Convenience stores in Japan reforming business models for growth

Three major convenience store operators in Japan are seeking to reform their business models for further growth, as the domestic market is reaching its “ceiling” and consumer behavior has changed drastically during the coronavirus pandemic.

Seven-Eleven Japan Co., the country’s largest convenience store chain, has been trying to shift away from its “one-size-fits-all” business model, its president, Fumihiko Nagamatsu said in a recent interview.

The chain expanded its network of stores under the unified format, which makes some 20,000 7-Eleven stores look identical, with similar lineup of products.

Nagamatsu, however, said it is increasingly important that each store caters to local customers, as supermarkets are doing.

With this aim, the company is working hard on the development of products in different areas of the country, he said.

Nagamatsu said the chain’s sales are recovering after being hit by the coronavirus crisis, due to its efforts to redesign product lineups to satisfy local customers.

“People are becoming more aware of health, so we’ve been offering more health-conscious products since fall 2021. We plan to expand the lineup of smoothies in 2022,” Nagamatsu said.

Seven-Eleven Japan plans to expand its home delivery service by making it available from some 1,200 stores in the fiscal year through February.

Nagamatsu said he hopes the service will make it possible for customers to place an order while having a meal at home and have a cold can of beer delivered before they finish eating.

“We want to make the service available nationwide by the fiscal year through February 2026,” he said.

Meanwhile, FamilyMart Co. President Kensuke Hosomi said the chain offered many successful products in 2021, although it went through a severe business environment amid the prolonged pandemic.

“Materials prices are expected to be high in 2022, and the course of the coronavirus crisis is unclear,” Hosomi said in an interview, noting that there is no time for him to be complacent.

Hosomi explained about the company’s digital advertising plan under which its stores will be equipped with large-screen digital displays that show advertisements.

“Looking at and touching products at brick-and-mortal stores has become a more valuable experience” amid the rise of online shopping, Hosomi said.

As well as selling products, FamilyMart stores will have an enhanced role to display items in a way that makes them look more attractive, Hosomi said.

Referring to the digitalization of stores, the president said he hopes to expand the network of small convenience stores with unmanned checkout counters to some 1,000 by February 2025.

FamilyMart is considering working together with local companies that are also part of the country’s social infrastructure, he said.

Lawson Inc. has been boosting its lineup of fresh food including tofu and milk at its stores to meet requests from customers who increasingly prefer shopping at nearby convenience stores rather than going to supermarkets far away amid the coronavirus crisis.

In the year to February 2023, Lawson will introduce in-store kitchens at 10,000 stores, where customers will be able to place orders via smartphones and receive freshly cooked bento boxed meals at the stores.

“We cook after receiving an order, so there will be no food loss,” Lawson President Sadanobu Takemasu said in an interview.

“People’s impression of frozen food is changing to something that is delicious and has a long storage life,” Takemasu said, adding that the company aims to boost its frozen food sales fivefold in five years.

Takemasu said Lawson is trying to offer items with regional flavor to make people want to visit its stores every day. When the number of visitors from abroad rebounds, related spending will help the further growth of the company, he said.