Convenience Store Sales Increase:

https://mainichi.jp/english/articles/20200121/p2g/00m/0bu/016000c

TOKYO (Kyodo) -- Convenience store sales in Japan rose 0.4 percent to a record level last year, as the government's measures to spur consumer spending helped offset the impact of a consumption tax hike, an industry body said Monday.

 

Sales on a same-store basis increased for the second straight year to 10.34 trillion yen ($93.84 billion) in 2019, topping 10 trillion yen for the first time since comparable information became available in 2005, the Japan Franchise Association said.

Sales were lifted by the government's shopping reward point program for purchases made through cashless payments, which was introduced to mitigate the impact from the consumption tax increase to 10 percent from 8 percent in October, according to the association.

The rebate rates are 5 percent at small and medium-sized stores and 2 percent at major chain stores such as convenience stores. Cooked and frozen food items were among products that contributed to the all-time-high sales.

Still, the outlook for convenience store sales remains uncertain as the current government program will end in June and major convenience store operators such as Seven-Eleven Japan Co. and Lawson Inc. are shortening operating hours through such steps as ending 24-hour operations at some outlets due to a labor shortage.

In 2019, average spending per customer on a same-store basis rose 2.1 percent from the previous year to 632.6 yen, while customer visits fell 1.6 percent to 16.35 billion.

The number of stores totaled 55,620 as of the end of 2019, down 0.2 percent from a year earlier, the industrial body said. It was the first fall since the association started compiling data, reflecting convenience store operators' efforts to curb new store openings to avoid their profitability from being squeezed in the saturated market.

Total sales including those at newly opened stores during the year grew 1.7 percent to 11.16 trillion yen.

In December alone, the same-store sales fell 0.3 percent to 915.57 billion yen, with the monthly number of customers slipping 1.1 percent to 1.39 billion. The average spending per customer rose 0.7 percent to 659.2 yen.

 

Commentary:

 

Anticipating the consumption sales tax hike, the government instituted some measures to maybe offset consumer worries.  Store sales increase o.4 percent, supposedly a new record. The govt. instituted  a shopping point program of purchases made through cashless payments. That is good, but what about those who still want to use cash, as there is usually a significant number who do.

 

The so-called rebate rates of 5 percent for small and medium sized stores, I think is/was a very good strategy, and 2 percent for major chain stores such as convenience stores, was a good strategy too.

 

The article mentions cooked and frozen foods that contributed to the all-time-high sales. I think, in some respects those items are always or seem to be very popular now, in a society that is valuing convenience for food than actual food to cook at home.

 

Whenever I visit or see convenience stores in Japan, frozen foods or even bento type foods are everywhere in the stores.

 

For example at Yokohama station, there is small supermarket, near Sony Plaza, that seems to have rows upon rows or shelves of frozen food and bento type food. I am amazed at the number of each that is being sold and bought at this store, and as I visit other stores including convenience of conbini type stores I see the same thing.

 

So yes maybe the govt. incentives did help but I think the trend is what I see. Workers/consumers don't want to really cook too much after a hard day at work. They want something convenient to buy on their way home.

 

At the same time, as the article suggests, all is not positive for convenience stores.  The incentive programs will end in June. But as the previous sentence above, I think consumers/workers will continue to buy and purchase the above items.

 

But still the number of stores is beginning to decline. This could be just a normal change in the market and or it could be related to the labor shortage challenge and or franchise owners leaving the market to potential franchise owners unwilling to open a franchise due to lack of flexibility of companies to help existing and potential franchise owners.

© 2020, Tom Metts, all rights reserved