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This in-depth guide to Japan explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

The four largest grocery retailers in Asia are 7&i Holdings, FamilyMart UNY, Aeon and Lawson, we reviewed their five year growth forecasts, strategic priorities and latest developments.

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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."

AEONs Maxvalu in Hiroshima and a handful of 7-Eleven stores are reducing their operating hours in Japan.

Maxvalu in Hiroshima ending 24-hour operations

Maxvalu Nishinihon, a Hiroshima-based subsidiary of AEON, is ending 24-hour operations for 25 stores later this month. The company plans to refocus its staff members' attention on improving customer service. The move should also help the business cope with labour shortages in western Japan prefectures, including Hyogo and Hiroshima, where its stores are mainly located.

7-Eleven reducing opening hours in some stores

Seven-Eleven Japan has announced that it will reduce operating hours at some of its stores later this month. This will be tested on 10 company-run 7-Eleven stores across the country, operating only between 7am and 11pm rather than 24 hours.

Labour shortages driving change

Around 96% of 7-Eleven stores in Japan operate 24 hours a day, excluding any located inside external office buildings and train stations. Labour shortages for the night shift remains a challenge for convenience operators across the market.

Both Lawson and FamilyMart have experimented with reduced opening hours at their convenience stores. The former for example, has also launched self-checkout counters to support staff members. With increasing pressures, many franchise owners are trying to negotiate shorter operating hours and other subsidies.

Retailers are introducing a number of different initiatives to combat labour shortages in the market. Japan's Ministry of Economy, Trade and Industry is also helping drive automation in retail. Furthermore, 50 Japanese banks have recently joined Tokyo bank J-Coin to set up a cashless payment system developed by Mizuho Financial Group. J-Coin payments are processed via a mobile app using a QR code, a phone number or a LINE Messenger ID number. We expect Japanese retailers to further integrate cashless payments in-store to drive efficiencies and offer shoppers greater convenience. 

 

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American manufacturer and distributor Avery Dennison has announced that it will work with the Japanese government to drive RFID technology roll-out in convenience stores across Japan.

Roll-out across Japan by 2025

We have already seen some of the leading convenience operators, e.g. Lawson launch new style checkouts in recent years. This latest announcement should help accelerate the roll-out process announced back in 2017. The technology will help drive in-store effencencies, automate the check-out/payment process and support dynamic product pricing and advertising.

 

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FamilyMart plans to open an additional 300 stores across Malaysia. 

Room for growth in convenience channel

QL Resources, the operator of FamilyMart Malaysia, has reaffirmed its plans to open an additional 300 stores in Malaysia. The retailer opened 30 stores in the country during the previous financial year and another 90 stores in this financial year, ending 31 March 2019.

Chia Song Kun, chairman of QL Resources said, "we still stick to our plan to open 300 stores in five years."

Driven by increasing demand...

Though there is a healthy concentration of convenience stores in Kuala Lumpur and the greater Klang Valley area, penetration in the rest of the country remains low. With only 7-Eleven and MyNews as the other major players in this channel, FamilyMart Malaysia sees positive growth opportunities, driven mainly by domestic demand.

Find out more information about FamilyMart here.

 

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