The Real Pain of Loss

Convenience store owners accept loss as part of the risk they take in this line of work. Profit and loss are two sides of the same coin. Shelves must have products to attract customers, and freshly packaged foods offer one of the highest profit margins among convenience store commodities. While the store's computerized ordering and marketing system is designed to take much of the guesswork out of retail, often it is the owner's local knowledge, attention to factors such as weather, and willingness to take risks by ordering more or less of a given product that push a day's sales into the black.

Store owners get support and advice (known in the industry as “backup”) when it comes to things like food ordering. Through the use of sales representatives (or svs), store chain headquarters work with individual franchisees to analyze the buying habits of their customers and adjust product ordering to boost store sales and profits. Svs visit stores several times a week and are likely to encourage owners to order more product rather than less. The store's computerized ordering and sales system permits owners to know almost immediately if a product sells out before a new shipment arrives. The chain headquarters knows as well. The sv may then chide the owner for missing a valuable sales opportunity due to lack of stock, known as “chance loss.” From the company's perspective, as competition among rival chains grows more fierce, empty shelves and missed sales opportunities are a greater threat to brand image and chain profit than unsold food. Under the chance loss logic, only by having some loss can the owner and the chain be certain that the store reached its potential of selling as much as it could of a particular product during a certain period of time. Despite the postindustrial efficiency of the just-in-time distribution system, loss is not simply unavoidable, but also desirable and, in fact, healthy for the bottom line. For the store owner, negotiating a Balance between possible chance loss and the more visible loss due to product overstock is a daily struggle. For some franchisees, edible loss is the harsher of the two to swallow. Moral discomfort with food going to waste is part of the reason. But the unsold food is also a tangible sign of how little risk the chain headquarters will accept. The store owner pays for the unsold product and its disposal; the company still takes its portion of the profit.

Franchisees are willing to accept the responsibility for loss, but as store owners, they often harbor resentment concerning the policies that franchise headquarters take toward unsold products. One issue is with the way in which loss is calculated. Ambiguity in most contracts leaves the franchisee bearing the brunt of the cost for unsold food products. When a store owner pays for loss, he also pays the headquarters a royalty fee that is embedded in the selling price of the item. Critics of the convenience store system refer to this fee as a rosu chāji (literally “loss charge”). Ishii itsurō, a tokyo lawyer fighting the loss charge practice, argues that the system of embedded fees on food is “convenient for the corporation that desires to minimize its risks by charging the store owner for an item whether the product is sold or not” (ishii 2006, 12). The corporations counter such a claim by pointing out that the fee—to their eyes a penalty—is necessary to keep owners mindful of their ordering practices and safeguard against owners selling merchandise under the counter for a profit. Similarly, chains also frown upon and in some cases forbid the practice of discounting product that is near its consume-by date, also called “time sale reduction” (mikirihanbai). Large chains have been some of the most adamant opponents to this practice, which is common among independent shops and large supermarkets sometimes owned by the parent companies of these same chains. Corporate spokesmen claim that the practice is detrimental to store profits and undermines a guiding principle of the convenience store—customers' willingness to pay a small premium for the convenience of “twenty-four-hour, year-round” (nenjūmukyū) access to products and services. Slashing the price on food products would hurt store owners and the company alike by further stoking the flames of competition, altering customer expectations, disrupting established buying patterns, reducing food sales, and adding even more tasks to the workload of the convenience store management. Japan's largest convenience chain, 7-eleven, told one group of questioning store owners that if all 7-eleven stores nationwide (some 14,883 units in 2013) began practicing time sale reductions, the company “would go bankrupt” (takada and Masumitsu 2009, 1).

Chains' rules that all unsold food should be thrown away further aggraVate owners. Chains make efforts to ensure that food freshness standards are strictly maintained by all franchises. The store headquarters is concerned about the potentially damaging effects that a food poisoning case would have to the chain's brand image and individual store sales. To prevent old food from being sold and eaten, the chains maintain that the safest policy is for unsold food to be taken off the shelves, removed from its packaging, and disposed of in the trash. The rigorous multi-week owner-training courses that new franchisees must undergo reinforce the importance of properly discarding food. Course instructors will point out that an owner seen eating expired food or engaging in the practice of giving away loss to store employees risks setting a dangerous precedent among the store staff that may lead to workers taking food for themselves.

Owners are not blind to the fact that by “properly” disposing of all unsold food, they ensure that their workers will be more likely to become their customers and buy store food. Despite corporate appeals to consider brand protection, store liability, and the potential for profit, the sheer waste of throwing away thousands of yen in edible food a day weighs heavily on the consciences of many store owners. The term that owners most commonly used to sum up this feeling was mottainai; the term means “waste,” but it also carries connotations of shame, even disgrace, for not giving a material object the proper respect it deserves. One book dedicated to the term framed mottainai thus: “everything that exists is the result of someone's hard work and the time spent on it—it has a history. Mottainai embodies an appreciation of that history from those on the receiving end. That is why mottainai reflects a sense of guilt for the end-user when he/she lets things go to waste” (Planet Link 2005, 9). In 2005, the popularity of the term was further invigorated with the visit of the Kenyan activist and nobel Prize laureate wangari Maathai to Japan. On a speaking tour organized by the Mainichi Shinbun, a major national newspaper, Maathai embraced the phrase, saying that it captured in one term the “4rs”—reduce, reuse, recycle, and repair—which have long been the focal point of grassroots initiatives to protect and restore the environment (Planet Link 2005, 5).

In the interactions and interviews i conducted in 2004 and 2005 with convenience store owners, i found mottainai was most prevalently used among those in their late forties to early sixties. Having grown up in Japan's immediate postwar period, when soaring food costs and scarcities of rice, meat, and vegetables were a fact of daily life, they or their parents would have known privation, and the sight of good food being thrown out would be something hard to bear.

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