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50 Years On, Japan’s Convenience Stores Keep Evolving To Stay Competitive

In the nearly half century since Japan got its first convenience store near Tokyo Bay, such outlets have become ubiquitous, with customers dropping by not only for groceries but also for financial services, package delivery, and much more.

But in recent years, the domestic convenience store market has become saturated and competition has heated up, prompting operators to seek more attractive products. A labor shortage has also become a serious problem, leading some stores to give up 24-hour operations and introduce unmanned cash registers to keep up with the changing times.

What is now Seven-Eleven Japan Co was established in November 1973, and its first store in the country opened in the capital’s Toyosu district in May 1974 following a licensing agreement with Southland Corp, the U.S.-based operator of the brand.

“Seven-Eleven, which was born in the United States and evolved in Japan, has become a product of Japanese culture recognized all over the world,” Seven-Eleven Japan President Fumihiko Nagamatsu said at a recent ceremony to commemorate the 50th anniversary of the company’s establishment.

Other chains such as Lawson Inc and FamilyMart Co started franchise operations shortly after Seven-Eleven’s establishment. The industry saw rapid expansion, meeting demand from customers who wanted to buy groceries outside of traditional stores’ opening times.

The first 24-hour outlet was born in 1975, and plastic-wrapped rice balls were launched in 1978, becoming a smash hit at a time when they were widely considered to be a type of food only made at home.

In 1987, convenience stores enabled customers to pay utility bills at the cash register utilizing bar code scanning and installed ATMs in 1999, allowing people to withdraw cash.

The number of convenience stores in Japan jumped some nine-fold from 6,308 in fiscal 1983 to 58,340 in fiscal 2018. But the number fell to 57,544 in fiscal 2021, reflecting saturation of the industry, according to data from the Japan Franchise Association.

A shrinking workforce, meanwhile, has forced some convenience store owners to work long hours, prompting franchise operators to start to introduce shorter opening hours to address the issue.

FamilyMart has started to introduce unmanned cash registers, aiming to increase the number of stores with such labor-saving measures to about 1,000 by fiscal 2026.

Other chains are also ramping up efforts to stay competitive, such as launching frozen foods supervised by famous restaurants and offering meals cooked in-store.

Tsuyoshi Yoshikawa, an analyst at SMBC Nikko Securities Inc., points out that customers have still not yet returned to the pre-pandemic level.

“Convenience stores must now compete on developing products that can win customers and raise average customer spend,” he said.

Source: Japan Today