Labor shortage a stress test for Japan's 24/7 convenience stores

Mon Apr 24, 2017 7:24pm EDT
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By Sam Nussey and Ritsuko Shimizu

TOKYO (Reuters) - Japan's growing labor shortage threatens the nation's ubiquitous convenience stores, whose business model relies on an army of part-timers packing bento lunch boxes, manning cash registers and delivering goods 24/7.

The big three "combini" operators 7-Eleven, FamilyMart and Lawson, which have expanded through Japan's long slump, are scrambling to ease the pressure on franchisees by offering a mix of financial aid and labor-saving automation.

But their earnings outlook is the bleakest in years.

Lawson Inc (2651.T: Quote) projects its first drop in profit in 15 years this fiscal year, and 7-Eleven Japan, part of Seven & i Holdings (3382.T: Quote), forecasts a meager 0.2 percent increase.

Japan has around 55,000 convenience stores nationwide - roughly one for every 2,300 people - and each store needs around 20 part-timers to run it.

Some shop owners struggling to fill shifts find themselves working some nights as well as during the day.

"The labor situation is starting to get health-hazardous," said one store owner who asked not to be identified.

Restaurant chain Royal Host (8179.T: Quote) and McDonald's Japan (2702.T: Quote) have begun moving away from 24-hour operations, but so far convenience chains aren't reducing hours or cutting store numbers.   Continued...

FILE PHOTO: People are seen at Seven & i Holdings Co's Seven Eleven convenience store in Tokyo, Japan January 12, 2017. REUTERS/Kim Kyung-Hoon/File Photo