Tags: japan | consumers | spending | habits

Japan Consumers Tighten Spending Habits

Friday, 05 February 2010 10:35 AM

OSAKA, Japan — As rush-hour travelers spill out of the busy Japan Railways train station, some walk into the bright, fluorescent-lit convenience store just outside the exit gates.

The clean, organized store is a world unto itself: rows of spotless shelves stocked with everything from milk cartons to packaged underwear to freshly baked goods. Clerks greet customers with a loud “Irrashimase,” or “welcome.”

Located on almost every corner of every street, these 24/7 convenience stores, called “combinis," are a mainstay in Japanese society. Similar to the American 7-Eleven store concept, the convenience store caters to every kind of Japanese person. Businessmen grab a pint of beer on their way home from work, kids browse through comic books and college students pick up a cheap lunch in a to-go box.

But Japan’s convenience stores are in trouble — and that means Japan could be, too.

Despite the popularity of these one-stop shops, overall sales at convenience stores are down 6.3 percent from one year ago, and declined for the sixth month in a row, according to the Japanese Franchise Association. The report also stated average spending per customer dropped 3 percent for the 12th consecutive month.

As Japan’s economy tries to pull itself out of a nationwide recession, many Japanese consumers such as Rieko Emoto, 70, have opted to shop at discount food supermarkets instead of convenience stores.

“I usually visit the nearest supermarket because prices are reasonable,” Emoto said.

On average, supermarket food prices are about 20 percent cheaper than convenience store prices.

Japanese spending declined when the economy worsened last year, said Osaka University economics professor Takeshi Abe. “Japanese people are now saving money for daily commodities,” he said.

Once known for their tendency to buy expensive goods, the Japanese have started cutting costs, a trend that could continue well into the country’s future economic recovery.

With more customers heading to large discount markets, Japanese convenience store chains have struggled to maintain the strong sales of years past. The Circle K Sunkus chain reported “lackluster sales,” in its latest financial statements. Sales fell 5 percent during the first three quarters of last year.

“Consumer spending was generally weak,” Circle K Sunkus stated in its financial report. “With no upturn in employment conditions or income levels, consumers have further tightened their belts and have shown increasingly stronger preferences for low prices,” the report said.

One of Japan’s most popular convenience store chains, Lawson, opened its first store in Osaka 35 years ago and now operates about 10,000 stores across the country. Lawson reported that sales last month dropped about 5 percent compared to one year ago. Sales began to decline last July, when the number of customers decreased, along with the amount of spending at stores.

At Family Mart, a mega-chain that operates stores in a number of Asian nations including Japan, daily sales declined 7 percent in July and continued to decline through the end of the year.

Emoto said a convenience store near her home closed down last year after several failed attempts by various franchises, including a Family Mart. She thinks the overabundance of convenience stores may have led to a decline in sales.

While younger Japanese consumers frequent convenience stores for a quick bite, Emoto said she only shops there once or twice a month.

“Older people prefer supermarkets because the food is fresh and there are many varieties,” Emoto said.

Long-time Osaka resident Neeta Nankani treks to the large fresh foods supermarket a little further away from her apartment complex, but her children enjoy shopping at the local convenience store, just a few minutes' walk from home.

“When I was sick these past 10 days, my children bought lunch boxes from the convenience store for me,” Nankani said.

While her local Daily Yamazaki shop is relatively quiet on a Monday afternoon, it still has a steady stream of customers.

“People stop by here on the way to and from work,” said Daily Yamazaki store clerk Mika Fujiwari. “We’re pretty busy in the mornings and during lunchtime.”

Customers like Yoshifumi Mino, 48, come in for just a few minutes to pick up an item or two. “I usually spend about 500 yen (about $5) when I stop by once a week on the way home,” said Mino, as he picked up a ham and cheese bread roll for his pre-dinner snack and jogged over to his car, parked along the street.

Another customer, Kubo Satoru, 60, dropped by the store to buy two boxes of grapefruit juice, a favorite drink among the high school students he tutors after school. Unlike others in his age group, he says he buys items from this convenience store on a daily basis.

Convenience stores not only sell food and other products. Customers can also pay utility bills, buy stamps, mail letters, use an ATM to withdraw money and buy airline, concert, or movie tickets in one shop.

Like many younger Japanese consumers, Emi Yamada, 36, is attracted to her favorite convenience store’s newest products. “I like to shop for sweets and seasonal items,” she said.

For Yamada, shopping is about the convenience, not the price. “Shopping at a convenience store is fast, so I save lots of time.”

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Friday, 05 February 2010 10:35 AM
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