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The Evolution of the Convenience Store in Japan
By Takayuki Fujiyoshi, Executive Director, and Junichi Togami, Client Development
Since Japan’s first convenience store, 7-Eleven, was born in 1974, the convenience store industry has grown rapidly. The stores’ round-the-clock hours, convenient location, and shelves stocked with necessities truly changed the Japanese lifestyle. But now that more than 40,000 of them dot the landscape, the industry faces saturation. Chains are scrambling for market share – and NPD’s CREST Japan data shows the big competitors’ market share is falling.
What’s happening to convenience stores? First, supermarkets are moving in on their territory. While convenience stores are known for quick meal options and basic necessities, supermarkets have the strength and space to offer everything consumers need – not just the necessities. Supermarkets offer prices about 20% lower than convenience stores, and consumers have begun to notice. In many cases, supermarkets have also extended their operating hours to compete with convenience stores’ accessibility; many supermarkets are now open until midnight or 1:00 a.m., and some even operate 24 hours a day. With supermarkets becoming more convenient with each of these enhancements, “convenience” is no longer offered only in the convenience store channel. C-stores’ most important strength has been matched by some supermarket chains – each convenience store chain competes against not only other chains in its own channel, but also against supermarkets that are growing market share at c-stores’ expense.
Market Share in Chain Category
Total Market, Comparing Year Ending Dec. 2005 to Year Ending Dec. 2006
Source: The NPD Group
Given the new competition they face, convenience store chains are groping for new growth strategies and exploring new formats to attract their once-loyal customers back to the channel. Nearly every chain has turned its attention to older people and homemakers, who, until now, preferred supermarkets. The biggest chain, 7-Eleven, has started to decrease prices on products like beverages in an attempt to make shoppers think of them as an everyday shopping option for groceries, rather than solely as a place to make a quick and convenient purchase, despite higher prices. Lawson, another major chain, has created a format new to the Japanese market: the “1-coin” (100 yen) store, where all items are priced the same. Other chains have begun to offer fresh vegetables, meat, raw fish, and other fresh products to draw consumers away from supermarkets.
CREST Japan will continue to focus on convenience stores’ evolution. Our industry experts in Japan will monitor the trends and help clients understand the industry’s changes so they can refine their strategic planning and decision-making.
To learn more about CREST Japan, contact Takayuki Fujiyoshi at 81-3-5350-7684 (Takayuki_Fujiyoshi@npd.com).
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