Lawson 100 and the evolution of the convenience store

April 13th, 2010 by Philip Brasor & Masako Tsubuku

Lawson 100Japan has about 40,000 convenience stores, and sales at these stores have been declining for the past year. Given that sales everywhere have declined, that shouldn’t be surprising, but convenience stores in Japan had previously been resistant to recessions. That’s why there are 40,000 of them.

Apparently, it’s no longer the case. What tends to separate convenience stores from other retail operations in Japan is that people expect their prices to be higher. That, after all, is the cost of “convenience,” and the companies that run the stores took advantage of this prejudice by never reducing prices for any reason. Even when food approached its sell-by date/hour, store managers were not allowed to put it on sale. If they couldn’t sell it, then they would just have to throw it out (and absorb the loss). At least, that was 7-11’s policy until recently, when media coverage of this wasteful practice forced them to rethink it.

If you saw the same product at Ito-Yokado and 7-11, both of which are run by Seven and i Holdings, it would likely cost more at 7-11. And with more supermarkets not only going discount but also expanding business hours round the clock, fewer people feel the need to visit convenience stores. According to a recent article in the Asahi Shimbun, the response by the CS industry is not to join this trend, but to actually go in the opposite direction since “low-price competition” is a bottomless pit. Family Mart and 7-11 all have recently started stocking more expensive products to appeal to people who are “tired of going to all the trouble of saving money.” Most of these products classify as bakery goods — breads and cakes — that appeal to young women who don’t mind paying a little extra for something that’s better than average.

But one company is going in the other direction. Lawson Store 100 is a kind of joint venture between Value Lawson, a product-supply subsidiary of the convenient store Lawson, and 99 Plus Inc., which ran a chain of discount supermarkets where many (but not all) the prices were ¥99. The link-up was completed in May 2009, and less than a year later, the chain is celebrating the opening of its 1,000th store.

As the name suggests, Lawson Store 100 seems to be another of those 100-yen shops that are ubiquitous in shopping centers and train stations, but most 100-yen shops trade in sundries. Lawson’s is mainly a food store, and you can buy almost anything there you can buy in a supermarket, including fresh vegetables and meats. For sure, it’s not as convenient as a convenient store — you can’t send parcels or make copies or buy concert tickets or withdraw cash from an ATM — but all the things you’d buy at a CS are here, and much cheaper. Many are open 24 hours a day and, most significantly, Lawson Store 100 has many prepared foods for only 100 yen, and it’s prepared foods that most people think of when they think of the convenience of convenience stores.

It should be noted that almost all convenience stores have their own private line of 100-yen products, but Lawson Value and the other discount brands carried by Lawson Store 100 seem to offer better value. As a test, I compared ¥100 packages of peanuts at a number of convenient stores and Lawson Store 100 had them all beat. You get 185 grams (228 grams for a limited time in celebration of the 1,000th store opening), whereas the largest package elsewhere is 160 grams. If you find a cheaper bag of peanuts, let us know.

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