It’s Naptime for Japan’s Convenience Stores

(Bloomberg Businessweek) -- Prepare for the end of Japan’s 24-hour convenience stores.

In a country where deaths have outpaced births for several years and unemployment is a low 2.3 percent, it may not be surprising that finding people to work in convenience stores is tough. International students are an increasingly important source of manpower, but their temporary status creates significant churn. Prime Minister Shinzo Abe has succeeded in bringing more women into the workforce, but they’re generally unwilling to work late-night shifts. A plan to issue visas for unskilled guest workers— a first for Japan—could attract more than 345,000 additional overseas workers by 2024. But they would be limited to jobs in 14 industries, including construction, elder care, and agriculture—not convenience retail.

Seven & i Holdings Co. (parent company of 7-Eleven), Lawson, and FamilyMart UNY Holdings, which together operate more than 50,000 locations across Japan, have been under pressure from franchisees, who complain that they’ve sometimes had to work shifts themselves. This isn’t a problem only in Japan. These brands have stores across Asia, and some of their biggest markets—China, Thailand, and South Korea—are graying, too.

All three companies have tried to solve the problem with automation, particularly during the later hours, or by closing for part of the night—a dramatic move in a country where, according to Bloomberg Intelligence analyst Tom Jastrzab, more than 95 percent of convenience stores are open 24 hours. Beyond the prohibitive cost of putting robots in tens of thousands of stores, machines have their limits. As much as 19.5 percent of the volume of alcohol sold in Japan and almost 70 percent of cigarettes are purchased in convenience stores, according to Euromonitor International. Those stores testing automation are locking up their liquor for want of a system that can accurately check that the consumer is of age.

If all else fails, Seven & i, Lawson, and FamilyMart may have to close more often. One harbinger of inconvenient nights ahead: 7-Eleven, the biggest convenience brand in the world, tested a non-24-hour program in 10 corporate-managed stores in March.

●Thank Heaven

Seven & i is the world’s largest convenience store operator, with almost 17 percent of the global market.

● Trouble in Paradise

With franchises making up 98 percent of Seven & i stores in Japan, pressure from owners has weighed on its stock price.
 
Gopalan is a finance columnist for Bloomberg Opinion.

To contact the editor responsible for this story: Jillian Goodman at jgoodman74@bloomberg.net

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