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Japan convenience stores post strong growth in '08
Tue, Jan 20, 2009
Reuters

TOKYO (Reuters) - Japan's convenience stores posted their first same-store sales growth in nine years for 2008, buoyed by a windfall boost in tobacco sales and increasingly thrifty consumers who spend more time at home than eating out.

Analysts said that although convenience stores are unlikely to enjoy the same level of sales growth this year, when the effect of the tobacco-led lift disappears in year-on-year comparisons, their sales and profits are expected to remain solid.

Convenience store chains have gotten a boost as consumers seek cheaper meal options amid the economic slump, in contrast to department stores and other retailers that have been hit hard as shoppers cut back on discretionary spending.

"Some chains have been seeing same-store sales growth even excluding (the tobacco effect), and they may able to keep positive figures even after this effect is gone," said Junichi Kanamori, a retail analyst at Mitsubishi UFJ Securities.

For 2008, same-store sales at Japanese convenience stores increased 4.5 percent, the first rise since 1999, the Japan Franchise Association said on Tuesday.

Japan's convenience store chains, which run a total 42,000 stores, had been suffering flat or weak same-store sales in recent years amid intense competition.

But they have benefited from last year's introduction of cigarette vending machines that require special ID cards to prove one is at least 20 years old, the smoking age in Japan.

Many smokers, rather than going to the trouble of registering for the ID cards, have opted to go to nearby stores to buy their cigarettes, driving up sales at convenience stores.

Japan's top three chains - Seven & I Holdings , which runs Seven-Eleven stores, Lawson Inc and FamilyMart Co Ltd - all reported strong profit growth for the nine months ended in November.

These chains said same-store sales had risen even excluding the tobacco sales effect, as more consumers cut back on eating out or taking trips to suburban malls and instead buy meals at nearby shops.

Convenience stores' popularity contrasts sharply with that of upscale retailers.

On Monday, an industry group said Japanese department store sales had plunged nearly 10 percent in December, their biggest drop in a decade.

 
 
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