This article discusses the history of Japanese convenience stores, how Japanese retailers responded to the economic recession during the bubble era and stood out, what we can learn from them, and briefly explores future trends in China's retail industry.

  1. Development of Japan's Retail Industry Since the collapse of Japan's bubble economy, the retail industry has faced increasing difficulties. General merchandise stores suffered from excess selling space and cost waste due to overexpansion, with sales per square meter far below levels seen in the 1970s. Retailers began seeking new methods to shift away from high-end strategies and avoid homogenization. It wasn't until the mid-1990s, with the continuous expansion of convenience store chains and rising sales, that Japan's retail industry gradually recovered. Today, Japan has an average of 388 convenience stores per million people.

  2. Consolidation, Resource Sharing, and Complementary Advantages in the Convenience Store Industry Tracing its roots, the retail industry's development ultimately leads to reshuffling to promote integration and resource sharing. From the late 1990s to the early 2000s, mergers occurred between FamilyMart and Itochu, Lawson and Mitsubishi, and Sunkus & Associate with Circle K Japan. After 2000, negative sales growth spread across Japan's retail stores, causing unlisted small and medium-sized chains to fall into difficulties and frequently be merged by larger chains. This led to a new landscape where 7-Eleven, Lawson, and FamilyMart became the three major players. Recently, FamilyMart signed a merger agreement with logistics giant UNY Group Holdings, and the new company UNY・FamilyMart Holdings will soon be established. It is expected that after the merger, organizational simplification and cuts in non-operating departments will save over $910,000 in administrative costs. Moreover, through the combined strengths of the two companies, the number of new FamilyMart stores will grow dramatically. Data shows that the combined store count of FamilyMart and Circle K Sunkus has already surpassed that of industry leader 7-Eleven.

Domestic Merger Cases There are numerous merger cases in China's retail industry, such as China Resources Vanguard's successful acquisition of Tesco, Wumart's 1.4 billion yuan investment to acquire 70% of B&Q China, Rainbow Department Store's acquisition of Wandiantong Convenience Stores, and Hualian's stake in Lawson... Facing continuous innovation and iteration in retail, various formats will optimize business models and improve overall operating profits through combining strengths and learning from each other. Convenience stores, as social infrastructure, have attracted much attention.

  1. How to Address Labor Shortages Due to Population Aging With the acceleration of population aging starting in 1995, Japan's working-age population (15-64 years old) began to decline continuously, falling to 80 million. In 2000, China's elderly population increased from 10.2% to 11.6% of the total population, with aging particularly severe in first- and second-tier cities. The reduction in labor has a significant impact on industrial development across society. To improve labor utilization, Japan's retail industry shifted from a "traditional industry model" to a "corporate management model," introducing equipment industrialization and improving store operation standardization to reduce dependence on labor. (Equipment industrialization: using advanced information technology to enable close collaboration among retailers, suppliers, and stores, achieving efficient operation of the entire supply chain, including product dispatch, allocation, transportation, and sales.)

▲ Equipment Industrialization

Of course, stores must interact directly with customers and adapt to their specific needs. Especially when judgment and decision-making are required, only "humans" possess that capability. Therefore, the degree of mechanization at the front end of the supply chain is not as high, while automated mechanization is actively promoted at the back end, which customers do not see. This presents a state of "high-tech at the back end, low-tech at the front end; data at the back end, analog at the front end."

  1. In-Store Technology Updates and Detailed Services

Technology Updates In fact, technological innovation has long been implemented inside convenience stores, but it has not yet been widely adopted and sustained. Currently, manual operations still dominate, with smart technology as a supplement. We should dare to break traditions and try new things; over time, it will become as widely used as self-service ATMs. For example, advanced technologies such as EOS automatic ordering systems, POS electronic cashier systems, and self-checkout systems. If a community convenience store is equipped with two self-service POS machines, only one assistant is needed, greatly saving labor costs. (The assistant can help with checkout, restocking, etc.)

▲ Self-Checkout Service

Additionally, there are some bold and novel proposals for store equipment industrialization. For instance, connecting all shelves and installing conveyor belts underneath so that shelves move slowly forward like conveyor-belt sushi. Products could be scanned and located, with robotic arms retrieving items, and robots equipped with containers could organize shelves and restock in time. In summary, for the retail industry, the high degree of mechanization brought by equipment industrialization can improve management efficiency in various processes and reduce labor costs. It is believed that with the development of equipment industrialization, the problem of labor shortages will be resolved.

Detailed Services In Japan, stores are everywhere, and customers can use restrooms, pay utility bills, withdraw money from ATMs, use multi-function machines, send and receive parcels, and purchase various tickets... Japanese convenience stores serve customers of all ages. The trend of a declining birthrate and an aging population has led convenience stores to introduce many services for the elderly, such as home delivery services offered by FamilyMart and 7-Eleven. Additionally, at Yamashita Park in Yokohama, there is a Lawson-themed store called "Happy Lawson," known for its excellent parent-child services.

  1. Japan's Retail Industry Talent Development Programs Facing an aging population, the number of people working in the retail service industry is gradually decreasing, so companies need to focus more on talent development. Traditionally, service staff training has focused on "store clerk education," covering reception, cashier service methods, shelf organization, and other on-site tasks. However, as the proportion of companies hiring new graduates increases, training systems for new employees have been established, and companies are willing to invest more in staff training. Corporate education differs from school education in that it targets employees with potential. The figure below shows the concept map of the chain store education system:

As shown in the figure, the themes running from entry to retirement are knowledge education and experience education on the left, with evaluation criteria changing according to the education stage. On the right are the specific education programs for each stage, formulated and executed by training instructors.

Each stage has different educational focuses: in their 20s, the focus is on basic business training; in their 30s, training for potential reserve managers; in their 40s and beyond, training for experts and managers, including 1.5 to 3 years of job rotation, with more frequent rotations for more capable individuals; in their 50s, education involves selection by the board of directors, with decision-making authority, and they bear the responsibility of future corporate leadership. (Note: 20s means 20-29 years old; 30s means 30-39 years old; and so on.) To become an expert in a relevant field, one must pass extremely difficult qualification exams, providing a promotion channel for truly capable and motivated employees. The corporate goal is to cultivate more excellent experts in different fields, so that in major projects, they can subdivide areas, share responsibilities, and jointly promote corporate growth.

  1. Current Status and Development Trends of Domestic Convenience Stores After understanding the history of Japanese convenience stores, let's look at the development in China in recent years and discuss what might happen in the coming years.

Current Status of Domestic Convenience Stores With the hurricane of "Internet+" and e-commerce, which has broken time and geographical restrictions and brought the third revolution in retail, the traditional retail industry's chill has not shown any signs of easing. However, the convenience store industry has bucked the trend and become the next anticipated windfall. In addition to traditional convenience store companies, supermarkets and hypermarkets in transition are also targeting the convenience store market. For example, Wumart has reformed its convenience stores, emphasizing "personal immediate consumption"; Carrefour has launched the "CarrefourEasy" convenience store model; and Bubugao has stated it will reach 10,000 convenience stores by 2015 and strive for 100,000 by 2020.

Development Trends of Domestic Convenience Stores Many domestic convenience stores follow the "mini-supermarket" route, but they have not escaped the shadow of supermarket operations, making them indistinguishable. Therefore, convenience stores need to actively seek new business to increase profit points, such as parcel collection, dry cleaning, and other services. At the same time, the continuous rise in store rents has become the biggest obstacle to expansion. Abroad, the common solution to the rent problem is to develop franchising (franchising: joining with your own property can avoid cost pressure from high rents), which may be the optimal way to solve the high rent problem for chain convenience stores under 300 square meters in China in the future. Such stores are closer to communities, have location and relationship advantages, and are more stable because they are built on traditional Chinese neighborhood relationships. Additionally, consumers have higher requirements for the shopping environment. Diversified shopping channels, convenient payment, sensory technology, express logistics, and other hardware and software innovations enhance the customer shopping experience. "Experiential marketing" will become the focus of future marketing, and big data-based marketing, which analyzes consumption needs and trends through data systems to achieve precision marketing, will become one of the important means of marketing technology upgrades.

(Source: Yipin Design)

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