Convenience Stores like 7-Eleven in Japan Struggle to Remain Convenient

Staying open around the clock becomes harder for 7-Eleven franchisees in Japan due to labor force shortage

A blue car in front of a 7-Eleven store
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Japanese conbinis, or convenience stores, face labor shortage crises as the country’s population continues to grow older. The essential part of convenience is under threat as franchisees struggle to keep their stores open 24/7 due to a lack of workers available for shift work, especially during the night hours. The branch of 7-Eleven in Japan has recently been under scrutiny as it failed to effectively address the issue. In this article, we are going to examine the roots of the problem and its recent development.

Conbini business model

Although convenient stores are present in many countries, Japanese conbinis became a cultural phenomenon and is now an integral part of life in Japan where millions of people rely on them for daily shopping. What makes convenience stores so convenient is the combination of their close locations to housing units, selection of all the necessary everyday goods in one place, and opening hours, which is 24/7.

The number of applicants for conbini jobs fell drastically over the years. Keeping stores open 24/7 might become impossible.

Staying open day and night is the key element of the conbini revenue model on which such chains as 7-Eleven, Lawson, and Family Market have been relying for decades. The website of 7-Eleven for Japan states that stores are “open 24 hours a day, 365 days a year” right on top of its homepage. And all of over 20,000 stores in the country have to comply with this rule.

However, it becomes more and more difficult to keep up with such regulations for individual franchisees.

Higashiosaka case

In summer 2019, Mitoshi Matsumoto, the owner of a 7-Eleven store in Higashiosaka, was confronted by the management for violation of company rules when he decided to close his store overnight because there was no one to work the night shift. The case highlighted the problem that has been silently lingering in the air for a long time: it is not only a single store in Higashiosaka that has no other choice but to stay closed overnight.

Although one particular store in Higashiosaka got permission from the 7-Eleven Japan officials to stay closed in between 1 a.m and 6 a.m. the issue persists. In response, a group of conbini franchisees paid a visit to the Ministry of Economy, Trade and Industry in June with a petition urging the minister to make franchisors offer financial support and better work terms for franchisees. The petition had 1,600 signatures of the store owners from all over Japan.

Countermeasures

The government has encouraged both store owners and the companies to formulate action plans that would help alleviate the tension. However, submitted suggestions from both sides made it clear that there is a big gap in communication and understanding of the issue between the store owners and the companies’ management.

Recruiting new staff becomes extremely difficult for store owners in Japan. As society ages, there are fewer candidates for any given position. Atsushi Nara, who has been running a 7-Eleven store in Ibaraki prefecture for 37 years, explains that when he was opening a new store six years ago, there were only three applicants. Before that, he could have chosen 15 people from 20-30 applicants. In the meantime, sustaining existing workers becomes more expensive.

In response, 7-Eleven said it would dispatch personnel to understaffed stores by request from the owner. However, it turned out that hourly wages for temporary workers are two times higher than those of the current employees. Yet, the company pushes the agenda of opening more stores to generate more revenue.

When it comes to opening hours, store owners vouch for shorter working time. Mr. Matsumoto insists that other owners of 7-Eleven chain stores should be given the same rights as his Higashiosaka store. Still, 7-Eleven underlines that the company does not cancel its 24-hours operation requirements. Moreover, there was no response to requests for review of current contracts with franchisees, including their royalty payments.

The Fair Trade Commission decided to start an antitrust investigation to find out if the companies’ owners are using their position of power to impose disadvantageous conditions onto vulnerable franchisees at places. For example, stores must remain open even on Christmas.

What is next?

While stakeholders are trying to find a way to negotiate the situation and find measures that would be acceptable for everyone, store owners are turning to foreign workers to work at the counter and oversee self-checkout machines. Even though government course to increase the number of foreign laborers prompted a lot of criticism, store owners see positive aspects that foreigners bring with them to stores. They are willing to take evening and night shifts as well as assist foreign customers in the shop providing explanations about different products.

"Otsumami" - a bite size snack:

Conbinis might be operating shorter hours if the government and companies’ headquarters fail to address the issue of staff shortage.

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Written by Viktoriya Kuzina

Likes business in Japan and helping entrepreneurs become successful.

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