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Convenience aids Japanese retail

News, 22 July 2015

TOKYO: Even though Japan's convenience store sector faces numerous challenges, the country's second-largest operator, Lawson, plans to open another 450 stores this year, the company's CEO has revealed.

Speaking to the Financial Times, Genichi Tamatsuka said there are 55,000 convenience stores in Japan but the market has not yet reached saturation point.

He sees massive potential for growth because of demographic and other social changes that are altering consumers' buying behaviour.

"Whereas people used to go to a big supermarket and prepare meals for a family of four or five, now they're busier, they're older, and they prefer to buy in a small neighbourhood store," he explained.

Lawson currently runs a network of 12,000 stores – soon to be expanded – and, combined with its logistical muscle, Tamatsuka expressed confidence that it would be able to meet the needs of these "combini" neighbourhood stores.

"With our scale of 12,000 stores, our supply chain and platform, we can supply food and necessities to these neighbourhoods," he said.

Expansion overseas is another source of potential growth, he indicated, considering the value placed on the high level of customer service provided by Japanese retailers.

Lawson has 500 stores in China and has also started up operations in Thailand, Indonesia and the Philippines.

Despite Tamatsuka's confidence, research group Euromonitor earlier this year published a more downbeat assessment of Japan's retail landscape.

"Japanese grocery retailers are expected to face numerous challenges imposed by such factors as changing demographics and operational difficulties," it warned.

However, in what could be seen as endorsement of Tamatsuka's expansion strategy, the report went on to say, "in order to fight against such negative circumstances, grocery retailers may attempt to expand in size and diversify business portfolios".

Data sourced from Financial Times, Euromonitor; additional content by Warc staff