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Every visitor to Japan has seen them, and almost as many have used them. They are ubiquitous, commanding every street corner it seems, and Japan’s convenience stores, or combini as they are known here, have proven to be a rags-to-riches retail success story.

Japan’s first combini were traditionally mom and pop affairs tucked away behind train stations or buried in the back streets of deepest darkest suburbia. They offered the bare necessities, they closed early and often, and they tended to be more expensive than their grownup supermarket cousins.

 

Japan’s first modern-style combini, called My Shop, opened in 1969, and five years later it was followed by Japan’s first Seven-Eleven store in Koto Ward, Tokyo, a joint venture between the large local retailer Ito-Yokado and Southland Corporation. The convenience store concept was not a native initiative (that honour was earned in Dallas, Texas, in 1927), but Japan was to embrace it and make it its own in a way that only Japan can. In 1975 another Seven-Eleven, this one in Koriyama, Fukushima Prefecture, became the first in Japan to operate 24 hours a day, and from that time on the development of the combini as we know it was underway.

 

The first real wave of store openings came in the late seventies as the major chains competed vigorously to provide services that would draw customers through their doors: twice-daily deliveries of meals and ready to eat side dishes, photocopier and fax facilities, courier services, and a wide variety of snacks and beverages. By 1980 there were approximately 10,000 stores in Japan, but though the number was growing, combini were still very much a niche market, a last resort for the businessman on the go or the night owl who forgot to shop. The vast majority of consumers still used stores dedicated to specific products – rice came from the local rice shop, sake from the neighbourhood liquor store – or one of the growing number of supermarkets.

 

 

This was a relatively time-consuming way of shopping however, and given the size of the average Japanese refrigerator it was an all too regular one. That changed in the mid-eighties when Japan entered its second major post-war boom and the second wave of combini growth arrived with it. With the economy in overdrive, office workers were expected to burn more midnight oil and the combini concept came into its own: by 1992 there were 20,000 stores in operation nationwide. Salaried workers too busy to shop, let alone cook, could choose from a wide variety of meals and snacks (now being whisked fresh to the stores three times a day), pay their telephone and utility bills, renew their personal insurance, and then pick up a CD or Magazine to relax with at home, all at the same close-to-home location.

 

The combini had arrived, and suddenly it was hard to image life in Japan without them. The services they now offer have gone far beyond simply supplying late-night suppers: special terminals allow concert tickets to be purchased and hotel rooms to be reserved; 24-hour ATM machines – still a relative rarity in Japan but now commonplace in combini – allow cash withdrawals, deposits, and on-the-spot loans; the latest video game software can be downloaded from in-store consoles; CDs, DVDs, and even the devices to play them on can be ordered; packages can be dispatched around the globe and gifts sent across town via international carriers who make regular pickups; and, for better or worse, you can even pay municipal taxes. Certain stores also offer a consumer support service that lets you lodge a request for anything from a good real estate agent to a reliable babysitter, and within 24 hours a company that can help (and that is fully registered and approved by the store’s head office) will contact you with a response.

 

Perhaps one of the more revolutionary aspects of the combini business is the role it is playing in the online shopping boom. Seven-Eleven’s 7dream.com, for example, has nearly one million products available, and all purchases can be delivered to the store nearest the customer with 24 hours (using the chains existing delivery network) and paid for with cash at the time of collection. Not only do such systems circumvent many shopper’s distrust of using credit cards online, but they also mean that customers do not have to wait at home for the delivery; they simply pick it up on the way home from work.

 

Things have come a long way since the days of the mom and pop stores, and the vast majority of combini are now operated under franchise. The largest of these is Seven-Eleven Japan, which operates nearly10,000 stores, followed by Lawson and FamilyMart with around 8,000 and 6,000 stores respectively. The C&S Company, which owns both the Sunkus and Circle K brands in Japan also has about 6,000 stores, and MINISTOP and am/pm Japan each operate several thousand outlets, though am/pm has aggressively entered the market with high-tech combini in downtown locations and left their other second-tier competitors to primarily fight it out in the suburbs. And it is shaping up to be a battle royale: there are currently about 40,000 combini in Japan, or one for every 3,400 citizens, and on average each of those citizens is expected to spend around 50,000 yen in convenience stores each year.

 

 

The reason for this success was not quite as simple as being in the right place at the right time however. A great deal of research and development was needed to perfect the Japanese combini, and a great deal of logistical support is needed to keep them in business. For starters, a high-tech ordering and inventory system ensures fresh goods are delivered several times a day in direct response to recent sales. With space always at a premium in Japan, this system allows the stores to focus all available floor space on sales rather than stock and storage rooms.

 

It is the flexibility and adaptability of the combini that has endeared it to Japanese society, but in recent years new store openings have leveled off dramatically as most neighbourhoods have reached saturation point. The challenge for the future of the combini will therefore be to refine its services and secure customer loyalty; in a sense, to introduce a little of that mom and pop atmosphere.

 

In order to achieve this, many chains are setting up more defined stores that cater to specific demographics. For example, Lawson, Japan’s second largest franchise group, has recently begun operating Natural Lawson stores throughout Tokyo. A response to the growing health consciousness of Japanese consumers, the stores stock boxed lunches and snacks made from organically grown produce, freshly squeezed juices, natural cosmetics, and nutritional supplements. The stores also provide brochures on better eating habits and suggestions from staff on what to eat when feeling run-down or suffering from a cold.

 

The am/pm chain, meanwhile, is experimenting with dining facilities at its Delice Town store in Yokohama. A well-stocked combini with a small pharmacy and self-service café – across from a Delice Town self service gas station – provide pretty much everything the traveling salesman or busy commuter might need. It even operates a delivery service using zippy and eco-friendly electric scooters that will bring a meal to your office or a weekly grocery order to your home.

 

 

But for a real vision of the future of combini retailing look to the am/pm and Tokyo Electric Power Company joint operation in Tokyo’s trendy Shibuya district. As well as the usual combini snacks and services you can set up a videoconference, surf the net for free on a sleek new laptop, and even get a massage!

 

While refining their Japan-based operations, many of the nation’s more prominent chains are also setting their sights on foreign markets. FamilyMart boasts over 1,000 stores across Taiwan, Lawson is strengthening its presence in Shanghai, and Seven-Eleven is also eyeing overseas expansion. Could the humble combini be Japan Inc.’s next big export?

 

There are those that bemoan the rise of the combini and the near extinction of the old-style, family-run stores, but the blame for their demise is better laid at the feet of soaring land prices and economies of scale rather than the modern combini itself. The question that remains to be answered is this: which retail dinosaur will be the next to fall in the wake of the combini as these small but ubiquitous stores take on more and more of the services that were once the exclusive preserve of dedicated outlets? Only time will tell.