The Japan News by The Yomiuri Shimbun
Convenience store operators suffer as customers stay home
Convenience stores around the nation are facing difficulties due to a decline in the number of customers in office districts and vacation areas as a result of the novel coronavirus.
The use of convenience stores for many services, not only to buy food — the main draw for customers — has been on the decline.
If the current trend of people working from home and refraining from going out becomes more prevalent, operators will be forced to review their store expansion and product strategies.
Sales at convenience stores nationwide for May were ¥809.5 billion, down 10% from a year earlier on a same-store basis, according to an announcement on June 22. This is almost the same as April’s drop of 10.6%, the largest decline since January 2005, as far back as comparable records go.
The amount of purchases per customer increased 12.4%, the highest level ever, as people rushed to “buy in bulk.” The state of emergency prompted people to avoid going out until late May and drove people to buy large quantities of goods in a single visit.
However, the number of customers visiting convenience stores fell by 19.9%, the largest decline ever, which pushed down overall sales. Particularly large is the slump in stores located in office districts and near train stations.
“Sales in May fell to less than 70% of normal and profits were down significantly. We won’t be able to get customers back in for a while,” the owner of a store along the Seibu-Ikebukuro Line in Tokyo said.
This sluggishness can be attributed to the widespread adoption of teleworking, especially among large companies. As a result, fewer office workers are believed to be stopping by stores near stations and in office districts on their way to and from work.
In the past, office districts had been considered good locations for attracting more customers than residential areas. However, the pandemic has turned these favorable locations into weak points for the industry.
By category, the sales of daily-delivered food such as bento meals, bread and rice balls, which used to be a good source of revenue for convenience stores, declined 12.5%, and services such as package deliveries and ticket purchases fell 18.7%.
Sales of coffee, fried foods, Chinese steamed buns and other items that are typically placed next to cash registers and tend to attract customers also appear sluggish.
The “around the clock” model, which used to be a selling point for convenience stores, was already approaching its limit. The number of stores that had taken steps to shorten business hours stood at more than 100 among the three major companies last autumn, but by early May the number had jumped to more than 1,500, a temporary increase due to such factors as a decline in late-night customers and buildings some stores occupy closing at night due to coronavirus measures.
However, the trend could take hold depending on the course of the epidemic.
Competition in the convenience store industry is so fierce that a person related to the industry said that “a 10% drop in sales means zero profit for many owners.” In addition, competition from other industries, such as supermarkets and online shopping, is likely to intensify in the future.
Sales at supermarkets rose significantly in May, up 9.8% from a year earlier, according to a report published by three supermarket groups. One reason is believed to be increased demand for preparing and eating food at home, which has replaced demand for convenience store takeout food. As convenience stores’ pricing is generally fixed, they cannot compete with supermarkets in terms of price.
“There will not be an easy return to the pre-pandemic lifestyle. Convenience stores will be reviewing their locations and products at an accelerated rate,” Shun Tanaka of SBI Securities Co. said.