developing Asian nations such as Malaysia and Mongolia.
Every expert interviewed for this piece emphasized the importance of adjusting to local markets and figuring out the best practices for expanding in Asia — but convenience stores have also become another delivery system in a soft power race playing out across the continent.
The Japanese brands aren’t hopelessly behind — in Malaysia, Family Mart has received attention for a new line of Family Mart vending machines, while stores from Vietnam to the Philippines feature foodstuffs adorned with famous anime characters. Still, Emart24 Malaysia shows how a more concentrated effort can bring about success.
Perhaps, then, the answer lies in embracing one of Japan’s most surprising signifiers of cool in the 21st century — the convenience store itself.
This summer’s Olympic Games in Tokyo saw foreign journalists — confined to cramped hotel rooms and with little access to the capital proper — turning to convenience stores for sustenance, and delivering glowing reviews to readers around the world.
The plaudits have been around since long before the Games, though.
Chef Anthony Bourdain famously sang the praises of the Lawson egg salad sandwich. Meanwhile, owner-chef duo Akira Akuto and Nick Montgomery have successfully created a restaurant in Los Angeles based on Japanese convenience stores called Konbi, which offers versions of ready-made sandwiches.
The interest in convenience stores appears to be changing the marketplace in the United States.
Over the past year, Seven & I Holdings has introduced 7-Eleven Evolution in the United States, a new type of store featuring fresher food and a wider variety of items. It has more in common with the stores found in Asia than the traditional image of a 7-Eleven in America.
“There’s no question that Asia is influencing how U.S. convenience stores look today, and how they will look tomorrow,” Lenard says.
The convenience store of tomorrow in Japan might be unmanned, or it might be a sort of sophisticated 100-yen store that also happens to sell fried chicken. Or it could be a type of “ghost kitchen” that prepares home deliveries for the surrounding neighborhood.
But whatever shape convenience stores take at home and abroad as companies attempt to capitalize on emerging markets, it will be important not to lose sight of what made them successful in the first place.
“The more competition there is,” Yoshioka says, “the more the brand power of Japanese convenience stores being hygienic and of a higher quality stands out.”
That reputation stretches as far back as the first Family Mart in Sayama. Twenty years down the line, that sleepy outpost in Saitama might look totally different, but the convenience store ethos it helped usher in to the world in the first place will more than likely remain.
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