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Convenience Stores, Shelf Life, and the Logistics behind Loss

Convenience stores are a ubiquitous component of Japan's neighborhood commercial landscape. Based on an american convenience store franchise model introduced to Japan in the late 1960s and early 1970s, these stores have transformed Japan's distribution system and modernized its small shop sector by turning aging mom-and-pops into state of the art minimarts—late modern iterations of the general store (yorozuya) that offer an ever-evolving array of products and services meticulously tuned to the changing needs of consumers. But unlike the rural general store, convenience stores are a formidable commercial force. Currently, the industry generates ¥9 trillion ($96 billion) in sales annually (JFa 2012), outranking Japan's department store sector in terms of profitability. From only a few chains and a small number of stores in the 1970s, Japan has reached convenience store super-saturation (hōwa jōtai). According to 2007 statistics from the Japanese Ministry of economy, trade, and industry (Meti), tokyo is one of the most convenienced landscapes in Japan, with one store for every 2,300 people. Nara Prefecture, on the other hand, is near the bottom of the list, where there is still only one store for every 4,000 residents.

In the 2000s, industry analysts labeled the intense domestic competition among chains as the beginning of Japan's “convenience store war era” (konbini no sengokujidai). Battle lines still smolder on urban street corners and suburban neighborhoods where chains struggle for dominance by opening multiple stores within a short distance of one another to drive out or ward off competition. Wakamatsu's store was situated in the midst of one tokyo convenience store battleground. In the spring of 2005, over ten stores competed for customers within a five-hundred-meter radius of Daily's front door. Analysts have a name for this kind of commercial situation as well: konbini jigoku, or convenience store hell (Fukunaga 1999, 5).3 In the age of cutthroat street corner competition, food remains a critical weapon. Three-quarters of all convenience store sales are either food or drink, with prepared and packaged foods, such as rice balls, obentō, and sandwiches, consuming the largest share and offering one of the largest profit margins (Chiba et al. 2005, 11–12). In the case of obentō, for example, the stores stock an average of fifteen varieties each day and sell upward of 130 boxes in a twenty-four-hour period (2005, 16). Since the convenience store's humble beginnings in backwater industrial urban neighborhoods, prepared foods like rice balls (whitelaw 2006) and obentō and their constant improvement and reinvention have given chains a means for attracting new customers and differentiating themselves from other stores in the industry.

Taste, freshness, safety, and seasonality are critical ingredients for selling food in Japan's highly competitive and fussy consumer market and convenience store companies pay considerable attention to product freshness and appearance. In compliance with government standards, all prepared foods sold in convenience stores are labeled with a production date and consume-by date and time (shōhikigen). By the time many prepared foods reach the store, they often have less than twenty-four hours of shelf life remaining. In contrast, packaged foods, like instant coffee, sembei (rice crackers), and bottled water are stamped with a “best-before” date, or shōmikigen. Best-before dates are typically much longer—half a year or more in some cases—and the rules governing the handling and sale of expired products are less strict. Because of the small amounts of packaged products stocked at any one time and the high turnover rate in product sales, owners in the convenience stores where i did my research were typically less concerned about best-before dates. They did, however, keep careful watch over the consume-by dates on prepared foods, milk, and bread products.

The sales window for prepared foods is shortened further still by precautionary measures that particular convenience store chains impose upon themselves. Uncertain when a customer will eventually consume his or her purchases, some chains stipulate that all obentō, rice balls, and sandwiches be removed from the shelves two hours ahead of the expiration date printed on the package. Loaves of bread are pulled a day before the expiration date and milk four days before the expiration date. With new products being delivered morning, noon, and night, the task of inspecting expiration dates takes place as frequently as ten times per day.

The management of freshness (shinsenkanri) is an important component of and driving force behind the convenience store's highly integrated proDuction and distribution system. The critical synapses and surveillance for the system are Point of sales (POs) terminals, computerized cash registers connected to a store computer that allow retailers to keep track of sales and profits, manage stock, and gather critical customer marketing data with every transaction. Through product bar codes and the POs system, retail information can be exchanged in real time among stores, the chain headquarters, food manufacturers, and distribution centers. However, for store stock and profits to be accurately calculated, even items that are not sold must still be accounted for. As was seen in the case of Daily above, such products are removed from the shelves and recorded (see figure 5.2). Unlike damaged items that can be returned for credit, loss that results from stealing or products that cannot be sold because their shelf life has expired is the responsibility of the store owner and not reimbursable under the franchise contract. The store owner must bear the entire cost of the product as if he had purchased the item as a customer.

Figure 5.2

Convenience store worker decommissioning unsold food in the store's backyard Although in some stores shoplifting is a major problem, the most common source of loss is food products that have passed their consume-by date. According to one industry insider, most store owners can expect losses to total between 3 and 5 percent of their average daily sales—about ¥10,000–20,000 ($105–215). If a store has ¥400,000 ($4,300) in sales per day, then within a month-long period, approximately one entire day's worth of sales is lost to “loss” (takada and Masumitsu 2009, 1). While owners may carry insurance to guard against devastating losses in the event of a flood, fire, or prolonged power failure, none can afford a policy to compensate for every expired rice ball.

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