The number of convenience stores in Japan decreased for the first time since 2005, when comparative data started to be available, according to the Japan Franchise Association.
The association released preliminary figures Monday showing there were 55,620 convenience stores as of the end of 2019, down 0.2% -- or 123 stores -- from the 55,743 at the end of last year.
The decline was due to sluggish sales per franchise, prompting the major convenience store operators to curb new store openings. The business model of increasing sales by opening more stores is reaching a turning point.
The association counts the number of stores belonging to seven major convenience store chains, including Seven-Eleven Japan Co., FamilyMart Co. and Lawson, Inc. Its statistics showed that since September 2019, the monthly number of stores closed exceeded the number of stores opened, seeing a decrease from the previous month for four consecutive months. The latest peak was 55,979 stores in February 2019.
Convenience store numbers had continued to expand since Seven-Eleven opened its first store in Tokyo in 1974. While department stores and general supermarkets have been struggling, convenience stores have been able to boast high profitability through an area-dominant strategy in which they concentrate their operations.
However, while the number of convenience stores has grown nationwide, the increase in the number of customers has slowed. In addition to the declining population, competition with other businesses such as drugstores is intensifying, causing the convenience store business only see a slight increase of 0.4% to 10.34 trillion yen in total sales on a same-store basis in 2019. On the other hand, labor costs have been rising due to a shortage of workers, making it difficult for franchises to operate.
Major chains are trying to reduce workloads at stores by introducing self-checkout systems and reviewing the royalties paid by franchises, among other efforts to concentrate on supporting existing franchises than opening new stores.
"Convenience stores are saturated," FamilyMart President Takashi Sawada said. "The era of mass openings is over."
Industry observers strongly expect that there will be no major increase in the number of convenience stores for a while.
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