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We round up the latest trading updates and news for Japan's four largest retailers, Seven & i Holdings, FamilyMart UNY, Lawson and AEON.

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The three leading convenience store chains in Japan are facing increasing challenges to hiring staff for their stores. Labour shortages driven by the country's ageing population is deepening and retailers opening new stores require new workers.

Discounts and benefits for workers

The current approach for many convenience store operators is to incentivise workers with benefits and discounts. The average wage for convenience staff is around JPY1,000 an hour, but varies based on location in the country.

Seven & i Holdings, which operates over 20,600 7-Eleven stores in Japan, opened a day care centre for employees on the second floor of a store in the northern city of Sendai in July. In April 2017, it began offering workers discounts on hotels and travel services.

The second largest CVS chain in the country, FamilyMart, is partnering with Iris Ohyama to offer part-time workers nationwide discounts of up to 60% on rice cookers and other appliances. While Lawson, which operates more than 14,300 stores, offers its employees discounts on DVDs and books, serviced by the retailer's subsidiary companies.

Automation part of the solution

At an exhibition in October last year, Lawson launched an unstaffed store concept, featuring a robot that can prepare food as per customer preferences, e.g. cook gyoza dumplings. About two years ago, we covered how Japan's Ministry of Economy, Trade and Industry is backing the introduction of RFID technology in retail. Since then, we have seen Japanese retailers in different industries trial this technology. Retailers are now working harder to retain and attract new employees, but also promote automation to drive efficiencies in-store.

Lawson testing unstaffed stores during early hours

To reduce the burden on store employees and compensate for labour shortagess, Lawson has announced that it will test unstaffed operations at two outlets for several months from this summer. The concept was first announced back in December 2017.

Unstaffed service hours will be between midnight to 5 a.m each day. While a staff member will be available to support during the trial, Lawson hopes the outlets will be fully operational without personnel in the future. Certain categories, including cigarettes, alcohol, and postage stamps will be unavailable for purchase during unstaffed hours.

Smartphone-based self-payment is already available at Lawson stores in Shanghai. If self-checkout is rolled-out to other times of the day in Japan, customers will be able to avoid long lines at cash registers during busy hours. It will also help drive in-store efficiencies and boost productivity.

FamilyMart UNY partners Panasonic Corp

FamilyMart UNY has partnered Panasonic Corp to introduce technology in its stores to drive in-store efficiencies. The first FamilyMart store using Panasonic technology has opened in Kanagawa, southwest of Tokyo. The retailer will test advanced sensors and artificial intelligence to help stores restock more efficiently, as well as self-checkout, digital displays and price tags.

A shrinking workforce has seen retailers reduce and test shorter operating hours. FamilyMart in Japan plans to test reduced hours at up to 270 of its stores in Tokyo, Akita and Nagasaki prefectures beginning in June.

FamilyMart’s UNY’s Representative Director and Executive Vice President, Takashi Sawada, said, “We are faced with a labour shortage, and the issue of 24-hour operations. There is no time to waste."

A.S Watson will invest HKD1bn (US$128m) on digital innovation over the next ten years as it continues to step up transformation across the business to enhance the shopping experience.

Staying ahead of competition

A.S. Watson continues to invest in technology and ecommerce. By next year, the retailer will have spent approx. HKD1bn on digital and technology since 2012. Over the next ten years, it plans to invest another HKD1bn. In recent years, A.S. Watson has invested in self-checkout machines, virtual technology make-up service, predictive modelling technology and facial recognition for payments. It has also launched a Technology Partnership Programme to build a network of strategic partners.

Investment in personalisation

Looking ahead, the retailer plans to roll out machines for skin analysis, digital panels to let customers choose products and technologies for customising product positioning in different stores. It continues to introduce new initiatives to offer greater personalisation, as well as partner technology start-ups in countries such as Canada, the U.S. and Australia to accelerate digital transformation.

In 2017 for example, A.S. Watson partnered with Toronto-based Rubikloud as part of its investment in big data capabilities. At some of its stores, the retailer has developed a traffic management system that uses big data analytics to help it choose future store locations.

A.S. Watson FY18 results: sales up 10%

Click here to see A.S. Watson’s FY18 results.

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

A.S. Watson Group has opened its 15,000th store in Kuala Lumpur, Malaysia.

500th Watsons store in Malaysia

The world's largest health and beauty retailer continues to rapidly expand its store network, opening a new store on average once every seven hours across Asia and Europe. Earlier today, the Group opened its 15,000th store globally. This also marked the 500th Watson store in Malaysia. There are over 7,200 Watsons' stores in 13 markets in Asia and Eastern Europe.

A.S. Watson FY18 results: sales up 10%

Click here to see A.S. Watson’s FY18 results.

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

The world's largest international health & beauty retailer has posted a strong set of annual results.

Results summary - growth across all H&B divisions

At the end of 2018, A.S. Watson’s retail division had 14,796 stores across 24 markets, a 6% increase compared to the previous year. Total sales for the Health and Beauty segment increased 10% to HKD138,987m, with comparable stores growing 2.1%. Total revenue, EBITDA and EBIT of HKD168,991m, HKD16,164m and HKD13,078m increased by 8%, 9% and 8% respectively.

H&B Asia: comparable store sales up 7.1%

  • Health and Beauty Asia results were particularly strong, with an 20% increase in EBITDA driven by a 10% increase in store numbers, but also a comparable store sales uplift of 7.1%
  • The Philippines was a key market for new store openings for the Watsons banner. Together with its joint venture partner SM Retail, they opened more than a 100 new stores

H&B China: sales up 4%

  • Health and Beauty China trading under the Watsons banner continued to perform strongly, reporting a 7% growth in EBITDA and a healthy EBITDA margin of 19%
  • Store network expansion continued, but sales did not grow in line with space, growing 4% in local currency

H&B Europe: EBITDA growth of 6%

  • Health and Beauty operations in Europe delivered another solid performance with EBITDA growth of 6%
  • H&B Western Europe accounted for 50% of total H&B sales for the retailer, but growth remains subdued
  • H&B Eastern Europe is A.S. Watson’s smallest H&B division. However, it continued to show strong growth potential, reporting an 8% increase in sales growth in local currency
  • Click here to see Rossmann’s FY18 results
  • Kruidvat, Trekpleister, Prijsmepper, Ici Paris XL and Pour Vous have posted a 3.6% increase in turnover to €2.9bn. Turnover in the Netherlands increased 3.5% to €2.2bn. In Belgium, sales amounted to €687.2m, €9.1m from Luxembourg, €2m from Germany and €3.5m from France. The number of stores increased from 1,633 to 1,675

Loyalty and exclusive sales important

A.S. Watson continued to expand its online and offline customer base. It has 132m loyalty members from around the world. The retailer continues to develop and add to its range of exclusive products - sales accounted for 34% of total H&B sales (HKD138,987m) last year.

Areas of focus

A.S. Watson has cited several macroeconomic uncertainties, including trade disputes, Brexit outcome, fluctuations in commodity and currency prices that could impact the business. In retail, it has outlined several key areas of focus:

  • Adding digital and delivery capabilities to drive offline and online integration
  • Introduce initiatives to help personalise customer experiences
  • Enhancing store formats

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

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