Could 7-Eleven Become 7-Five in Tokyo?

The convenience store, the late-night go-to destination for the starved, the sozzled and the smoker, may be an endangered species across Asia and particularly in Japan. Last month, in an episode that contains all the elements of the story, Japanese media reported extensively on a conflict between the major convenience chain 7-Eleven and one of its franchisees.

7-Eleven accused the franchisee of shutting down his shop at night without permission and asked him to pay a “breach of contract” fee amounting to ¥17 million (US$ 153,000). The franchisee complained that he couldn’t find workers for late-night shifts and with his wife dying a few months earlier, he was overworking himself just to keep the shop open 24 hours.

The underlying problem is a significant shortage of labor faced by convenience store owners. With prices and wages set by the headquarters, franchisees, especially in more remote areas, are having a hard time recruiting people to work the undesirable graveyard shifts. The struggle of the franchisee in the 7-Eleven case shows that labor shortage is threatening the very defining characteristics of the convenience store.

The issue is certainly not one unique to Japan, but relevant throughout Asia as job seekers who previously saw the convenience store as the first step on the job ladder now opt for more attractive employment. 7-Eleven and other open-all-night convenience store chains, as well as their local equivalents, can be found in Taiwan, South Korea, China, as well as many Southeast Asian countries. The Japan-owned Seven-Eleven Japan Co. Ltd, for instance, headquartered Dallas Texas, operates, franchises, and licenses 67,480 stores across 17 countries, 40,000 of them in Japan alone.

Nor is 7-Eleven alone. There are tens of thousands of such stores scattered across the region. Their ubiquity has led to the emergence of social norms for making small purchases late at night. They are there for consumers who want a late-night snack, a six-pack of beer or a packet of cigarettes – and more. In 2007, for example, according to one study, more than 13,000 women took refuge in a convenience store, half of them to elude stalkers and other criminals. During that year, the study found, “some 6,000 lost children sought a convenience store for assistance and 12,000 elderly people were taken under protective custody after being found wandering the streets alone.”

Keeping them open is also important for overall sales, as the president of 7-Eleven made very clear. This is true in all countries where convenience stores remain popular.

In the long term, technologies such as automated self-payment systems may render humans unnecessary for running stores in the wee hours, but in the short-term, the most critical issue remains how to attract the needed late-night manpower with greater compensation, while adhering to unified pricing of products on sale.

Here, it has been suggested, the taxi industry can provide inspiration. Like convenience stores, taxis can be individually owned and must follow unified pricing. But the taxi industry incentivizes drivers to work all night by exacting a “late night surcharge” to standard fares, that gives graveyard shift drivers an additional income boost without damaging the taxi company’s bottom line or breaking pricing rules.

While keeping labeled prices of goods the same throughout the day, stores could be allowed to charge a certain percentage in late night surcharge to boost sales revenue. At least some portion of the surcharge would be reserved to make pay more competitive for employees working the hours when the surcharge applies.

Ultimately, adopting the idea of “late night surcharge” hinges upon a wider recognition of the fact that there is a cost to convenience. If one wants to buy something at an hour that normal people are fast asleep, then there should be a more widespread consensus that one should pay extra for the very ability to make the purchase.

Unfortunately, the convenience store industry, unlike the taxi industry, has yet to set such expectations for its customers. It is time that convenience stores do so, if only for the sake of maintaining the profitable 24-hour operation model.

Xiaochen Su is a doctoral candidate at the University of Tokyo.