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Convenience Stores As Urban Access Points

January 18, 2000

Convenience stores' move into the service sector is accelerating. They no longer simply sell products; they are now places where you can complete nearly every task essential to modern life, including paying utility bills and using fax machines and automatic teller machines. Recently they have begun to offer package tours, movie and concert tickets, and CDs, and even online shopping and banking services. In the fiercely competitive world of retailing, convenience stores appear to be going from strength to strength in their position as "urban access points."

Every Conceivable Service
When most people think of a convenience store, they think of a retail outlet where food and daily necessities are available under one roof. These stores are known for opening early and closing late, with many open 24 hours a day. They are convenient for busy people like office workers and young people living alone, for whom they are often said to take the place of a refrigerator. In the last several years, however, convenience stores have been undergoing radical change. Let us look at the example of a store in the suburbs of Tokyo.

It is an average convenience store, stocking about 3,000 products in a floor space of about 100 square meters (1,076 square feet). This store is nontraditional, however, in that it offers products and services that in the past were not found in convenience stores. Video game software, CDs, and cosmetics are just a few of the unconventional products that can now be bought. In one corner stands an ATM, so customers can withdraw cash without going to the bank. They can also pay electricity, gas, water, and telephone bills. Photocopying, fax, and express delivery services are also available.

Through tie-ups with travel and ticket agencies, the store has recently been selling package tours and movie and concert tickets through a special online terminal. It also acts as an agent and collection point for the sale of books over the Internet. It has even started delivering products to elderly people living alone and, in partnership with a nursing services firm, has begun checking up on the well-being of seniors living nearby on a daily basis.

Banking Plan
The concept of the convenience store was born in the United States in the 1950s and was imported to Japan in the mid-1970s. They started off as small franchise shops with long opening hours located near stations or residential areas and stocking essential everyday items. Subsequently, as well as expanding their selection of products--especially box lunches and cooked meals--they introduced a computerized point-of-sales system that enabled thoroughgoing inventory control. This dramatically improved their customer pulling power and boosted sales, leading to rapid growth. According to Ministry of International Trade and Industry figures, as of 1997 the number of convenience stores operating in Japan was 36,631.

The convenience store market has now reached saturation point, however. With various discount stores and specialty shops making inroads into the market, convenience stores are making little progress with sales of their staple goods--food and daily essentials. The August 1999 mid-year results of the five major chains indicate that sales are falling at the outlets of three chains, with sales at branches of the other two leveling off.

Each chain has now begun trying to strengthen the service side of its business. Representative of this is one big chain's plan to expand into banking. It is aiming to install at least one ATM in every one of its nearly 9,000 stores. This would generate income from service charges levied when customers use the ATMs to deposit, transfer, or withdraw money. Some chains are also planning to become involved in online sales of a wide range of products, from clothes to cars, by taking on the role of payment and collection points. It seems that convenience stores, which are characterized by their large numbers, prime locations, and long opening hours, will continue to evolve in their pursuit of market dominance.

Trends in JapanEdited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.