Foreigners Occupying Checkout Counters... Retired Owners Resembling Koreans and Concerns Over Store Saturation [Convenience Store Kingdom Japan]

Foreign Workers and Robots Welcomed
New Store Openings Plummet in Saturated Market
Aging Store Owners Also a Concern

The Japanese convenience store industry has not been able to escape the chronic social issues of low birth rates and aging population. Although the number of stores has already reached a saturation point, there is a severe shortage of staff capable of performing the necessary tasks. Additionally, as the size of the purchasing power generation gradually decreases due to aging, it has become a time to consider new ways to generate revenue.

Borrowing Foreign Workers and Robot Hands... Industry’s Labor Shortage

In Japan, convenience stores are considered one of the industries most severely affected by labor shortages. According to a 2018 public opinion survey conducted by the Ministry of Economy, Trade and Industry targeting 31,000 franchise owners of eight convenience store chains affiliated with the Japan Franchise Association (JFA), more than 60% of store owners complained about a lack of employees.

Currently, vacant positions are being filled by foreign workers. In fact, it is not uncommon to see foreign workers serving customers at convenience stores in urban areas such as Tokyo. The Sankei Shimbun cited the example of Seven-Eleven in Akasaka, Tokyo, reporting that "90% of the 60 employees across four stores are foreigners, with only six Japanese employees," and that "most come from eight countries including Nepal, China, and Vietnam."

Rather than rejecting foreign workers, Japan is actively employing them on site. In May last year, the first Myanmar-born store owner appeared at the Seven-Eleven Minami Azabu Itchome store in Tokyo, attracting attention. After coming to Japan in 2008 as a student, he worked continuously as a full-time employee at Seven-Eleven and finally rose to become the store owner. He hired Myanmar international students attending Japanese language schools in the metropolitan area as part-time workers and made efforts such as creating convenience store manuals in Myanmar language to guide students who could not speak Japanese well enough to work at other branches.

Meijin Ichitsu, originally from Myanmar, who became a Seven-Eleven convenience store owner. (Photo by Seven-Eleven Japan)

Seven & I Holdings, the parent company of Seven-Eleven, established an organization in 2020 to promote multicultural coexistence, and the convenience store industry has also set up consultation and relief institutions for foreign workers. If the qualification requirements for foreign workers are relaxed in the future, they plan to guide foreign workers’ careers aiming for positions such as store managers or leaders.

However, Japan also holds the view that it cannot rely on foreign workers indefinitely to fill labor shortages. The chosen strategy is automation. FamilyMart introduced robots in 150 stores starting in 2020 to check and restock store inventory. Based on beverages, these "part-time robots" can restock up to 1,000 items per day, reducing the overall workload by about 20%.

A part-time robot is filling beverages. (Photo by TBS News)

Recognizing market demand, SoftBank jointly invested with six companies including Taiwan’s Hon Hai Precision Industry and the Japanese robot development startup "Telegizance" to develop robots capable of doubling the daily beverage restocking capacity to 2,000 items. Seven-Eleven plans to introduce the newly developed robots from the first half of this year.

Store Saturation... What About the 50s and 60s Generation Owners?

Due to various issues such as labor shortages, barriers to opening new convenience stores are gradually rising. Above all, the dominant opinion is that further store openings are meaningless because the market is already saturated. Nikkei pointed out, "Competition within the same convenience store franchise chains is intensifying, worsening the plight of existing franchise owners," and "the total number of new convenience store openings has stagnated at around 55,000 recently. It cannot be denied that the number of stores is barely increasing."

Due to excessive competition, profitability has deteriorated, and the number of store closures is increasing. Excluding Seven-Eleven, which does not disclose closures, Lawson closed 130 stores last year alone, resulting in a net decrease of 12 stores, and FamilyMart closed 128 stores, reducing the total by 14.

In this situation, the lack of new store owners means the average age of existing owners is rising, which is also a problem. According to a survey by the Japan Fair Trade Commission, the average age of franchise convenience store owners is 53.2 years, with over 60% aged 50 or older and 30% aged 60 or older. Similar to South Korea, most people starting convenience store businesses are approaching retirement age. Therefore, since 2019, the Ministry of Economy, Trade and Industry has been considering who will succeed the remaining convenience stores when existing owners retire.

The convenience store industry suggests options such as passing the business to close relatives or long-serving employees for older owners. A Lawson representative said, "Recently, many owners who have operated convenience stores for 20 to 30 years want to entrust full authority to employees or staff who have worked with them for a long time," conveying the atmosphere of store owners concerned about succession issues.

Editor's NoteJapan, the "convenience store kingdom," is sending a warning to South Korea, which has entered an era of excessive competition in convenience stores. The history of convenience stores in Japan began in the 1970s and has already surpassed half a century. While there may be no department stores, there is not a single area without a convenience store, so the number of stores is vast. However, now it is a crisis situation. As the market reaches saturation, the number of new store openings has sharply declined, and external factors such as rising rents, labor costs, and a shrinking domestic market have contributed to voices saying the industry's golden age is over. South Korea, which has already surpassed the number of convenience stores in Japan, is following the same path as the declining Japanese market due to excessive competition. By examining the history of convenience stores in Japan and the strategies of companies facing crisis situations, we seek survival strategies for the South Korean convenience store industry.