SHOP WINDOW
An inconvenience for supermarkets Convenience stores closing the gap 13,000
9,750
Annual Sales ¥bn
Convenience stores (CVSs) offer what their name suggests: quick, convenient shopping, but until recently they did not compete with supermarkets on price. Now, along with the growing prominence of lower-priced own brands, the biggest chains have begun to reduce prices on major manufacturers’ brands to a significant degree, bringing them into direct competition with supermarket and general merchandise store (GMS) chains. In terms of total sales, the CVS sector overtook department stores in 2009. While other sectors have struggled over the past three years, CVS chains have continued to grow. In 2012, total sales reached ¥9.5 trillion, up 4% for the year. Chain stores (supermarkets and GMS chains) remain the biggest sector for now, but sales were flat at ¥12.9 trillion last year. The largest convenience store chains continue to expand store numbers by 10% or more every year. They also diversify into new formats, such as Lawson’s discount fresh food chain Lawson 100. Given the ongoing sales decline in the GMS sector, there is even a possibility that the CVS sector may become the largest of all sometime around 2020. To counter saturation in store numbers, the biggest CVS chains are looking for ways to improve sales at existing stores by negotiating new price discounts, not only for own-branded items, but also for manufacturers’ brands. Given their high margins and dominant market shares in products like drinks and prepared foods, the potential for further price competition in the CVS sector is significant. In May, for example, Circle K Sunkus, the number four chain, announced price reductions of 5-20% on 200 common brands. Seven-Eleven has been reducing prices for the past 12 months, by as much as 50% on some brands. FamilyMart and Ministop have added another twist, offering additional loyalty points on major brands from earlier this year. The shift to lower prices makes CVS shopping an even more attractive option for particular customer segments.
6,500
3,250
0
2005 2006 2007 2008 2009 2010 2011 2012 CVS
Chain Stores SOURCE: METI; JAPANCONSUMING
Notable is the busy, young singles segment that continues to grow in urban areas, along with the increasing number of older singles everywhere else. The change comes as the CVS sector seeks to end a rare 12-month decline in samestore sales, but shows the maturity of the sector and how it is now ready to compete with other mainstream formats. ROY LARKE JapanConsuming is the leading provider of intelligence on consumer and retail markets in Japan. The monthly report provides news about, and in depth analysis of, current trends.
JC
JapanConsuming
For more information, please see www.japanconsuming.com or contact Sally Bedown at subs@japanconsuming.com
August 2013
45