Editorials

Keeping convenience sustainable

Moves are afoot among major convenience store chains to review the uniform 24-hour operation of their stores, the standard industry practice since Seven-Eleven Japan Co. started it a year after it opened its first outlet in 1974. The sustainability of 24-hour operations came under the spotlight after the owner of a 7-Eleven franchise in Higashiosaka, Osaka Prefecture, started closing his store in February during late-night hours, saying he could no longer keep up around-the-clock service due to a staffing shortage that left him unable to take much time off for several months running. The feud between the owner and the top convenience store chain operator, which requires that its franchisees in principle maintain 24-hour service, eventually led the government to call on major chains to come up with plans to address the woes of such owners.

The store chains have meanwhile launched or expanded test operations of reduced hours at some of their outlets. Seven-Eleven Japan has indicated that it will take a flexible view of its 24-hour obligation in considering the circumstances of each store — although it will not change its round-the-clock service policy. To save on manpower, some of them have starting experimenting with self-service checkout machines; Lawson Inc. plans to test the feasibility of leaving some stores unmanned between midnight and early morning. Apparently, the chain operators themselves are exploring a new business model that responds to the accelerating manpower crunch. Such efforts need to continue to keep the convenient service of their chain stores sustainable.

The sense of security that convenience stores are always open is indeed a key feature of their service. Of the roughly 21,000 7-Eleven stores across Japan, 96 percent reportedly operate 24 hours. But many of the franchisees — which constitute most of the stores of the big chains — are small-scale family-run affairs, and amid the growing difficulty of finding employees the store owners themselves reportedly face the heavy workload of keeping the stores open 24/7, as seen in the case of the 7-Eleven franchisee in Higashiosaka. In a recent survey by the Ministry of Economy, Trade and Industry covering some 13,000 convenience store franchise owners, roughly 80 percent cited the difficulty of securing enough staff and rising manpower expenses as key sources of concern.

To efficiently run their thousands of stores across the country, major convenience store chains rely on detailed timetables for operating their plants and distribution networks in each area — and that depends on all the stores in the area running around the clock. They are said to be worried that their efficiency and profitability could be compromised if some of the stores operate on reduced hours. The chains also tend to open a cluster of shops within a small area, which also benefits their distribution systems. However, the franchisees are reportedly frustrated that this business strategy inevitably leads to bitter competition among neighboring stores in the same chain.

The reported woes of convenience store owners indicate that operating every store 24 hours a day is increasingly becoming untenable. To sustain convenient services of their stores, which have indeed become crucial social infrastructure for consumers, the chains should review their business model with flexibility in mind, such as by adapting each store’s open hours to the needs of the local customers they serve.

Keeping a store open through the night will make sense where there is enough demand — such as urban areas where people work through those hours. But there is little reason to keep stores open in the late-night hours in places where there is little such activity. It may also make little sense for all stores clustered in busy urban areas to stay open, just to compete for the thinning number of late-night customers.

Seven-Eleven Japan has launched a test operation of reduced hours at some of its stores — to the chain’s original hours from 7 a.m. to 11 p.m. — to assess the impact on sales and profitability, the number of customers and work efficiency.

FamilyMart Co. said it will start similar tests on reduced hours at up to 270 of its stores in Tokyo, Akita and Nagasaki prefectures beginning in June to see if there are regional differences in the impact on their business — and to sound out the intentions of the franchisees about reviewing their open hours.

Lawson, which has already allowed some of its franchisees to run on reduced hours, will in July start testing unmanned operations at its stores in late-night hours — in which customers will unlock the entrance with a smartphone app and make purchases via self-service checkout machines or by scanning products’ barcodes with their smartphones. Such efforts should be promoted and expedited.