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    International News

    Japan c-store chain to halt some 24-hour operations; e-money gains popularity at large retail chains.

    JAPAN -- Lawson Inc., the second-largest convenience store chain in Japan, plans to let some of its convenience stores close several hours a day in order to comply with the needs of aging franchisees, reported The Asahi Shimbun .

    The chain is the first in the industry here to announce plans to abandon round-the-clock operations, a norm among major chains, according to the report.

    President Takeshi Niinami said in the report the company will stop 24-hour operations at some outlets on a trial basis in fiscal 2006. He said the company will introduce a new, flexible system, probably in two years.

    Lawson has been considering revising the 24-hour operation since spring because many owners of franchise stores say the physical demands are too hard, The Asahi Shimbun reported.

    When Lawson was established in 1975, many owners were in their 30s and 40s. But today's owners are mostly around 50 years old. The company is considering allowing stores operating in cold climates, for instance, to stop late-night operations during winter, according to the report.

    About 8,000 Lawson stores nationwide are open 24 hours. Only 2 percent, such as stores operating in buildings, close at night.

    When convenience stores first arrived in Japan in the 1970s, many stores closed during late hours. But 24-hour operations became the mainstream in the 1980s and 1990s.

    Some rivals doubt Lawson will be able to buck the industry norm, according to the report.

    "Sales will grow primarily because we are open 24 hours," an official at a rival company said in the report.

    Lawson considers the retention of franchisees to be a more pressing problem.

    While observers say the industry is nearing saturation, all chain operators are desperate to increase the total number of stores to keep overall sales growing.

    Recruiting new owners is difficult because the growing economy is creating diverse opportunities.

    "Nowadays, people don't line up at briefing sessions (for potential new owners)," Shota Takahashi, director and managing executive officer at FamilyMart Co., told The Asahi Shimbun .

    About 41,000 convenience stores were operating in the nation as of Aug. 31, according to the Japan Franchise Association. In November, the industry's nationwide same-store sales fell year-on-year for the 16th straight month.

    Circle K Sunkus Co. saw a net decrease of 16 stores in the first half of this year, when it closed 162 and opened 146, according to the report.

    "We had secured land to set up new stores but couldn't find owners," a company official told the newspaper.

    Seven-Eleven Japan Co. has raised the age limit for franchise owners from 50 to 55. While FamilyMart is offering incentives to owners who manage more than one store. Under a system introduced in spring 2003, commissions that FamilyMart owners pay headquarters are partially returned for a second store.

    By the end of August, about 500 owners had started managing more than one store.

    Lawson has been holding orientations for children of franchise owners since 2004 in hope that a second generation will operate the shops owned by their parents, The Asahi Shimbun reported.

    In other news from Japan, large retail chains are promoting electronic money to improve efficiency at checkout counters and keep track of purchasing trends quickly, reported The Asahi Shimbun .

    Supermarket chain operator Aeon Co. announced this month that it will introduce East Japan Railway Co.'s Suica card at its outlets and Rival Seven & I Holdings Co., the holding company that controls Ito-Yokado supermarkets and Seven-Eleven convenience stores, said it will issue its own electronic money in spring 2007, according to the report.

    Some convenience store chain operators, such as Circle K Sunkus Co. and am/pm Japan Co., have introduced the Edy card, which is operated by bitWallet Inc.

    Supermarket and convenience store chain operators expect the use of electronic cash to shorten the time required for a customer to make payment.

    For card system operators like JR East and bitWallet, wider acceptance at large, nationwide retail chains would be a competitive advantage, according to The Asahi Shimbun .

    However, the emergence of multiple standards is an inconvenience for consumers, who will have to use different cards at different outlets.

    Aeon plans to begin accepting the Suica card at all its outlets within the region served by JR East by January 2007. It will consider accepting the card at all its outlets in Japan and abroad in the future.

    Seven & I's new card will be accepted initially at about 11,000 Seven-Eleven convenience stores nationwide and later at Ito-Yokado supermarkets and other group outlets.

    The group decided to issue its own card to create customers' purchasing profiles and avoid fees to a card system operator, according to the report.

    The Edy is leading the industry with 14 million cards issued. The card is accepted at about 26,000 stores. Of the 14.35 million Suica cards issued, about 9.48 million can be used for payments other than JR train fares. The card is accepted at about 3,000 outlets.

    Still, both cards are used less than once a month on average for payments at shops and restaurants--the Edy is used about 11 million times a month and the Suica about 6 million times, according to the report.

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