Japan Govt. Economic View: IN the Process of Re-formatting each blog for 2020, 2021, and 2022.

 https://mainichi.jp/english/articles/20201222/p2g/00m/0bu/092000c

Ideas:

Consumer spending is always a concern for the Japanese government. But of course its even more of a concern now related to the virus situation as some consumers tend not to go out as much and or spend as much as they are concerned about jobs, the future, and the spread of the virus. 

But of course the government always try to say something positive, the same anywhere, but the phrase " but is showing movements of picking up" is normal government language to try and signal to whomever, that its not all that bad, things are showing some improvement.

But then it becomes more clear which is quite true in any complex economy, there are sectors that might be doing better than other sectors. 

But this is true even in a normal economy. Even in a normal pre-pandemic economy, there are positives and negatives, there are some sectors that are always doing better than other sectors and there are always some businesses doing better than other businesses.

The "Go To Travel." maybe at the time, was a sincere attempt to spur economic growth and get some kind of domestic travel moving again. But maybe no one, anywhere in the world, including Japan, expected a third wave as severe as it is now.

Consumer spending is always a challenge for Japan, even though it makes up maybe 50 percent of GDP. 

Its interesting that consumer spending on cars during the pandemic is remaining firm, as you would think, as cars are a big spending investment that consumers would be more cautious about"big spending" items such as cars, appliances, or homes.

But at the same time "socio-economic" activities of course are the biggest losers or challenges in the pandemic.  Services, travel, retail, restaurants might be the biggest losers.

However, as anywhere companies learn to innovate, as best they can, such as new delivery systems, new online shopping portals and choices for consumers.

Those who can learn to innovate in the pandemic. But there are thousands of businesses that maybe don't have the resources needed to innovate.

And at the same, maybe no amount of innovation can help some businesses. How can travel agencies really innovate if there is no consumer demand or very little?

This is where governments should step and help those businesses with a much help as they can, and not just a one time offer. There needs to be multiple efforts to keep small and medium companies going. 

This is not the time to say "let the market decide" who survives and who wins. This is a challenging time that is not related to normal market or business actions. 

Exports only make up about 20-25 percent of the Japanese economy. Even though that doesn't seem like a lot it is a large part of the world's third largest economy.

Again the question remains with the pandemic as it is, why are cars selling as good as they are?

Not to say the pandemic doesn't affect everyone, which it does, but maybe there is a segment of the population, anywhere, is not as concerned about their jobs or future, and as such feel free to spend on a new car while there are of course millions everywhere who are worried about the future and jobs etc.

It just shows how an economy is very complex. As such you have those who might not be worried about jobs and future in the pandemic and you have who are really affected by the pandemic and don't even consider a new car at this time or the near future.

The idea of solid demand for semiconductor related products is not surprising due to the increased work from home and students taking online classes, so the maybe the need for new products such as PC's notebook computers, tablets etc.

The global economy. maybe in the early fall, showed signs of picking up but now the third wave probably will cause much of the global economy, with the exception of China, to slow down again in the next couple of months.

But again we have add a exception. The global economy, like any domestic economy is very complex with many global sectors.

We live in a global economy, that is very integrated, with some areas, such as car production and sales going somewhat good, and then the global airline industry, which of course is at an all time low at this moment.

So again we need to be careful and not paint a picture of complete gloom and doom as in the pre-pandemic period, there are still positives and negatives, but of course there are more negatives at the moment. 

Its important to see just what is being said here. The government is not saying corporate profits are on the rise but that they are not decreasing as much as before. 

The Tankan  business sentiment, feeling, survey just indicates a point in time about how companies might be feeling. It doesn't actually mean they are going to do anything different than what they are doing now.

Companies, most likely, are still taking a "wait and see" approach or a very cautious approach until the see consumer demand or business demand begin to improve enough that they feel good enough on increasing production, investments, and or an increase in services again.

Only the most needed capital investments, mostly likely are going to take place at this time.

But again, an economy is very complex. There might be some sectors and businesses are are doing reasonably good and feel is OK to spend in capital investments while some are going to take a wait and see approach.

And some use this strategy. When the economy is down and or business is not as good, is actually the best time for capital spending or even re-tooling their business for when the economy and business conditions get back to normal.

Have a nice day and be safe!

Japan Convenience Store Sales:

 https://mainichi.jp/english/articles/20201221/p2g/00m/0bu/089000c 

Ideas and Analysis:

There seems to be two trends related to convenience store sales; sales seem to be decreasing but average spending per person seems to have increased.

The article doesn't mention online sales of convenience stores, which might be a way to increase sales with some stores.

For example, a combination of online sales and deliveries to customers nearby such as in business offices and other places if those still working in offices don't want to go out for their lunch of convenience store bento, lunch sets, and or onigiri, triangular rice, green tea, and or whatever they might want for their lunch.

Of course it might not be profitable to do deliveries for just one small item from a convenience stores but convenience stores could look into the idea of a minimum order for a delivery to an area close to the stores.

There would seem to be a lot of room for innovation in the convenience store market.

As with previous articles it has been shown that with the virus some office workers are working from home and not visiting the convenience stores near where they work.

It interesting like the Japanese car market there are seven major convenience store operators in Japan. It would appear that both the car market and the convenience store market that seven or eight operators would be too many for all to survive. 

The Japanese market is very competitive but at the same time there seems to be some kind of symbiotic relationship of cooperation and or "live and let live" cooperation in that companies are not out to dominate the market and seem to accept a lot of players in the same market. 

The idea of a "live and let live" existence seems to be in many sectors in the Japanese market. Competition yes, "but we are not going to dominate and force you out of the market." 

I also see a somewhat balanced economy in that small business, medium sized businesses and large conglomerates, for the most part, seem to have a symbiotic relationship in that small companies are just as important as the large well known global companies. 

The heart of any economy around the world are the small and medium sized businesses, but in Japan, even more, the small business seemed, before the pandemic, to be the backbone of the economy and society. 

Yes the major output of any economy are large businesses that get all the news but the small and medium size business really drive the Japanese economy, or so it seemed, before the pandemic. 

The Japanese economy and society thrives on relationships and that is no more apparent than the web and symbiotic relationships that exist among the small and medium sized businesses that operate in some form and connection with each other and the large companies that they may provide services and or products to each other.

Have a nice day and be safe out there!

Bank of Japan:

 https://mainichi.jp/english/articles/20201218/p2g/00m/0bu/072000c

Ideas:

The Bank of Japan strategy is nothing new or not unexpected is this pandemic situation.

The Bank of Japan and the Japanese government need to coordinate their strategies for the best result for the economy, business, large and small, and for those who really need help.

The Bank of Japan, for many years, had maintained an "ultra-loose" monetary policy. Even the negative interest rate strategy is nothing new.

Back in 2010 the EU tried and negative interest rate strategy as a way to stimulate economic growth during the prolonged 2008 global financial crisis and the Greece crisis.

The negative interest rate strategy, while not exactly saying it is signaling to companies, which are sitting on or were sitting on before the pandemic  to "use your excess cash or lose it" over time. What the BOJ was/is trying to do is to get the large companies to use their excess cash and give salary increases to their employees.

The ideas is if workers get an increase in salaries, then they might feel good enough to actually use it, spend it in the economy instead of just saving all of it, and increase inflation, meaning the more demand their is in the economy, the more spending there is, the more money moving through the economy there might be an increase in inflation.

It as been the BOJ's strategy to get inflation up to the 2 percent level. The inflation in the Japanese economy has been around 1 percent almost forever, it seems. Most central banks want to see inflation between 2 and 4 percent, as that indicates there is a lot of movement in the economy and a lot demand. 

Since 2013 the BOJ has tried to increase inflation but without much success.

But then we have to ask the question, is a 2 percent inflation rate really needed for the Japanese economy. The economy overall, is very stable economy and even during the pandemic doesn't appear like it is going to collapse or go into a deep depression. 

Yes maybe a recession now but there have always been some kind of recession. But again, even in a recession, an economy is so complex you still have positives and negatives.

So the question again, is the goal of trying to reach a 2 percent inflation rate really that important for the economy to keep growing or moving forward? In theory it might help some business and sectors. But then their is the chicken and the egg idea? Which came first the chicken or the egg?

In other words does the economy need a 2 percent inflation rate to grow or does just need more demand, which creates the 2 percent.  

The BOJ in previous years as said it hasn't been able to reach 2 percent but that it is not going to abandon the strategy.

Regarding consumer prices, again a very complex measure as you are looking at an overall index of the entire economy and not individual sectors or even individual companies and their prices.

The 0.6 decrease of course might mean less consumer spending on some products and or changes in prices related to external situations such as producer situations related to supply and demand. 

For example, if the growing season for fruit and vegetables was very good there might be an overall supply or surplus of some products. As such producers will be forced to lower their prices because they have too much supply for the marketplace and as such they need to offload their excess supply or lose out

And at the same time, if demand is down for their products they might be forced to lower their prices if there is not enough demand, in order to maintain a certain amount of profits.

And then if the growing season for fruit and vegetables was not so good, they might have a shortage meaning they can't supply enough for demand in the market. Either way produces will raise prices in order to maintain a certain level of profits as if they had enough supply for the market.

The "yield control curve" is nothing more than attempt to keep borrowing costs low in order to keep enough borrowing in order to keep enough money moving through the economy to keep the economy moving and not move into a stagnant or not growing mode.

But again the Japanese economy seems like its been a very stable economy and despite whatever the BOJ tries to do, the economy just keeps moving forward, but of course not at at the rate the BOJ or even the Japanese government wants. We might say again, the Japanese economy is very stable but at the same time, maybe its not operating 100 percent at its full potential, and of course not during the pandemic.

The BOJ as with any central bank is always looking for new monetary tools and strategies to keep the economy moving in the right direction especially during this protracted pandemic period.

Yes again the economy maybe has picked up or improved but there are probably many sectors that haven't.  In a normal economy there are always positives and negatives but during the pandemic of course there are more negatives than positives than positives. 

Liquidity in the financial system is very important during a recession and in this case a pandemic recession. In 2008, in the US, banks were afraid to lend because they were afraid they might go out of business which many did. Because demand for borrowing was at an all time high during that time, banks had almost completely stopped lending as they were afraid. As such there was not enough money moving through the economy to help the economy grow or get out of the 2008 global financial crisis.

As such the US government had to step in and provide enough needed to funds to keep the banking industry happy so that they would start lending again to businesses to who needed extra money to survive.

The BOJ seems to have learned that as it is making sure Japanese banks have enough liquidity to meet the demand of companies and families who need money to survive the pandemic.

Again the BOJ seems to be doing everything it can to sustain the banks in order to help companies survive. 

It doesn't want banks to get into a position of feeling that they are afraid to lend like with what happened in the US in 2008/2009. 

The idea of zero interest loans of course are not a favorite of bank, but the BOJ has put enough funds into the banks as to offset any bank losses or minimize bank losses from the zero interest rate strategy.

Of course the zero interest rate strategy is an incentive for companies to borrow, not just for survival, but to keep enough money moving through the economy.

An economy needs to have a certain amount of turnover or movement. If not economies go into recessions or even worse. So central banks are always looking to make sure there is enough money movement to keep an economy moving at the right amount. 

Most likely the only thing the BOJ and the Japanese government can do for the services sector is to keep giving them massive handouts or supplement budges to help as many as it can from going under. 

Its doubtful that the BOJ or Japanese government can help every business but it can try to do as much as it can.

And again this no time for the idea of "let the market decide" like in normal market and economy times when the market can sort out the positives and negatives or winners and losers depending on consumer demand, products, quality customer service and so on.

It seems most central banks have gone to a zero interest rate strategy to help businesses survive. 

And again central banks using the 2 percent inflation strategy or benchmark as way to signal an economy is working somewhat efficiently. 

Have a nice day and be safe!

Japan Consumer Prices:

 https://mainichi.jp/english/articles/20201218/p2g/00m/0bu/035000c

Ideas:

Core consumer prices can be related to many variables. Supply and demand of course are the two main variables that affect core prices.

Overall producer price increases or decreases might have some affect. Mostly producer price increases in that producers might "pass on"the increases to the end buyer. But also supply can be a factor. If there is a huge surplus of a product producers might be forced to lower prices due to the fact that the supply is more than the market can handle and in order to more their products and gain some kind of revenue or profit they are forced to lower prices.

If there is a shortage of a product, producers might be forced to increase prices in order to maintain and certain level of profit similar to a normal period without surpluses or shortages.

In this case, because of the virus situation, there might be a large surplus of some products which forced producers to drastically reduce prices.

However, there is always a however in economics, if because of a huge decrease in demand related to the virus situation, some producers might reduce prices as an incentive to get consumers or buy and some might actually increase prices because they need to keep a certain profit level to survive or stay in business. 

But again the Bank of Japan is still, good or bad, focused on the 2 percent inflation range. I think, during the virus situation the Bank of Japan might better focus less on the 2 percent target and focus on helping business and families survive the virus situation and then when things begin to get back to normal then begin again to focus on the 2 percent inflation level for the economy.

The idea that the BOJ has the CPI forecast at only 0.6 is not bad considering all the difficulties the business and society has gone through in the virus situation. It good have been much worse.

However, as we see, an economy is very complex. The accommodation industry has probably, along the overall tourism and the airline industry have probably suffered the most. 

As with any economy, even during a pandemic there will be some positives and of course mostly negatives. In a normal economy there are always positives and negatives, meaning a market economy always has some industries doing better than other industries and some businesses doing better than other businesses.

But this is not the time, as I've written in other posts, to just let the market decide the winners and losers. This is not a normal market economy right now.

The "Go To Travel" strategy might have been a good idea, at the time, but no one, in any country, expected this kind of third wave the global economy is now experiencing. The suspension of the program is probably the best strategy at this time.

What we see here is the interconnection of an economy and how so many sectors or areas are rely on each other to grow. 

Its interesting, maybe because of regulations, that the oil and or electric companies didn't maintain or keep their prices for the end users despite maybe their lower producer prices and it looks like the might have "passed on" their lower prices to end users. Maybe because of the pandemic situation and or an somewhat decrease in demand for some energy products.

And then there is always the idea, sometimes, producers will raise their prices even though demand might be down, in order to keep or try to keep the same level of profits.

Consumer spending mostly likely will not see a significant increase during this third wave as consumers might stay away from places where there are large crowds.

But at the same time, as there are positives and negatives, there again might be a significant increase in online shopping and food deliveries and so on during this third wave.

Have a nice day and be safe!

Japan 2021 Estimate:

 https://mainichi.jp/english/articles/20201218/p2g/00m/0bu/055000c

Ideas:

Governments can only make estimates and no one really knows exactly what is going to happen the future, especially with the virus situation.

Of course they know and they know they just need to be close to what might happen and not try to give an exact estimate of future economic growth.

And as is shown with the OECD and the IMF sometime different economic organizations will have different estimates from the government estimate, as they might be looking at different economic data and or have different perspectives on economic growth.

Of course the largest possible economic expansion since 1995 and 2020 was not so good because of the virus situation.

With the virus situation, government, public spending, is needed now more than ever, to help sustain and stimulate economic growth. 

But most likely because of the severity of the situation even more needs do be done.

A one time check to families or even small businesses is not going to be enough. Small businesses, until the end of the virus situation, or even a few months beyond that, need to have weekly and or monthly sustainable funds to keep them in business.

This is not the time to worry about government debt and or to say "let the market" decide the future or the economy.

The future of the economy is small business, families, and individuals either having enough to live on  or businesses continuing to stay in business and or closing and or families starving and not having enough money during the pandemic

And yes Japan's GPD most likely will shrink 5.2 percent which just shows the need for the government and the Bank of Japan do to has much as the can to help businesses and families survive.

Of course back in April 2020 no one new really what was happening or how to deal with the situation. And the "larger than expected" GDP drop, at the same time, should have been somewhat expected. 

When you shut down a size-able part of the economy what does anyone think is going to happen. Again not to blame anyone, as everyone was trying figure out what is going on and how can we best stop or at least minimize the situation.

Future projections are nice are good, but even those who makes projections or estimates understand they don't really know what is going to happen in the future. They can only hope  that what they predict is somewhat close to what might happen.

But if it does happen that consumer spending in 2021 is 3.9 percent is excellent. But again we have to think is it a year to year projection, meaning comparing 2020 and 2021?

Hopefully as consumer being to feel better about future of their jobs and income then spending might increase. And or the just get tired of waiting for things to change in the economy overall they just go back to some kind "new normal" spending.

Capital expenditures is another situation. Companies sometimes wait for better economic conditions to invest/spend and or they invest/spend when they need to equipment, buildings, factors etc. So sometimes is not easy to see why or why they don't invest/spend.

Every economic organization seems to have a different estimate for economic growth, as maybe they are looking at different data and or how what criteria they use for the estimates.

All a government can do is try to guess what might happen in the future. And that is even more apparent now. No one knows exactly what will happen in 2021. 

Because the virus situation will continue into 2021 and most likely into the summer, and the the vaccinations happening at slow pace, economic growth really is just an estimate or guess.

An economy does not grow evenly or does not recover evenly.

Lets take the most extreme area: how long is it going to take for the Japanese tourism industry to fully recover or even to have a modest recovery?

There are thousands upon thousands of business involved in the Japanese tourism industry. 

How many have already gone out of business and how many will be left when the virus situation is completely under control?

And how long before Japan begins to allow foreign tourists back into Japan?

These are some questions that I'm sure the Japanese government is fully aware of.

Of course even now what about the Tokyo Olympics?

Have a nice day and be safe!

Japan Export News:

 https://mainichi.jp/english/articles/20201216/p2g/00m/0bu/055000c 

Ideas:

Exports are important for many countries but maybe even more important in Japan. It is estimated that exports make up 20 percent of Japan's GPD. While not large compared to consumer spending is close to 50 percent of GPD, it is sill a very significant part of Japan's GDP.

So even though its not as large as consumer spending a continued trend downward begins to put pressure on other areas of GDP; consumer spending, government spending, business investments to make up the difference and or are now watched more carefully to see if they increase or decrease as Japan's economic growth is dependent on all parts of GPD growth.

The above ideas just shows the how much Japan exports are subject to outside or external variables as for the most part, exports in any country in the world, as every country, every company that exports faces external variables everyday. 

Car, auto parts, and electronic equipment are most likely the most important exports for Japan.

Political factors, external variables ,as seen, can cause havoc with exports as we see with the  U.S-China situation. We shall see in the coming months what is going to happen with a new political atmosphere in the US. 

No doubt the pandemic as increased a lot of stress on the logistics industry. All areas, exports and imports have been affected by the pandemic and by the stresses placed on the logistics industry with decreased flights, decreased ships available along with ports and airports under stress due to the restrictions globally.

For consumer goods, of course the ideas that consumer demand might be down due to the pandemic, as some consumers begin to worry about jobs, income  and such and have decided to wait and not spend like before the pandemic.

And at the same time, possible, some suppliers are unable to produce and sell like before the pandemic maybe has reduced some imports into Japan. 

The so-called pent-up demand is an interesting idea as there are always waves of demand and waves of waiting to buy because of many different variables. But of course the idea of consumers unable to unwilling to buy during pandemic is just one example.

Of course China seems to have come out of the pandemic, somewhat, and with the largest consumer market, no doubt China is the largest market for Japanese exports. Any increase in growth is very good. 

But to why US consumers are buying cars during the pandemic is kind of a mystery, as there are millions upon millions of people and families, either out of work and or living on unemployment. 

So, not to be insensitive, there might be a significant part of the population that doesn't feel the same affect about the virus that others do.

It remains to be seen just what is going to happen with exports and the global economy enters the 2021. Will there be continuing decreases as countries begin another lockdown, which affects consumer demand and puts added pressure on the logistics industry.

And then with Brexit now in full force how is that going to affect Japan's exports to the EU and with the United Kingdom, as they are now separate entities. 

An economy is made up for four parts but not four equal parts. For example consumer spending usually is the largest part in most advance economies. If consumer spending is significantly down, exports, for example, usually is not enough to overcome the decrease in consumer demand/spending. But in Japan's case, export growth might be enough to offset some of the decrease in consumer spending.

In a country like the US, exports can never offset a decrease in consumer spending as exports in the US might only be 5 to 10 percent of GDP, but in Japan with exports at 20 to 25 percent of GPD it might be large enough to help Japan's GPD continue to show growth if exports are up yet consumer spending is down.

Have a nice day and be safe!

Reuters: Japan Exports:

 https://www.reuters.com/article/us-japan-economy-trade/japan-posts-record-run-of-export-declines-on-soft-u-s-china-demand-idUSKBN28Q030

Ideas:

I don't think any country can expect significant increases in exports over much of the next year until the pandemic comes under control and life in most countries can get back to some normalcy or more importantly a "new normal" that might represent some kind of pre-pandemic normal.

Factory output and broader economic activities shows just how much exports can play in the growth of an economy. Its not just the direct relationship with the companies that export, but all the interconnected businesses that are part of the a company's business.

Such as suppliers, small businesses, medium-sized businesses are all highly connected to a direct export company.

So if exports are down, it not only affects the direct export businesses but all of the business that are connected to the direct export companies.

Most likely a very good estimate that exports won't return to pre-virus levels until the middle of next year.

A countries export mix is very important. While there was an increase in the demand for Japanese cars in the US, there were declines in other areas such as aircraft equipment. 

So a country can never rely on just one main exports, such as in South Korea, sometimes might depend too much on semiconductor chips. If the semiconductor chip global markets declines, quite possible the demand for Korean cars might not be enough to offset the decline in semiconductors.

So, as much as possible, not depending on one or two major exports is better for an economy, which South Korea and Japan sometimes seems to do, or so it seems.

Even though China saw an improvement in the economy and an improvement related to the pandemic, doesn't mean exports to that country will get back to the pre-virus level any time soon.

But of course the increase in communication devices might show either there is demand for smartphones, tablets, notebook computers and so on due to the virus situation.

A decrease in imports can be attributed to a decrease in consumer demand, continuing logistics challenges, and challenges related to suppliers being able to actually make/produce products due to the virus situation in their home countries.

The idea of a new budget is definitely needed as the virus is not going away and there are many individuals, families, and businesses of all sizes that are not doing too well.

While the idea of investments in new industries might be needed and other countries talking about the same thing, so the idea of helping new and emerging businesses and industries is good, but at the same the there is still the need to help struggling industries such as the tourism industry, the airline industry and all the companies that might be involve in the services industry that seem to where the most damage is related to the pandemic.

While data might show the economy rebounded in the third quarter, its important to remember, and economy is a very complex organism, with many different parts.

While parts of the economy may have rebounded that doesn't mean all industries and businesses have rebounded equally, if at all.

So while its good that some businesses and industries rebounded that doesn't mean all businesses and industries have rebounded.

And even more importantly, even though some have rebounded doesn't mean that they are back to the pre-pandemic level. It might just be "they live to be in business for another day" as the virus situation continues.

Japanese Manufacturers:

 https://mainichi.jp/english/articles/20201214/p2g/00m/0bu/038000c

Ideas:

Improved sentiment is good but its just the beginning as its still at minus 10. Mostly likely the January sentiment will again decrease even more with the surge in the virus and the new emergency measures put into place, now in January.

However, most indexes are just estimates and many times, because there are many variables in involved, its not always clear how the index sentiment might actually play out in the real world.

What exactly, beside the pandemic, might cause companies to feel less positive at this time or or any time? Mostly likely they watch the economy and the sector they are in very carefully and then make plans accordingly. 

An economy and even a sector or industry is not uniform, as there are always positives and negatives related to an economy and even sectors in an economy. 

While Toyota might continue to have good sales some other car makers might have challenges. Is it because of low consumer demand that some other car makers are not doing as good or is it consumer choice related to what cars they want or like?

Again any kind of gain is a positive, even if the index is still negative. An index doesn't have to be perfectly positive for market conditions to show some kind of positive. There are many variables involved in a market. So different companies within a sector might be looking at different variables than what other companies are looking at.

The Japanese economy was emerging but maybe with the surge of the new virus, it could again dampen consumer demand for some products or services. 

For example a car might seem like a rather large or risky purchase for some now because of the virus situation. But reports recently have shown car sales in Japan were up. So you can never really tell exactly what consumer are thinking.

But the conventional wisdom would say consumers are worried about the future, about their jobs, and about if their companies are going to survive.

Again its not easy to always understand the mood or sentiment of consumers. If its true, the pandemic is maybe lessened a lot in China and as such consumers are back in the spending mood instead of waiting to see what happens in the future.

In the US its even more difficult to figure out. However as bad as the pandemic is in the US, the US is a rather large country and as bad and terrible as things are, there might be pockets of areas where they are not feeling the virus as much as other areas. And as such consumer spending might be almost normal, if we can even say normal now instead of a "new normal."

Of course we don't know exactly if car companies used a lot of promotions and also cut prices as an incentive during the pandemic to get customers to buy cars.

Projected investment is also hard to figure out as some companies might not be in a position to invest in new equipment, technology, or even replace existing plans, equipment, or older technology.

Some companies might be using the pandemic, always with any external or internal challenges, as a reason to wait see what the future will be.

Again any time there is improvement in sentiment is a positive idea. However, as the pandemic as surged again, sentiment could see a decrease.

As to why overseas demand is recovering is somewhat a challenge. For China, is seems predictable that demand would be moving back to normal or a new normal, maybe not back the pre-pandemic level.

But again the US and maybe the EU is somewhat not so clear as to why there might be an increase demand during the pandemic situation. 

Industries, markets and subsets of markets and industries are very much interconnected in that might happen in one sector or a leading sector might have an affect on other sectors.

So as the car market increases, that might be anything that is related to the car market, other sectors or sub-sectors might begin the see increases in demand, especially for suppliers for car makers and other related sectors.

Its also like the housing industry or any other industry. There are so many other sectors or industries interconnected with the housing industry, if the housing industry is doing well, then all the other sectors related to the housing industry most likely are also doing well.

And now we can see the same thing related to the restaurant or service sector industries. All the companies interconnected with restaurant industry might not be doing as well unless the restaurants have innovated and moved more into takeout and delivery services.

The same with fast food places innovating into takeout and delivery services

The same with retail places innovating into as much online selling as brick and mortar selling and or using self-service checkout operations to reduce costs and limit customer challenges related to social distancing.

Service industry companies need to find ways to innovate as a way to keep customers. As mentioned above find ways to offer more takeout and home delivery services. 

For retailers, if possible find ways to sell more online to entice customers to buy even if they don't want to go to the store. And the store of course provide a variety of delivery options, either home delivery or at a conbini near their home location or a central delivery pickup area if they don't want to go to a crowded store, for example like Sogo department store in the Yokohama station area, which is always very crowded on the weekends.

Hotels of course are a different story. Getting customers to come to a hotel for a night or two like in the Tokyo area, before the pandemic was almost a given that most or many hotels were full on Friday and Saturday nights is maybe impossible at this time.

But as been reported many hotels are innovating and creating rooms or spaces for meetings and or individual rooms for those who want or need to work in an environment, but not in their home office environment. 

But of course it remains to be seen if the idea is profitable or even feasible for many hotels.

Have a nice day and be safe!

Japan Convenience Store Challenges:

 https://the-japan-news.com/news/article/0006981330

Shorter business hours make little headway at convenience stores

Article:

One year has passed since Seven-Eleven Japan Co., the nation’s largest convenience store chain operator, put into high gear its review of blanket around-the-clock operations. The impetus for the review was a worsening shortage of manpower, which was also afflicting the food service industry. Not long after, the novel coronavirus started to spread.

Fast-forward to today. With people who lost their jobs due to the coronavirus crisis willing to fill positions at convenience stores, the manpower shortage and reductions of business hours have been pushed to the back burner.

Now individual store operators are paying attention to innovations in labor saving, but in anticipation that the manpower problem will reoccur once the virus outbreak is brought under control.

Ideas:

The ideas of 24/7 operations in the convenience store industry maybe is a convenience for some customers, or many, but it had become a challenge and problem for many who have a franchise and are/were required to stay open even late a night when they had no extra workers to fill the gap from midnight to 6 AM for example and the husband or wife had to work the late shift.

Now with the virus situation, with those who have lost jobs, there seem to be more willing to work the late night shift.

Whenever I traveled to Yokohama and went to the conbini stores to buy something you either saw an older person and or an foreign college student working the registers. 

Its understandable it someone doesn't want to work the 12 to 6 late shift. If not then the older franchise owner has to cover because he/she has no one else to work the shift and the company requires the store to remain open 24 hours.

Article:

The 7-Eleven Hachioji Yorozucho store located in a residential area of Hachioji, Tokyo, was bustling with customers and fully staffed before noon in mid-November. Store owner, 72, said, “The manpower shortage has been resolved due to the increase in applications for part-time positions.”

In autumn of last year, Seven-Eleven Japan worked out guidelines for shorter late-night business hours, and accepted applications starting that November for eight selected stores. Other stores could apply later if they so desired.

The owner looked into the possibility of shorter business hours in late December last year. He did so because the store’s sales were only about ¥10,000 per hour in the wee hours and the store would be in the red after paying wages for part-timers.

Ideas:

Stores should not have to stay open if there operating costs for the late night time period is more than the sales for that time period. If a store only has, for example, one customer per hour, how can they make a profit if the operating cost are more than sales/ revenue.

Its basic economics that a store should not operate during the hours, if possible, if sales are not more than the operating costs during that same time period. 

But some could say our sales during the rest of the day is far greater than the operating cost and if we look at the entire day we still have more profits than the operating costs even though we remained open during the slow or down periods.

That might be true for some stores but not all stores, as some convenience stores are probably operating on very thin profit margins meaning they can't afford to stay open during slow or down periods.

Article:

The situations have changed recently. The number of applicants for late-night, part-time jobs has increased among those who were dismissed from izakaya Japanese-style pubs and other eating and drinking establishments amid the coronavirus pandemic, and university students for whom online lectures continued.

Convenience store operators have not changed their 24-hour operations in principle. The number of stores adopting shorter business hours has not increased because they concluded contracts that gave a bigger portion of profits to franchise shops that operated around the clock.

As of Dec. 1, only 800 7-Eleven stores have adopted shorter business hours. The number comes to about 1,000 if including those that adopted the shorter operations on an experimental basis and looked into the possibility of introducing the system. This accounts for less than 5% of the total number of 7-Eleven outlet.

In the case of Lawson franchise stores, the comparative number was held at about 350, or 2% of the total.

The review of around-the-clock operations was triggered when a franchisee in Osaka Prefecture began shortening hours without consent from the headquarters. The headquarters came around to permitting the shorter hours as complaints mounted that part-timers could not be secured due to the labor shortage, thus making it impossible for owners and managers to take days off.

Ideas:

So 7-Eleven gives an incentive of more profits to those who maintain 24 hour operations. It might be good if a store franchise operator can still afford it.

But of course because of the pandemic, those who lost their jobs in other service type jobs are probably more than willing to work the late night shift.

In that case the conbini stores maybe can easily stay open, but the situation might still be the same if there are no or not a lot of customers during that time.

But if 7-Eleven and others cover some of the late night operating costs then it might be worth it to stay open.

Convenience store companies need to find a way to give more benefits or incentives to the operators instead of the operators deciding to close because they have no part-time workers during the slow periods and or listen to the operators and work with them in a partner relationship instead of a top-down relationship where only what the company wants is important.

There should be a shared partnership where both are considerate to the ideas of the other and not just what the company wants. 

Article:

■ Slim progress in unstaffed stores

As the virus outbreak drags on, convenience stores are still facing an uphill battle. Nationwide, convenience store sales in October dropped 4.3% from the same month a year earlier, logging a year-on-year decline for the eighth straight month. But now sales at outlets in residential areas are brisk, while those in business districts and tourist spots have turned downward.

Individual franchisees, anticipating a return of the labor shortage down the road are setting their sights on ways to ensure profitability. These operators have been stepping up investments to help finance labor-saving efforts for their stores.

Self-checkout systems, in which customers scan bar codes by themselves and pay by credit card or e-money is seen as one way to reduce the risk of virus infections. Since employees are handling neither the goods, nor the money at the register, customers can avoid contact with them.

Ideas:

The virus situation doesn't seem to be slowing down there might be, for the present time, more willing to work the late night shift in the convenience stores.

A 4.3 percent drop in sales might not be a lot for some businesses but if a store is already operating on a very tight profit margin, meaning the difference between revenue and costs is not much, any lost in sales can be a significant factor or many of the store operators. 

And if they have to remain open during the period when operating costs are more than sales/revenue, and the rest of the day sales are not what they were before the pandemic it can only create more problems for the operators of stores.

Of course during the pandemic there are many stories of sectors/industries that are finding ways to innovate in order to survive and stay in business.

Japan has always been a people or customer service friendly style of business, in that a person to person style business is/was how the main idea always.

But as businesses try to survive the ideas of less person to person customer service style businesses will become more prevalent in the years to come.

In Yokohama, for example, whenever I would visit an Uniqlo or GU store they had already transitioned to a self-checkout style system. But there were always store staff standing by to help any customer who had trouble with the self-checkout system. 

So the idea of person to person customer service was still available along the the self-checkout system.

The question might be if convenience stores do to a self-checkout system, what will be the challenges, for some groups such as older customers who are not used to self-checkout systems and or even, for example, trying to buy things online. 

And when foreign tourism, does return are there going to be direction/instructions in foreign languages such as Chinese, Korean and English, and will there be someone available to help those who have challenges with the self-checkout systems in the convenience stores. 

Those are some challenges that convenience stores need to think about as the consider moving more toward self-checkout systems.

Article:

Lawson Inc. last year tested an unmanned late-night operation at one of its outlets in Yokohama. The doors were effectively locked except for customers using a smartphone app to enter, shop and pay electronically. But the unmanned operation stopped short of being fully adopted because alcohol and tobacco cannot be sold without age verification, which must be done by a clerk.

While it is essential to continue steady efforts toward labor-saving systems such as the self-checkout, an executive of a major convenience store said that “a manpower shortage will occur again, so it will be necessary to work out measures with our sights set on the future.”

An analyst said: “Making labor-saving investments alone will be not enough as a measure to deal with the labor shortage that will come after virus infections are put under control. The franchise headquarters should establish a system under which voices of franchise stores calling for shorter business hours can be better reflected in the management of convenience stores.”

Ideas:

Any ideas of innovation should be examined carefully for both the positives and the negatives of a new system to be implemented. 

As above there might be many challenges for some groups when for example self-check out systems, along with the ideas of some products can be sold at certain times and still need or require person to person interactions. 

For example if a customer uses a self-checkout during the 12 to 6 AM period and there is a problem with the self-checkout system, what are they do to if there are no workers in the store at the time.

This happened recently in South Korea, which also has been experimenting with self-checkout systems in some of its convenience stores.

So even if a convenience store or other stores or service type business begins to use a self-checkout system, there still will be the need for store workers/people in case of system challenges.

Article:

■ Effects on restaurant industry

Moves to reexamine 24-hour operations were seen at restaurant chains well ahead of other establishments, because they were asked to voluntarily restrict late-night operations as the first wave of the virus outbreak hit last spring.

The shortage of manpower had already been more serious at restaurant chains, which have more employees than convenience stores. The cutbacks in late-night operations amid the calls for voluntary restraint on going out led the trend of shorter business hours to take root.

Skylark Holdings Co. began 24-hour operations in 1972, setting a precedent in the family restaurant industry. This was in response to demand from customers who, after working late into the night, wanted to enjoy a proper meal. By the peak in 2009, more than 700 restaurants were open around the clock.

Ideas:

The shortage of workers in the restaurant industry is not a surprise. If the restaurants, before the pandemic were open 24 hours, it would seem logical that they would have challenges finding workers for the 12 midnight to 6 AM time period. 

While it might not have been a challenge during the peak 2009 period, the lifestyle changes or mindset of society has dramatically changed since then.

Some in society, globally, are not willing to work certain jobs or hours as before, so the idea that convenience store or restaurants there are open 24 hours are not attracting, for example the college age group who don't want to work the late night shift and or don't want to work for minimum wage, if that is what is being offered today.

Article:

Facing a steady decline in late-night revenue due to several factors, Skylark had abolished 24-hour services by this spring. One element behind this is the increased availability of boxed lunches and side dishes at convenience stores to eat at home.

When the state of emergency was announced in April, Skylark group restaurants shortened business hours and strengthened their lineups of meals for takeout, like other family restaurants. About 2,800 restaurants in its group, including Gusto and Jonathan, will reduce business hours during the forthcoming year-end and New Year holidays, as well.

A Skylark official in charge said: “Due to the ongoing virus outbreak, the period of busy hours has moved to the daytime. If late-night operations are reduced, it will improve profitability.”

Ideas:

Companies are always looking for ways to improve their profit position.

For example some or many in the restaurant industry were most likely having challenges with the late night shift, and like convenience stores, seeing their operating costs higher than their profits. And then add in the idea of being unable to find enough workers for that time period, the pandemic situation actually became an incentive to reduce hours and innovate their products and service.

The idea of sitting in a restaurant and eating a meal may still be an idea for some or many but some don't want to during the pandemic period, so its only natural that restaurants began to offer more takeout service.

Possibly some might have even considered the idea of delivery type services. For example, maybe already, but they might a contract with auto-bike delivery service. The customer order as takeout meal online and the restaurant then texts or sends a message to the delivery service company to pickup the takeout meal in 15 minutes and then take it to the customer who ordered the takeout meal.

In that way companies don't have to invest in auto-bike or workers to do that service.

so the restaurants can be a combination of customers coming to the restaurant and picking up the takeout meal and or have it delivered instead of going to the restaurant.

Of course what many pizza companies are already doing now.

Article:

McDonald’s Holdings Japan, whose sales have been robust amid the coronavirus crisis, discontinued 24-hour operations at about 50 of its outlets between late last year and September this year. The company is considering focusing on its own home deliveries and other services, and will likely work toward strengthening its outlets’ daytime services, when many customers can be expected to come.

Ideas:

And the there is McDonald's, which most likely started its home delivery services before many other fast-food industries. 

But it will be interesting to see what Mos Burger and KFC are doing right now related to home delivery type services. 

McDonald's maybe saw that is wasn't very profitable staying open for 24 hours if there are not enough customers during this time period.

For example, I visited two McDonald's in the Yokohama Kannai area and whenever I went there to order takeout breakfast after finishing my morning run, I noticed in both places, one across from Yamashita Park, koen, and the other place near Kannai station, eki, that all the workers were older workers or even retirement age. I didn't see anyone under the age of lets say 60 in both places.

Perhaps again college age students no longer want to work at McDonald's as maybe the hours don't fit their schedule and or lifestyle. 

And or the pay per hour is not what they like.

I've also visited the Mos Burger across from the Kannai McDonald's many times and I've seen the same situation related to the age of the workers in Mos Burger. 

Have a nice day and be safe!