TOKYO -- Japan's major supermarkets are opening 10% fewer stores this fiscal year than last, instead remodeling more existing locations to expand pre-cooked food offerings to compete with convenience stores and cater to elderly and single customers.
The Nikkei asked 27 supermarket companies how many stores they opened and closed from fiscal 2012 to fiscal 2017, and 15 responded. Those companies launched fewer stores year-on-year for four consecutive years, and are set to open just 62 in fiscal 2017, the lowest count of the years in the survey.
The companies also aim to close 36 stores in fiscal 2017, 30% fewer than the prior year. Most of them closed more locations in the fiscal years 2015 and 2016, and appear to have met their goals of shutting down unprofitable ones.
Seven & i Holdings is remodeling more supermarkets in its group. Its Ito-Yokado supermarket chain is opening just one new store in fiscal 2017, three fewer than the year before, but remodeling 19 locations -- nearly triple those in fiscal 2016.
York-Benimaru, a Fukushima Prefecture-based unit of Seven & i, will spend roughly 4 billion yen ($35.9 million) to remodel some 30 stores. It will add more racks of frozen food and pre-cooked meals and dishes, responding to an increase in the ranks of working women and single customers with less time to prepare meals.
Yokohama-headquartered OK Corp., which operates many locations in the Tokyo region, is remodeling 17 stores in fiscal 2017 after overhauling just one location the year before, and opening 10 stores -- the same number as in fiscal 2016. It aims to satisfy customers better by reducing checkout waits with partial self-service at some remodeled locations, though not at its smaller stores.
Tokyo-based Summit will spend about 10% more on remodeling this fiscal year, expanding ready-made dish and meal sections primarily in its popular bigger stores. It faces stiff competition from convenience stores in the capital, and aims to "appeal to customers with the richness of its product lineup," as President Hiroki Takeno put it.
Heiwado, which operates in the region around cities including Kyoto, Osaka and Nara, is opening just one new store this fiscal year, down from four the year before, owing to difficulties including higher construction costs. It will remodel 20 stores, a 70% year-on-year increase.
The market scale for food supermarkets was 10.24 trillion yen on an existing-store basis in fiscal 2016, a growth of just 0.1% from the previous year, according to an industry group. The gain in sales owes to high produce prices. Customers remain deeply thrifty.
With Japan's population shrinking and aging with a declining birthrate, it probably will only get harder to open supermarkets. Existing stores' viability will continue to gain in importance.