Feature | 7-Eleven, franchisee face off over 24-hour operations

Starting this month, a Seven-Eleven outlet in the Minamikamikosaka district in Higashiosaka, Osaka Prefecture, reduced its business hours to 19 hours a day — opening from 6 a.m. to 1 a.m. (NOWnews)

TOKYO (The Japan News/ANN) – Seven-Eleven Japan Co. and one of its franchisees are facing off after the outlet owner decided to stop its 24-hour operations due to difficulties in recruiting part-timers.

Nowadays shoppers use convenience stores for purposes such as paying utility fees, and the existence of such outlets plays a part in crime prevention, making them function as life infrastructure bases for local communities. The latest confrontation between franchisor and franchisee will likely stir a debate.

Starting this month, a Seven-Eleven outlet in the Minamikamikosaka district in Higashiosaka, Osaka Prefecture, reduced its business hours to 19 hours a day — opening from 6 a.m. to 1 a.m. The decision was made because it was unable to secure part-timers, and the franchise owner of the shop concluded it would be difficult to keep the store open around the clock.

Following the move, the franchise owner was then reportedly requested by the chain’s headquarters to pay about ¥17 million for breach of contract, but the owner insists on the need to shorten the shop’s operation time. When it gets difficult to recruit employees, franchise owners could be forced to work on their days off to cover staff shortages, resulting in long working hours.

In response, Seven-Eleven Japan released a statement on Wednesday in which the franchise chain’s headquarters said, “Seven-Eleven stores have been playing roles not only to sell goods but also to operate as social infrastructure.” The headquarters also said in the statement that it “will support the store so that it will be able to continue 24-hour operations,” expressing its intention to continue talks with the franchise owner in Higashiosaka.

Most operators in the convenience store industry, in principle, keep their shops open 24 hours a day, seven days a week. Of about 50,000 total outlets of the three major convenience store chain operators in Japan — Seven-Eleven, FamilyMart Co. and Lawson Inc. — stores that open on reduced hours account for only 3 percent to 5 percent. Many of them are located in such places as train stations and office buildings, which are closed during the night.

Convenience stores also function as basic infrastructure where shoppers use ATM services and pay utility fees. Many convenience stores have made agreements with local authorities to serve, among other purposes, as bases for providing support to those who are stranded at times of disaster.

In addition, store management is also designed based round-the-clock operations, as merchandise delivery and cleaning, for instance, are mainly conducted late at night when there are fewer customers.

There also is a high demand for 24-hour operations among consumers. Lawson once reduced opening hours at some of its outlets on a trial basis, but it generated a negative impact on the number of both daytime and nighttime customers, as well as on sales.

However, severe labor shortages have prompted some operators in the distribution and restaurant industries to reduce opening hours. Royal Host Co. ended 24-hour operations at all of its outlets in 2017.

In the convenience store industry, a similar move has been taken. Hokkaido-based Secoma Co., which operates Seicomart stores, only keeps about 20 percent of its outlets open around the clock.

In South Korea, which surpasses Japan in the number of convenience stores per capita, it became illegal in 2014 to force franchisees to have their shops open 24 hours.

Lawson has set up an employment agency, introducing personnel to its outlets. Convenience store operators have introduced self-checkout machines in an effort to reduce manpower or have been working on measures to realize unmanned operations in some of their outlets.

However, an industry source said, “It will still take some time to drastically improve the labor shortage situation.”

“It is a too heavy burden for franchise owners to undertake a role to operate [their stores as bases for] basic living infrastructure,” said distribution analyst Hiroaki Watanabe. “It is time for companies as well as the central government to step up getting involved with measures to work toward improving labor shortages.”

By News Desk