What Is It About Convenience Stores That the Japanese Love So Much?

They have taken "convenience" almost as far as it can go, covering nearly every corner of daily life. And at night, they are a patch of light in the dark.

"Peaches taste sweetest after three hours in the refrigerator."

This line is printed on a poster in a Japanese 7-Eleven, telling customers how to get the best out of their peaches. For someone newly arrived in Japan, this kind of attention is hard to resist.

In 1974, Japan's first convenience store (a 7-Eleven) opened in a small family-run liquor shop in Tokyo. Today, stores like it, 60 to 200 square meters in size and open 24 hours a day, every day of the year, are everywhere in Japan. There are more than 56,000 of them, or 388 for every million people. In China, the figure is 54. Tokyo, where they are most densely packed, has more than 5,700, or 49 for every 100,000 people.

Another set of figures also caught our attention. In 2014, Japan's domestic convenience store market passed 10 trillion yen for the first time. That is far more than department stores and drugstores (6 trillion yen) and second only to supermarkets (18 trillion yen). 7-Eleven's sales came to 4 trillion yen, and FamilyMart, with nearly 2 trillion yen, overtook Lawson for second place for the first time. The top three chains together hold 80% of the market.

Japanese convenience stores began by staying open around the clock. Then they took payments for water, electricity and gas, and even for insurance, taxes and other bills that have nothing to do with utilities. Then came ATMs and parcel drop-off and pickup, and now home delivery. Japan's convenience stores have taken "convenience" almost as far as it can go. Many of the Japanese students abroad and local Japanese people we interviewed walk into a convenience store several times a day, because it can take care of nearly everything they need.

In China, young people are the main customers of convenience stores. In Japan, the stores serve every age group. With fewer children being born and the population aging, the stores have launched many services for the elderly, and both FamilyMart and 7-Eleven now deliver to people's homes.

"Convenience-store prices, specialty-shop taste" is the motto of Japanese convenience store food. Beyond the standard oden and hot and cold drinks, the stores keep adding distinctive items: freshly ground coffee for 100 yen, doughnuts, fried chicken nuggets that taste like pan-fried dumplings. They seem to know exactly what customers want.

The manager of a FamilyMart in Tokyo told QDaily that the wording on bread packaging matters a great deal. Shoppers favor products described with doubled-up adjectives, which may whet the appetite. Breads labeled with words like mochi-mochi (soft and chewy) sell especially well.

After the 2011 Great East Japan Earthquake, 80% of the Tohoku-region branches of the three big chains, 7-Eleven, FamilyMart and Lawson, were back to normal within two weeks, giving survivors toilets, running water and daily necessities.

"Even after the tremors had died down, as long as I couldn't see the lights of the 7-Eleven come on as usual, I still felt a faint unease."

This is probably what makes the convenience store so appealing. Even after the consumption tax went up, 7-Eleven's store profits hit a record high for 32 months in a row.

Just how convenient are Japanese convenience stores?

In May 1974, 7-Eleven opened Japan's first true convenience store. Between 1980 and 1990, chains of every brand began to expand. Toshifumi Suzuki, founder of the 7-Eleven chain in Japan, called this the period when "convenience store culture took root in Japan and grew strong. More and more young people and office workers came to see the 24-hour convenience store nearby as 'a second refrigerator for their home.'"

Today, the convenience store has long since outgrown the idea of a second refrigerator.

A 2013 survey by the website nifty found these reasons:

• Open from morning till night
• Stores everywhere
• You can use the restroom
• You can pay utility bills
• A wide range of food
• They usually have whatever you want
• You can withdraw cash from the ATM
• You can use the multifunction kiosk
• You can send and receive parcels
• You can buy all kinds of tickets

These are the top ten reasons the Japanese like convenience stores. Only 20% of customers walk in purely to shop. In other words, 80% come with another purpose as well, such as printing, paying bills or withdrawing cash. It is no exaggeration to call the convenience store a one-stop service center for daily life in Japan.

These in-store services bring customers in more often, and they do push up sales.

Take 7-Eleven: its ATMs handle about 120 transactions a day on average. Customers waiting in line for cash show far more patience in a convenience store than in a bank. Most browse the shelves or leaf through a magazine in the periodicals section. Tachiyomi, reading while standing at the rack, is a sight peculiar to Japanese convenience stores.

The same goes for in-store Wi-Fi. Few customers stand in the store, buy nothing, and simply bury their heads in the wireless network. 7-Eleven even uses its in-store Seven Spot Wi-Fi service to steer customers between businesses within its group. For example, it hands out free event tickets for Sogo & Seibu through Seven Spot at 7-Eleven stores, sending convenience store shoppers on to the department store.

Beyond all these services, the sheer number of convenience stores is a convenience in itself.

More than convenience: attention to detail

A Chinese student who once worked part-time at a 7-Eleven in Tokyo told us that the first thing you learn on the job is how to wrap things quickly.

When you buy tampons, sanitary pads or other feminine hygiene products at a Japanese convenience store, the clerk wraps them for you like a gift, in quality paper of the kind The Body Shop uses. It is more hygienic, and it spares the customer embarrassment.

Convenience store food can be delicious too

"The food is very much tied to the seasons" and "the quality is every bit as good as a specialty restaurant's." Every one of the Japanese students abroad and local people we interviewed mentioned these two points.

Most convenience stores in the world sell food that keeps well. Japanese convenience stores, by contrast, are keen to roll out a steady stream of seasonal foods as the seasons change. Every spring, for example, they launch cherry blossom bento boxes, cherry blossom sushi, and cherry blossom and rose flavored ice cream.

A Japanese website once listed five reasons Japanese convenience stores are so popular with foreign tourists, and the first was "high-quality food." In much of the world, a convenience store meal feels like making do. In Japan, even for a cup of instant noodles, employees have filled cup after cup with water and tasted each one to find the amount that gives the best flavor, then put a label on it telling customers how to prepare it.

In his memoir The Philosophy of Retail, Toshifumi Suzuki gave an example of how the company protects the taste of its food. At lunchtime, 7-Eleven's directors would gather to taste the company's products. When the red bean sticky rice ball, now a perennial bestseller, was first developed, Suzuki complained that it lacked a "sticky, chewy texture." He asked why, and learned that the factory had no steamers or equipment for steaming glutinous rice in large quantities, so it had cooked it the same way as ordinary rice, which changed the texture. He had the product pulled from the shelves at once. The company brought in new equipment and re-examined everything: the variety of glutinous rice, how it was washed, how long it was soaked, which red beans were used and how they were cooked. Only once it had the "sticky, chewy texture" did the rice ball go back on sale.

In the fiercely competitive retail industry, every convenience store brand puts enormous effort into food development to win customers. Sunkus launches 5-8 new private-label desserts every week. FamilyMart meets with dessert makers every week to work on its own products. Each meeting discusses more than 30 new items, and only 2-3 desserts ever make it to market.

From selling other companies' products to building private labels

7-Eleven once ran a limited-edition promotion in Japan for the famous anime Neon Genesis Evangelion. All 25 two-meter-tall models of Unit-01, priced at 1.836 million yen (about 110,000 yuan) each, sold out within two minutes.

Why can't the Japanese resist limited-edition goods? Japanese users on Twitter once offered this answer: "special limited" editions, like cherry blossoms, carry a sense that nothing lasts, and since Japan is an ethnically homogeneous nation, buying a special limited product brings the joy of owning something unique.

The Japanese really do love special limited products. But it must also be said that merchants dare to market this way only when the market is mature enough. The same logic applies to convenience stores' private labels.

Many Japanese convenience store private labels do very well, and none of them gives the impression of being "just cheap, uneven in quality and tacky." Lawson's desserts have won a Monde Selection gold medal for their delicate texture. ParaDO, 7-Eleven's own cosmetics brand, is regarded as excellent value among drugstore cosmetics.

Teaming up with well-known brands is another common strategy. Lawson, for instance, worked with Gyoza no Ohsho (a well-known restaurant chain) to launch fried chicken nuggets that taste like pan-fried dumplings, and with Jojoen (a well-known yakiniku restaurant) on a signature salad.

From ordinary convenience stores to themed convenience stores

At Yamashita Park in Yokohama, there is a Lawson called "Happy Lawson," known for its excellent services for parents and children. The store is split in two. The front half sells goods, with a large selection of children's books, toys and baby food, and the back half is an indoor play area and dining area for children.

Another Lawson, in Kugahara, Tokyo, is built around health. Vegetables from partner farms greet you at the door, dedicated shelves hold nutritionally balanced bento boxes, and new health foods arrive every month. Anyone can use the store's body fat analyzer (the kind you see at a gym) for free. The store also has a large medicine section, and besides the clerks, a pharmacist is on duty 24 hours a day.

Knowing what customers want

In 2001, 7-Eleven set up IY Bank Co., Ltd. (now Seven Bank). The aim was not, as outsiders strongly suspected, for "a convenience store to move into banking," but to give 7-Eleven stores the right to install ATMs.

The reason was simple: from the late 1990s on, many customers answering questionnaires had asked for "ATMs in convenience stores."

Today, the stores learn what customers want faster than questionnaires ever allowed.

A FamilyMart manager told QDaily that more than 100 new products go on his store's shelves every week. The checkout machines run on a POS system and have several buttons for boy, girl, adult man, adult woman and so on. At checkout, the clerk enters the customer's sex and age group, and the system shows how each product sells at different times of day and which groups buy it.

The more popular and convenient approach today, of course, is to scan membership cards for detailed purchase data. From this the stores work out, among other things, what people like to buy in what weather, which feeds into new product development and more targeted shelf placement.

As people grow more health-conscious, the store has also launched nutritious, low-calorie lunch boxes. One FamilyMart box with under 500 calories is a big hit and once sold 1 million units in 20 days. Japan is a heavily aging society: people over 60 hold more than 1,000 trillion yen in assets, more than everyone aged 20 to 50 combined.

So convenience stores are offering more and more services for the elderly. FamilyMart works with local governments to deliver bento boxes to old people, and elderly customers can phone the store and have clerks bring other daily necessities along with the delivery. When 7-Eleven clerks make deliveries, they also drop in on elderly people living alone nearby to check that they are well.

This April, some convenience stores signed health-checkup agreements with local governments. Residents can book a checkup through a convenience store, or have it done in a checkup van or tent set up near the store.

What has 7-Eleven, Japan's best convenience store brand, done that is new?

In the late 1960s, Japan's economy grew rapidly and consumer demand surged. Large supermarkets boomed, and for a time most small shops on the street stood empty as their takings plunged. In 1973, when the convenience store model arrived in Japan, local small retailers were going through their hardest times.

Toshifumi Suzuki, then a director of Ito-Yokado, signed a 7-Eleven licensing agreement with the American company Southland Corporation. "People habitually assume that the fewer competitors they have, the better, but in fact the rise of supermarkets was not why small retailers were struggling," Suzuki said. In his view, the shops were failing because of low productivity and the outdated belief that "cheap means popular."

To raise productivity and the value of products, Suzuki's first move was "small-lot delivery," which cut the size of each purchase.

The average Japanese convenience store covers about 110 square meters and stocks around 2,500 SKUs (distinct product lines). In the past, stores bought in bulk from wholesalers and placed the next order only when stock ran low. For a convenience store, which has a tiny floor and tries to display as many products as possible, this easily led to piles of goods that would not sell.

At the time, however, no wholesaler would accept "small-lot" deliveries several times a day, and the idea was even considered against "common sense." Yet it was his belief that "common sense is not always right" that let Suzuki pull off many things that are taken for granted today but were firsts at the time. The chart below shows some of 7-Eleven's innovations in retail.

The next markets for Japanese convenience stores: China and Southeast Asia

Facing a shrinking birthrate and an aging population, Japanese companies have gradually turned to the vast markets overseas. "The next stage for 7-Eleven convenience stores will be the world," Suzuki said plainly in 2013.

According to the latest figures on its official website, 7-Eleven has 47,700 stores worldwide, 1,105 of them in mainland China, more than 700 of those in Guangzhou. FamilyMart has 16,059 stores worldwide and 1,094 in mainland China, mostly in Shanghai (818 stores).

Lawson, the first of the three to enter China, has only 564 stores there, mainly in and around Shanghai. Zhang Sheng, general manager of Lawson's Shanghai region, said recently that the company plans to raise its store count in the region from 380 now to 500 in 2015, and then to 1,000 within 2-3 years.

According to Nikkei Chinese, Japanese convenience store chains will open stores faster in Southeast Asia. FamilyMart plans to grow its store count in Thailand, the Philippines, Vietnam and Indonesia by nearly 20% within the year, to more than 1,600 by next spring. Seven & i Holdings plans to open its first store in Vietnam in 2017 and pass 1,000 stores within 10 years.

Lawson, a step behind overseas, also plans to open 500 stores in the Philippines within five years.

You may feel that Chinese convenience stores still lag well behind Japanese ones in "convenience," but things seem to be improving.

QDaily Research Lab once ran a survey asking "Why do you love convenience stores?" One reader wrote: "A patch of light on a pitch-dark road late at night. That's enough."

It seems that, when it comes to loving convenience stores, people are much the same everywhere.

(Graphics: Wang Shiyun. Lu Baoyi also made important contributions to this article.)