How have convenience stores influenced Japanese shopping patterns? How are convenience stores changing today?
How do convenience stores in Japan differ from those in other countries? To answer these questions,
various books, magazine articles and information on web pages about convenience stores are summarized.
Definitions
First of all, we should define what a convenience store is. The American Heritage Dictionary defines a convenience
store as -
A small store retail store that is open long hours and that typically sells staple groceries,
snacks, and sometimes gasoline. (4th edit, page **.)
ENR-NAMENEWS offers a slightly different definition -
A small store, located near a residential area, open long hours seven days a week,
and carrying a limited line of high turnover convenience goods.
In the same vine, an April 2001 Business Solutions article defines them this way -
a compact, drive-to store which offers a limited line of high-convenience items.
In this paper, we shall define a convenience store as any store with the following characteristics:
(1) long opening hours, and (2) a small inventory of fast-selling, usually inexpensive products.
It is worth pointing out that nearly all convenience stores are chain stores and the employees at such
stores usually have little voice in management policies.
Historical Background
According to the National Association of Convenience Stores (1997), the first convenience store was established
in 1927 in the U.S.A. It provided service 16 hours a day, 7 days a week.
The first convenience store in Japan was established in 1974. It was a 7-11 store in Tokyo.
By 1980, there were about 2,500 convenience stores in Japan (Kunitomo, 1997:32).
Today there are over 40,000 convenience stores in Japan. Convenience stores have become part of the Japanese
urban landscape. Why have convenience stores become so popular in Japan?
After WWII, many people in Japan could not afford basic necessaries, and retail stores were few.
However, from 1955 to 1965, the Japanese economy grew over 12.5%. As economic conditions became relatively stable,
and retail stores expanded. According to Kunitomo (1997:42) this was the golden age of the Japanese retail store industry.
A characteristic of many stores during the era is that sales results strongly influenced stock inventories. The upbeat economy
recovery encouraged people to buy things, so retail stores yielded large profits. Many big retail stores started to follow a
franchise system called the 5s format because it was an effective way to increase sales. The main characteristic of 5s
format stores was to keep inventions high. Kunitomo (1997:47) notes that retail stores using this format emphasized mass production and large volume sales. Because of this revolutionary system, chain stores sprang up, and products became cheaper and cheaper. By the late 1960s in Japan, there are mainly two types of chain stores: supermarkets and general merchandise stores. The former offered mostly food, and the latter offered some food and clothing. Daiei, Itoyokadou and Jasco were examples of general merchandising stores.
To dominate the retail market and stay abreast of keen competition, big chain stores introduced new systems such as self-service, one-way control and cash registers. Also, headquarters were separated from stores for effective specialization. On the other hand, small retail stores lacked access of many supplies and increasingly lost their competitive edge. As a result, during the 1970s, many retail stores disappeared, even though the Japanese economy was still vibrant. Per capital incomes rose and people became more concerned with quality than quantity. In addition, depopulation in the countryside kept going on because of the city growth, and populations became more and more urbane. These lifestyle changes made business tough for exciting chain stores.
A new sales approach was needed. Progressive stores started to capitalize on changing lifestyles. Finally, Itoyokado decided to establish a convenience store in 1970 and the first Seven-Eleven opened its doors in Tokyo in 1974. It was an important chapter in the history of Japanese retailing because convenience stores targeted individual consumers who make small daily purchases rather than family shoppers buying food for an entire week. As Kunimoto (1998) has pointed out, successful convenience stores need to adapt to changes in lifestyle. Fig.1 shows how convenience stores have mushroomed in Japan in recent years.
Fig. 1: The number of convenience stores in Japan from 1974 - 2000. (Source : Yamane, 2001)
Recent Trends
Convenience stores changed a lot since 1974. Kawabe (1994:128) remarks that all convenience stores share these three points.
1. Franchise System
By adopting effective franchise systems, seven companies are able to control the convenience store market in Japan. All outlets of each of these stores maintain uniform service guidelines and distribute products to nationwide outlets according to strict guidelines.
Fig. 2: Total outlets of major convenience stores in Japan as of March 2001.
(Source: NIPPONIA, 2001)
2. Long Opening Hours
By definition, convenience stores maintain long operating hours. When other types of stores have their shop windows closed during the early morning or late at night, convenience stores are open for business since 1975 in Japan, Seven-Eleven stores have operated 24 hours a day. Most stores believe that around-the-clock business would not be profitable. However, convenience stores use late night slack hours to take stock inventions.
3. Range of Services
Seven-Eleven stores started offering several kinds of service to customers in 1981 (Kawabe, 1994:254). That year they began handling utility payments service that previously only banks and post offices handled. By 1983, most other convenience stores started the same type of services.
In 1985, delivery services were accepted at convenience stores. By 1991, some convenience stores began offering other services such as laundries, insurance sales, and photograph development to attract customers
To give you an idea of how popular these services have been at one convenience store chain, please refer to Fig. 3.
Fig. 3: The estimated number of annual customer visits to 7-11 in Japan from 1992 to 1996. (Source: Kawabe, 1994: 189)
Kawabe mentions how these three points also have helped convenience stores keep a breast of changing lifestyles (1994:262). For example, women are a significant part of the Japanese work force. To attract more female customers, many convenience stores now sell items such as sandwiches, sweets and stockings. In addition, convenience stores also target young people who are more worried about convenience than savings.
According to Satou (1997:162), an important feature of convenience store marketing is the Point of Sales (POS) system. The system helps stores manage sales-related information. All items in a store have a bar code appears which a high tech register reads. The bar code register reports the price of each item, and transmits sales information to a central database. The corporate office can the easily update any given product and keep their inventories properly supplied. The POS system enables the franchise headquarters to gather detailed information on individual stores and discern which products are popular. In short, the POS system lets stores the head office know which products are selling well, and which aren't. Since this system provides specific, up-to-date information, stores can stock items that are in demand in each area. Fig. 4. lists the types of products sold at Japan's leading convenience store.
Fig. 4: Top ten product types sold at Seven-Eleven in 2001. (Source: NIPPONIA, 2001.)
According to Kawabe (1994:277), there are some differences between Japanese convenience stores and those in other countries. For example, American convenience stores are often connected with gas stations, so customers can easily buy snacks and soft drinks while filling their gas tanks. It is common for American stores to deal with rental videos. By contrast, Japanese convenience stores often sell cigarettes and alcohol. Also, adult magazines are available in Japanese stores but not in the U.S. Since Seven-Eleven stores were successful in Japan, Japanese convenience store systems such as POS and this product delivery system has been introduces in the U.S. The Southland Corporation, which owns the Seven-Eleven chain in the U.S. started introducing Japanese systems when in danger of bankruptcy during the late 80s. As a result, the Southland Corporation regained its profit and other companies in the USA have also adopted the POS system.
Japanese convenience stores have also been eyeing foreign markets. NikoMart and FamilyMart, both Japan-based companies, opened up outlets in Taiwan in 1988. They currently operate several hundred stores in Taiwan. Ministop, another Japanese company, has been in Korea since 1995. For this reason, competition among convenience stores has been heating especially in Asia. (Imai, 2001: 78)
Conclusion
In conclusion, convenience stores in Japan have been influenced by the rapidly changing economic conditions and people's lifestyles. Since convenience stores have become part of the Japanese social fabric, people are seeking convenience more and more. His essential for convenience stores pays close attention to social trends in order to stay in business. Moreover, Kunimoto suggested that ordinary convenience stores are not needed anymore - each store should offer new interesting services and products for convenience (1993: 246).
In fact, two new trends in convenience stores are already emerging. The one is localization which allows stores to respond better to the needs of local customers. The other is increasing automation. Many services offered by convenience stores are now highly automated.
Though the convenience store market is volatile in many ways, there is little doubt that convenience stores will continue to be a feature of Japanese urban landscapes for the foreseeable future.
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