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7-Eleven rethinks 'convenience' in Japan's new normal

More frozen food, less rice balls just part of revamped layout -- the first in 50 years

A 7-Eleven store in Kawasaki features multiple cases for frozen food. (Photo by Takuya Imai)

TOKYO -- Seven-Eleven Japan, the country's largest convenience store chain, has embarked on a major review of what a typical store looks like.

Replacing the "one-size-fits-all" model for the whole country, the company will give more autonomy to each store to redesign itself to cater to the local clientele.

It marks a big turning point for the Japanese convenience store, which had pursued the unified format -- synonymous with efficient management -- throughout the half-century since the opening of the first 7-Eleven store.

At a 7-Eleven store in Tokyo's Itabashi district, the number of frozen-food cases was recently doubled from one to two. "Due to the coronavirus, less people are casually dropping by at the store. Instead, we are seeing people coming in for bulk shopping of preservative foods," the store manager said.

Throughout the country, 7-Eleven stores are undergoing layout changes. The fear of infection through dining inside restaurants and lining up at supermarkets has pushed consumers to buy groceries and daily goods at nearby convenience stores.

While mainstay rice balls and sandwiches have seen slower sales, liquor, frozen foods and sweets are growing.

The store in Itabashi has doubled its stock of lemon-flavored alcohol. It has quadrupled its frozen udon inventory.

Store owners have been given the green light to change store layouts. It is not, however, an entirely free hand. Seven-Eleven headquarters has prepared multiple layouts suggestions, according to the location of the store. Stores by the roadside and those in residential areas will receive different blueprints. Owners can chose from these suggestions and make improvements at their discretion.

Some stores have already begun to revamp the layout and the plan is to see more than 8,000 stores undergoing transformation this fiscal year ending February 2021.

"There can be 20,000 varieties of the store," said Fumihiko Nagamatsu, the company's president, referring to the 20,000 stores Seven-Eleven operates in Japan.

There will be change in the product line up as well. Traditionally, Tokyo headquarters took the lead in developing new products. Going forward, development teams in each region will lead product creation, and they will be encouraged to launch new products aimed at the local market.

Currently, region-limited products make up 30% to 40% of the total line up, but this is expected to rise to 50%.

The reforms come as the convenience store giant faces the reality of saturation.

Major convenience stores have grown by opening a large number of stores in a certain area and cutting costs by establishing efficient logistics networks. Moving to individually tailored stores will inevitably lead to higher costs. Seven-Eleven says it will attempt to absorb such costs by further optimizing delivery.

As Japan grapples with a declining birthrate, convenience stores are facing difficulty securing both customers and staff to run the stores. It cannot open stores at the breakneck speed it once enjoyed.

Net new openings of Japan's three major convenience store companies -- Seven-Eleven, FamilyMart, and Lawson -- are set to be between 300 and 400 stores this fiscal year. This will be the second-lowest level in the past two decades.

The new coronavirus has accelerated the trend. Same-store sales fell sharply in the April-June period. All three chains predict a decline in profits for the full year.

The fact that trading house Itochu announced this month that it is making FamilyMart a wholly owned subsidiary was also reflective of the trend. FamilyMart's President Takashi Sawada called it a "transition to quality" over quantity. Like Seven-Eleven, FamilyMart will also reconfigure store layouts and make use of Itochu's logistics network to change the lineup of products.

Lawson entered a partnership with Muji store operator Ryohin Keikaku last month to develop private-brand products for daily necessities. "To survive, we need products that you can only buy at Lawson," said the company's planning director.

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