'The Country of Convenience Stores' Japan Sees First Decrease in Number of Stores in 14 Years

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] In Japan, known as the "country of convenience stores," the number of convenience store outlets decreased last year for the first time since 2005.

According to the Nihon Keizai Shimbun on the 21st, the Japan Franchise Chain Association announced in its "Annual Convenience Store Statistics" released the previous day that as of the end of December last year, the number of stores operated by seven major convenience store companies, including Seven-Eleven, was 55,620. This represents a 0.2% (123 stores) decrease compared to the end of December 2018.

The decline in the number of convenience stores is attributed to the difficult business environment faced by franchise chain stores, such as labor shortages leading to rising labor costs. Large convenience store chains in Japan have traditionally expanded their number of outlets based on the principle of 24-hour operation. However, as the total number of stores exceeded 55,000, competition intensified, prompting a review of business hours and a shift in business models.

Seven-Eleven, the industry leader, is focusing its resources on supporting existing franchise stores rather than opening new ones. In October last year, Ryuichi Isaka, president of Seven & I Holdings, the parent company of Seven-Eleven, announced personnel reductions and store closures, stating that "profit deterioration was evident in certain regions during the first half of the year." Nihon Keizai Shimbun also reported that FamilyMart and Ministop are closing underperforming stores to improve profitability.

Although the number of stores decreased, convenience store sales increased. Last year, sales per convenience store reached 11.1608 trillion yen, a 1.7% increase from the previous year. This marks a continuous sales growth trend since 2005, reaching an all-time high. Nihon Keizai Shimbun analyzed that the popularity of point rebate benefits for cashless payments following the consumption tax increase last year, as well as the lower consumption tax rate applied when taking home prepared foods, contributed to this growth.