TOKYO (Reuters) - Japan's 24-hour convenience stores, already struggling with lagging sales and growth, may soon face yet another threat -- moves to limit business hours and close the stores late at night.
The prefecture of Saitama, which borders Tokyo, may follow in the footsteps of the western city of Kyoto and urge convenience stores to close during late night hours in an effort to limit carbon dioxide emissions, Japanese media reported.
Kyoto, a former capital, wants to persuade convenience and other 24-hour stores to close late at night so as to improve evening views of the city and cut down on energy use. The Nikkei business daily said closures could last from 11 p.m. to 7 a.m.
The move is strongly opposed by the industry, which fears a withering impact on an already troubled sector also grappling with the specter of a higher tobacco tax, which could hit overall sales.
"Even if we only operate the stores for 16 hours, we can't stop the refrigerators," said Toshiro Yamaguchi, the president of Seven-Eleven Japan Co, which is owned by Seven & I Holdings Co Ltd, at a news conference in Saitama on Tuesday.
He said such cuts in operating hours would reduce each store's profit by 20 percent. "If this happens, our current business model will lose its foundation."
As of April, Japan had 41,360 convenience stores, according to the Japan Franchise Association.
Some city areas are so saturated that competing stores may be located within a block of each other, while others are located in rural areas so sparsely populated that the stores can be a lonely outpost of light amid the rice fields after dark.
Analysts said that while it is difficult to estimate the potential impact of the move without a concrete plan, their overall impression was that it was likely to be negative.
"This could cut profits and lead to less efficient operations and the increased loss of opportunities," said Masafumi Shoda, an analyst at Nomura Securities.
"But it depends on the store -- urban stores do better than others. There are some in the countryside that are inefficient."
Others said the impact would depend on what hours stores were forced to close.
"Closing convenience stores at 11 p.m. might be a bit too early -- they should wait until after the last commuter train runs, say until around 1 a.m. or so," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, adding that many businessmen who return home at that hour drop by to pick up a snack after an evening of drinking.
"But how many people really shop in the middle of the night? Staying open 24 hours means paying to employ part-time workers, which raises overall costs for the sector quite a lot."
Both said that if governments were sincere about reducing carbon emissions there were much more efficient methods, such as cutting back on the huge number of automatic vending machines.
Seven & I Holdings posted its first drop in full-year operating profit in six years this April but forecast a recovery this year as it closes unprofitable stores.
Shares of Lawson Inc were down 0.6 percent on Wednesday, while Seven & I rose 0.3 percent. FamilyMart Co Ltd fell 1.4 percent.
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