By Bloomberg, CNET News.com
Monday, April 17 2000 02:59 PM
URL: http://www.zdnetasia.com/news/hardware/0,39042972,13027570,00.htm

TOKYO--In Japan, neighborhood stores open around the clock, and offer everything from cigarettes to postage stamps to adult Japanese comic books known as manga.

Now the country's 30,000 convenience stores are cramming even more into their 100m square spaces. Trying to capitalize on their close-to-everyone locations, they're positioning themselves to hasten Japan's move to the Internet.

"Convenience stores are forging a new role in Japanese society," said Yuji Fukuda, who follows retailing for Tokyo's Dentsu Institute for Human Studies. "They are trendy like mobile phones, and their Internet business ventures make them an economic symbol of the 21st century."

Faxes and bento

Convenience stores, or "conbini," as they're known in Japan, began popping up in Japanese neighborhoods 30 years ago. They since have evolved into a staple of daily life, melding the meeting-place role of the public bathhouses of old with the needs of today's urban Japanese consumer.

Want to buy concert tickets? Your neighborhood conbini has them. Expecting a package but won't be at home? Pick it up at the store. You can pay your utility bills there too, or send a fax and of course choose from a range of sushi and boxed "bento" meals--microwaved on demand.

The biggest convenience store operator in Japan is Seven-Eleven, which entered the country in 1979, when it was owned by the US company Southland Corp.

After Southland's bankruptcy in 1991, its partner Ito-Yokado Co, Japan's largest supermarket company, took control of both the Japan and US operations. Seven-Eleven now operates 8,150 stores in Japan--40 percent more than the 5,700 it has in the US and Canada.

Now the conbini are beginning to install computer terminals at which consumers can browse or shop on the World Wide Web as easily as they flip through magazines and comic books.

Cash buyers

"Primarily, the convenience stores want to increase the number of customers that come into the store," said Kenji Tsukazawa, an analyst at Jardine Fleming Securities (Asia) Ltd. "They are in a very competitive industry."

In moving to e-commerce, the stores are again catering to a Japanese characteristic, in this case a reluctance to use credit cards, especially to order goods online.

They have agreed to be pickup sites for the online orders, which customers can pay cash for at the store. "Seven Eleven's Internet shopping system is one that fits easily into people's daily lives," said Nobuyuki Miyaze, a company spokesman. "Unlike the US, Japan is not a credit card society."

While the convenience chains' growth has slowed during Japan's decade-long economic slump, the promise of e-commerce has led to a surge in planned openings. Seven-Eleven is expected to open 500 stores in 2002, 100 more than this year, according to analyst Tsukazawa.

Some of Japan's biggest companies, recognizing the draw Of convenience stores, are forming ventures with them to sell goods online. Sony Corp. will use Seven-Eleven stores as pickup sites for computer games ordered through its PlayStation.com Web site, devoted to Sony's popular game player. Seven-Eleven also is acquiring a 20 percent stake in PlayStation.com.

Toyota too

Retailer Daiei Inc's Lawson unit, Japan's second-largest convenience store chain with 7,200 stores, in February announced a similar tie-up with NEC Corp, Japan's largest maker of personal computers. NEC will put computers in the stores for Internet surfing and shopping.

Even automakers are getting into the act. Toyota Motor Co, Japan's largest carmaker, is planning to feature its Web site, gazoo.com, on terminals in FamilyMart Co stores to provide information on dealers and new and used cars. The carmaker also plans to sell software, music CDs and furniture online through FamilyMart, the country's third-largest conbini chain.

Ito-Yokado even plans to turn Seven-Elevens into virtual neighborhood banks by installing automated teller machines in the stores starting this summer.

Seven-Eleven also wants to tap the country's rapidly aging population by delivering prepared meals and other products ordered online. It will own 60 percent of a new venture, called Seven Meal Service, that will teach the elderly to use computers to place orders.

"We want to offer a system of delivery and service that fits easily into people's lives." said Seven Eleven President Ken Kudo. "It's very easy to understand the demand."

Not a sure thing

The Internet gamble may pay off, analyst Tsukuzawa says. He estimates, for example, that Seven-Eleven's daily per-store customer count will rise to 1,160 in 2003 from 960 in 1998, with average daily sales of 830,000 yen (US$7,700), up from 693,000 yen (US$6,600).

Still, there's no guarantee the e-commerce ventures will succeed.

Bunkyodo Co, a Tokyo-based bookstore chain that is one of the country's biggest online retailers, says shopping through a computer still doesn't have wide acceptance in Japan.

"Compared to the US right now, people willing to shop online (in Japan) are still scarce," said Fujio Shimazaki, the Bunkyodo's executive vice president. "It's still a very specialized market that appeals to young people."

And even some of those young people are blase about the whole thing. Consider Hirose, a 23-year old pub employee who declined to give his last name as he browsed through the manga at a Tokyo am/pm convenience store, part of a chain owned by Japan Energy Corp.

He has never bought anything over the Internet and isn't likely to do so just because there's a computer at the conbini, Hirose said. "I only come here to buy cigarettes and look at magazines."