TOKYO—7-Eleven Japan, the nation’s largest convenience store chain, is replacing the “one-size-fits-all” model for its entire organization and is designing each location to meet the needs of the local community.
According to Asia.Nikkei.com, this is a big move for the Japanese convenience store giant, which for 50 years has pursued the unified format that is synonymous with efficient management.
At a 7-Eleven store in Tokyo’s Itabashi district, the number of frozen-food cases was recently doubled to two. “Due to the coronavirus, less people are casually dropping by at the store,” the store manager said. “Instead, we are seeing people coming in for bulk shopping of preservative foods.”
Like shoppers worldwide, Japanese consumers worry about possible coronavirus infection by dining in restaurants, and many avoid supermarkets in favor of buying groceries at neighborhood convenience stores.
While mainstay rice balls and sandwiches have been moving slowly, the sales of liquor, frozen foods and sweets are growing. The store in Itabashi has doubled its stock of lemon-flavored alcohol and has quadrupled its offering of frozen udon, which are Japanese noodles made of wheat flour.
The changes don’t stop in Tokyo though. Throughout Japan, 7-Eleven stores are undergoing layout changes. Store owners can change store layouts based on multiple layout suggestions from the company’s headquarters, but they also can make improvements at their discretion. More than 8,000 stores will undergo transformation this fiscal year ending February 2021.
7-Eleven has 20,000 stores in Japan, and “there can be 20,000 varieties of the store,” said Fumihiko Nagamatsu, company president.
Product lines also will change. Traditionally, the 7-Eleven headquarters took the lead in developing new products, but in the future, development teams in each region will handle product creation and are encouraged to launch items aimed at the local market. Today, region-limited products make up 30% to 40% of the total lineup, but this is expected to rise to 50%.
The reforms come as the convenience store giant faces the reality of saturation. Major convenience operators have built their businesses by rapidly growing store count. As Japan grapples with a declining birthrate, convenience stores are facing difficulty securing both customers and staff to run the stores. Moving to individually tailored stores will inevitably lead to higher costs, but 7-Eleven says it will attempt to absorb such costs by further optimizing delivery.
Net new openings of Japan’s three major convenience store companies—7-Eleven, FamilyMart and Lawson—are estimated to be between 300 and 400 stores this fiscal year. That will be the second-lowest level in the past two decades.
As expected, the pandemic has impacted store sales of all three. Same-store sales fell sharply in the April-June period, and the three major chains predict a decline in profits for the full year. All are taking steps to manage the challenges.
Trading house Itochu announced this month that it is making FamilyMart a wholly owned subsidiary, another move reflective of the trend. Of the acquisition, FamilyMart’s President Takashi Sawada called it a “transition to quality” over quantity.
NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.