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Tuesday, May 8, 2012

Convenience store chains go with flow, grow


Staff writer

The nation's top three convenience store chains last month posted record annual operating profits for the 2011 business year despite the sluggish, disaster-stricken domestic economy.

News photo
Calling on customers: A 7-Eleven employee shows items sold from its mobile store in Sapporo on March 22, when the chain launched the service there. KYODO

Convenience store chains in their early years were often seen as mainly targeting young male customers. But the increase of women in the workforce and surge in seniors has led to changed strategies.

In fact, the increase in convenience stores is being fueled by the rise in seniors and female customers, and the chains are gearing their products for them, including more fresh foods, elaborate desserts, women-friendly "bento" boxed lunches and packaged processed foods.

Also, the March 2011 disasters led many people who rarely used convenience stores to reassess their value, the operators said, adding shortages of key grocery items at large supermarkets prompted more consumers to frequent their smaller outlets, particularly in the early days after the disasters struck.

"One of the contributing factors for the strong earnings is our focus on fresh products" to attract female customers and seniors, said Yuki Takemoto, assistant manager of public relations at Lawson Inc., the nation's No. 2 convenience store franchise.

Lawson posted ¥61.7 billion in operating profits in its March-February business year, up 11.2 percent from the previous year.

About half of the roughly 10,000 Lawson stores nationwide now sell a range of fresh vegetables, fruit and other produce, compared with around only 1,200 in fiscal 2009.

Stores that increased their stocks of fresh produce more than a year and half ago saw a 4.3 percent increase in average sales to female customers and a 4.7 percent rise in sales to the over-50 clientele during the second half of fiscal 2011.

At Lawson stores, the ratio of customers older than 50 jumped to 35 percent in 2011 from 20 percent in 2004, and female customers accounted about 40 percent in 2011, compared with 30 percent in 2004, the company said.

Unlike supermarkets, which offer produce in bulk and thus can cater to large households, Takemoto said Lawson stores sell smaller quantities geared toward couples, seniors and singles. The chain also has Lawson Farms in four locations providing its outlets with locally grown produce and aims to expand the farms to 30 to 40 locations in three years.

"Customers aged between 50 and 65 are our targets," said Takashi Shinno, manager of public relations at FamilyMart Co., the nation's third-largest convenience store chain. FamilyMart posted a record operating profit of ¥42.5 billion in fiscal 2011, during which the firm saw a 4 percent increase in elderly customers.

A FamilyMart store in Tokyo's Daikanyama district is considered a flagship outlet for targeting elderly customers.

The store, which opened last November, boasts a wood-grain interior and about 2,300 items of merchandise, including some 700 original products, a wider selection of pricier wines and chic reading glasses.

FamilyMart also opened a laboratory in 2010 that focuses on creating products for seniors. Items include snacks geared for the elderly and more elaborate and healthier bento.

During the 1990s, "it was not that we weren't targeting elderly customers, but our focus was more on young people, who were the main customers, and how we could produce items to attract those customers," said Shinno.

But as the demographic changed and competition intensified with rival chains, as well as supermarkets and drugstores that sell grocery products, "we thought it was crucial to appeal to customers who weren't coming to convenience stores," he said.

While also selling more fresh products at more stores, 7-Eleven, the top convenience store chain, is accelerating efforts to physically become more convenient for seniors.

Its "mobile store" delivery service has been expanded to provide about 150 items.

According to the government, about 6 million people nationwide have difficulty shopping, especially in rural areas mainly populated by seniors, due to a weakened supply chain and transportation infrastructure.

Given that, "it is important that we physically approach customers" said Nobuyuki Miyaji, a public relations official at Seven & I Holdings Co., which runs the 7-Eleven outlets.

Lawson and FamilyMart also have delivery services, but 7-Eleven's has expanded to nine prefectures using 14 mobile stores.

All three chains said they saw an increase in elderly and female customers after the March 11 disasters, which disrupted supply channels and led to grocery shortages, even at large supermarkets.

In the early stage, many people who usually shopped at supermarkets visited convenience stores instead to ascertain what items were in stock and found the lineup was better than they had imagined, the operators said.

Bento are notable examples.

"About 80 percent of the customers who purchase traditional bento are male," said Takemoto of Lawson.

Previous convenience store bento, containing rice with grilled fish or fatty meat, were less appealing to female customers and thus regarded as subpar fare.

That has changed. Chains now are preparing more women-friendly, healthier fare in better-looking packages.

It's not uncommon now to see female convenience store patrons purchasing "pho" Vietnamese-style noodles, or soup in bowls. Elaborate, quality desserts have also won the hearts of female customers in recent years.

In addition, well-packaged processed foods are proving popular, especially items that have a certain shelf life so they don't have to be consumed right away. Such fare are seen as better serving the lifestyles of seniors and working women.

Nowadays, packaged processed foods last longer, including salads, tofu, fried eggs, pickles and grilled fish that can be taken home and served later, the chains said.



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