Find out about the retailer's strategic priorities, commercial focus areas, channel and country presence.

See data on the retailer’s performance and forecasts for its operations by channel.

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

We review Seven & i's retail outlook over the next five years and the key markets to watch, as it continues to expand around the world.

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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.

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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.

Seven & i posts 12.5% increase in revenue

Seven & i Holdings has released a strong set of annual results (ending 28 February 2019), posting a 12.5% increase in operating revenue to JPY6,791.2bn (US$60.7bn), with operating income up 5.1% to JPY411.5bn (US$3.7bn).

Revenue from its domestic CVS operations grew modestly at 2.9%, with existing store sales rising for the eighth consecutive year at 1.3%. Strong growth categories were frozen food, rice products and sandwiches. Seven-Eleven Japan continues to focus on expanding counter, refrigerators and frozen food sales area. Network expansion slowed compared to recent years, adding net 616 stores to reach 20,876 nationwide. It is also set to enter Okinawa on 11th July, the only Japanese prefecture where the retailer's presence is missing. The retailer plans to open 50 new stores next fiscal year and reach 250 by 2024.

Sales at the retailer's main supermarket banner, Ito Yokado, was flat at 0.1% YoY. It ended the fiscal year with 159 stores across Japan, five fewer than the previous year. Further closures are expected, with the retailer forecasting to end FY2020 with 157 stores as it continues to reform and restructure the business. While total convenience store sales in the U.S. for the fiscal year ending 31 December 2018 increased 27.4% to JPY3,993.2bn (US$35.7bn), thanks to the acquisition of Sunoco stores. Gasoline sales was up 47%, and existing store sales increased 1.9%.

Seven & i continues to bring new initiatives to its stores to offer shoppers greater convenience. In July, it plans to add a payment function to SEJ APP. A 7pay app is set to launch in October for external participating stores. As part of the retailer's digital strategy, it plans to develop the function further by integrating the payment app among Group companies' applications by Spring next year.

FamilyMart UNY: revenue falls but income rises 23.7%

FamilyMart UNY posted a 3.1% fall in gross operating revenue to JPY617.7bn (US$5.5bn), but core operating income increased 23.7% to JPY51.5bn (US$460.2m) (mainly attributed to the sale of UNY hypermarket business). More profitable operations and post-merger activities in Japan have been key focus areas rather than opening new stores. Newly converted FamilyMart stores recorded higher daily sales, as well as stronger customer footfall than pre-conversion. FamilyMart UNY ended the fiscal year with 16,430 stores in Japan, 802 fewer stores than last year. The retailer's overseas network grew steadily, with 189 new stores to reach 3,357 in Taiwan and 372 new stores in China to reach 2,569. 

Hypermarket operations in Japan are classified as a discontinued business, after Pan Pacific International Holdings Corporation (PPHI) (Don Quijote) completed full acquisition of UNY on 4th January. The retailer has also released a statement outlining the merger of FamilyMart UNY Holdings Co., Ltd. and FamilyMart Co., Ltd. This will change the retailer's trade name to FamilyMart Co., Ltd effective from September 1, 2019.

FamilyMart UNY has outlined four key areas of focus: enhancing support for franchised stores, strengthening store profitability, moving forward with the shift to digital and promoting business collaboration with Pan Pacific International Holdings Corporation (PPHI) (Don Quijote).

Under the enhancing support for franchised stores strategy, it will focus on store investment to drive efficiencies in-store. There are approx. 1,000 FamilyMart stores in Japan equipped with self-checkout registers in response to increasing labour shortages. It is also beginning to test different business operating hours for its stores. For its moving forward with the shift to digital strategy, the retailer will launch a FamiPay smartphone app in July. The FamiPay app will allow customers to make transactions using the retailer's "FamiPay" digital currency. The app will look to improve customer convenience by offering discounts and coupons exclusively to app users.

Lawson posts 6.2% increase in sales

Lawson continues to be the fastest growing retailer amongst the big four in Japan. It recorded a 6.2% increase in net convenience stores sales to JPY2,424.5bn (US$21.7bn), and 6.6% rise in operating revenue to JPY700.6bn (US$6.3bn). This was mainly driven by new store openings, with a net increase of 667 stores to reach 14,659 convenience outlets across Japan. Existing-store sales in Japan (excluding ticket and gift-card sales etc.) declined by 0.5% YoY as customer numbers declined. However, average customer spend increased, with strong sales of rice balls and boxed meals, and growth in night-time food options where the retailer has been upgrading.

Operating profit fell 7.7% YoY to JPY60.8bn (US$543.4m) following investment in new POS cash registers into all stores to drive efficiencies to in-store cash management, plus costs relating to the launch of Lawson Bank. Store numbers overseas increased by a net 614 to 2,171 stores, with expansion mainly coming from China, where it operates in Shanghai, Chongqing, Dalian, Beijing, Wuhan and Hefei. 

Lawson is looking to establish a more profitably model across its international operations, targeting 5,000 stores by FY2021. In China, it plans to build scale through regional and franchise agreements, while in Southeast Asia, it hope to develop win-win partner relationships to expand its store network.

Transforming its products is a key priority for Lawson. It is changing nutritional and information labelling, e.g. low salt and low-carb logos, and is also reducing food waste and the use of plastics. Furthermore, it will have a stricter new store opening criteria ongoing to drive stronger profitability. The retailer plans to open 700 new stores next fiscal year but close the same number in Japan. This will be a significant change to the last five years, having averaged a net 668 new stores YoY.

Lawson plans to use digital technologies to boost store efficiency, particularly with rising costs and labour shortages. In July, Lawson will test unstaffed stores during the early hours. In FY2019, Lawson will use its new POS registers to enable customers to self-checkout by reading product barcodes. This system is expected be rolled-out to all stores by the end of 2019. Lawson plans to introduce its own mobile payment service, “Lawson smartphone cash register” to allow customers to pay by mobile app.

AEON posts 1.5% increase in revenue

AEON has posted a 1.5% increase in operating revenue to JPY8,518.2bn (US$76.1bn), with operating income rising 0.9% to JPY212.3bn (US$1.9bn). The performance of the retailer's GMS Business was flat, posting operating revenue of JPY3,080.6bn (US$27.5bn). Operating revenue from its Supermarket Business, which includes Maxvalu and Ministop convenience chain, fell 0.2% to YoY. The retailer's International Business, which includes operations in Malaysia and Hong Kong, recorded robust revenue growth of 4.5% to JPY437.5bn (US$3.9bn).

AEON's Health & Wellness Business, which operates under Welcia Holdings Co., Ltd continued to perform strongly, highlighting growing demand in this segment. Operating revenue increased 11.7% to JPY793.9bn (US$6.6bn) YoY, with a net 426 new stores to reach 4,964 across the business. The retailer ended the fiscal year with 1,878 and 2,050 Welcia and Tsuruha stores respectively.  

 

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First phase of launch announced; CEO for joint venture appointed.

Eight 7-Eleven stores to open in Mumbai

After signing a master franchise agreement with 7-Eleven last month, Future Group announced that it will open eight 7-Eleven stores in Mumbai as an initial phase. In addition, the Group shared that it is exploring two different retail formats of the chain.

The Group is experimenting between two sizes for its stores – 111 sq m and 185 sq m. While the exact store locations are not finalised, it is expected to be near shopping malls, hospitals and business parks. Future Group had previously announced plans to rebrand some of its existing convenience stores.

CEO for 7-Eleven India named

Future Group has also named Mr. Hardeep Singh as the CEO for 7-Eleven India. Singh was the founder of Vulcan Express, a logistics firm that provided supply chain solutions to ecommerce platforms, before it was acquired by Future Group. Prior to that, Singh also led the supply chain and logistics function at Walmart India.

Mr. Kishore Biyani, CEO of Future Group, said that the expansion of 7-Eleven India “will be a critical part of growing our food and FMCG brands and bringing new services, formats and conveniences for our customers. An effective supply chain and distribution setup will define the future of a retail format like 7-Eleven."

Find out more information about Future Group here.

 

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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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Seven & i Holdings partners with Future Retail to develop and operate its iconic brand in the country.

First stores expected this year

7-Eleven, the world’s largest convenience retailer, announced that it has signed a master franchise agreement with Future Retail to begin operations in the country.

The deal looks set to benefit both parties as the Future Group gains access to global technology and processes while 7-Eleven will leverage on the retail experience and local knowledge of Future Retail.

It remains unclear how 7-Eleven will coexist with the 1,300 Easyday stores that Future Retail currently operates. The group has already stated that it will rebrand some of its existing stores.

Giving shoppers greater convenience

By introducing greater convenience to shoppers, 7-Eleven’s entry into India looks set to accelerate the modernisation of this channel. Kishore Biyani, founder and group chief executive officer of Future Group said, “we are proud to bring this globally trusted convenience store to India and build new pathways together that will offer Indian customers greater convenience and choices, within their own neighbourhood."

Future Retail is one of India’s largest multi-format retailer and currently operates Big Bazaar, Hypercity, Nilgiris, Heritage Fresh and Easyday banners. Its loyalty programmes, Big Bazaar Profit Club and Easyday Savings Club, has close to 30m members.

With more than 65,000 stores globally, 7-Eleven has successfully introduced the convenience format into more than 18 countries worldwide. In Japan alone, it operates over 20,000 stores.  

 

Find out more information about Future Retail here and Seven & i Holdings here.

 

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