Convenience stores target niche markets
TOKYO: Faced with a domestic market saturated by more than 50,000 stores, the three biggest convenience store chains have announced new strategies that they hope will differentiate their stores and products by targeting three different niche markets. While Seven-Eleven Japan Co. has its sights set on the “elderly market,” Lawson Inc. is focusing on “health- conscious” customers. Meanwhile, FamilyMart Co. is looking to create “multifunctional stores.”
The number of stores operated by 10 major convenience store chains has topped 47,000.
If locally operated shops are included in the figure, the number exceeds 50,000, according to the Japan Franchise Association.
Monthly same- store sales in the industry had declined for the 10 months through March. However, daily per- store sales increased between fiscal 2008 and fiscal 2012 among the top three chains.
Industry giant Seven-Eleven saw its daily sales increase by about 40,000 yen ( RM1,200) per store to about 660,000 yen ( US$ 6,753) , while Lawson’s daily sales rose about 30,000 yen to bout 540,000 yen.
FamilyMart marked a daily sales increase of about 20,000 yen to about 520,000 yen.
Seven-Eleven has clearly outpaced its rivals, adding about 3,000 stores over the past five years.
Lawson added about 1,200 stores during the same period while FamilyMart increased its outlets by about 2,000, leaving both operators with a sense of crisis about the situation.
To gain a competitive edge, Lawson is seeking to appeal to health- conscious customers in a bid to be known as the “fresh” convenience store.
“The industry No. 1 ( SevenEleven) and No. 2 ( Lawson) have different ways of doing things. We’re raising the quality of our products to compete with depa- chika (department store basement food markets),” Lawson President Takeshi Niinami said at an Apr 10 press conference to announce the firm’s earnings.
While fresh food such as vegetables, meat and fish has traditionally been regarded as the weak point of the convenience store industry, Lawson aims to grow vegetables at about 300 of its own farms nation-wide by fiscal 2020.
The vegetables will be sold pre- cut so they can easily be used in cooking or preparing pre-made side dishes and bento ( box lunches). The firm is aiming to attract customers concerned about health and food safety. Lawson also hopes to attract elderly and healthconscious customers with instore pharmacies.
The firm currently has 29 such stores and will increase that number to 100 by the end of the fiscal year.
Junji Ueda, chairman of FamilyMart, said competition to open new domestic stores is in its final stage when he announced the chain’s plan to launch 1,500 stores this fiscal year to bring the chain’s total to more than 10,000.
More than 30 per cent of these new stores will have in- store eating areas. At the same time, FamilyMart aims to expand its fast-food menu by increasing the variety of freshly brewed coffee and fried chicken the stores offer, for instance.
FamilyMart’s strategy to create multi-functional stores has made progress through an agreement with railway company Kintetsu Corp. Under the agreement, convenience stores will be set up in existing retail space inside train stations. It has also secured a tie-up with five drug store chains, including Komeya Pharmacy Co., to operate combined conveniencestore pharmacies.
Meanwhile, Seven-Eleven is improving its line of food products aimed at the elderly and one-person households, such as vacuum-packed grilled fish and small side dishes.
Although the chain’s line of private brand products tends to be touted for its low prices, Seven & i Holdings Co. President Noritoshi Murata said the firm is looking to change course and emphasise quality over affordability.
The chain now offers a Seven Gold line of food products that cost up to twice as much as the price of its regular Seven Premium line. There are only 11 items offered under the Seven Gold brand, but the firm intends to expand to 300 items by fiscal 2015. — WP-Bloomberg