TOKYO REPORT: Lawson Sees AI-Driven Efficiency, Asia as Key to Growth

Tokyo, Nov. 17 (Jiji Press)–Japan’s convenience store sector is undergoing a major shift, as store expansion slows amid limited room for rapid expansion at home and inbound tourism increasingly drives consumption. Lawson Inc. aims to lift earnings by boosting store productivity through artificial intelligence and other digital technologies from telecommunications partner KDDI Corp., while pursuing renewed growth through overseas expansion focused on the rest of Asia. Lawson, jointly owned by major trading house Mitsubishi Corp. and KDDI, marked this year the 50th anniversary of the opening of its first store. “We’ll roll out Lawson stores that blend the in-person shopping experience with technology,” Lawson President Sadanobu Takemasu said after unveiling the company’s next-generation concept, “The Convenience Store of the Future,” in central Tokyo in June. Inside the pilot store, AI-powered cameras track items as customers pick them up, while digital shelf displays recommend complementary products in real time. Robots restock beverages and other fast-moving goods to streamline operations. The advanced technologies come from KDDI, which increased its stake in Lawson to 50 pct last year. Lawson plans to introduce these features across additional locations in phases. A system that uses AI to forecast store-level demand and recommend order quantities has now been introduced to all stores, easing the workload on franchise owners. Industry leader Seven-Eleven Japan Co. has deployed a similar advisory tool, and FamilyMart Co. plans to broaden its use as well. FamilyMart has already installed large digital screens in more than 10,000 stores and is expanding the number of locations with unmanned checkouts. Lawson, which operates fewer stores than its two major rivals, is pursuing differentiation through partnerships with local governments. The company aims to strengthen its role in social infrastructure for local communities by supporting services such as drone-based deliveries and health care services. At the same time, as competition from drugstores and online retailers intensifies, growth opportunities for domestic convenience stores are narrowing. According to the Japan Franchise Association, the number of convenience stores in Japan stood at 55,736 at the end of last year, down from a peak of 55,950 at the end of 2021. In response, operators are increasingly looking to overseas markets to secure sustainable growth. Seven & i Holdings Co., the parent company of Seven-Eleven Japan, spent more than 2 trillion yen in 2021 to acquire U.S. convenience store chain Speedway LLC, becoming the largest operator in North America by store count. Overseas convenience stores now generate nearly 80 pct of the group’s sales, and the company plans to open about 1,300 additional stores in North America by fiscal 2030. FamilyMart and Lawson, meanwhile, are pursuing growth in Southeast Asia alongside China’s large market. Lawson aims to double its overseas store count to around 14,000 by fiscal 2030. Its strategy in Asia will be critical as it seeks to compete with Seven-Eleven, which maintains a strong foothold in Japan and is steadily expanding its North American presence. Regarding the overseas expansion of Japanese-style convenience stores, Akira Nakagawa, a senior researcher at Deloitte Tohmatsu Strategy Institute, said: “They have yet to gain widespread acceptance due to differences in distribution histories and business practices. Local partnerships will be essential for establishing a lasting presence.” For Lawson, the outcome may hinge on whether it can tap the network of Mitsubishi, which holds a 50 pct stake in the company, to secure partners with deep expertise in local markets and business customs. That capability is likely to determine the success of its international strategy. END [Copyright The Jiji Press, Ltd.]