Lawson Inc., Japan’s second-largest convenience store operator, plans to open 130 outlets in China next year as economic growth and rising disposable incomes boost consumer spending in the world’s most populous nation.
Lawson will boost capital spending as much as fivefold to $50 million next year to add stores in the Chinese cities of Chongqing and Shanghai, President and Chief Executive Officer Takeshi Niinami said in an interview in Tianjin yesterday. The Tokyo-based company may also enter Beijing, Dalian, Chengdu and Shenyang, he said.
Japanese convenience-store chains, including 7-Eleven owner Seven & I Holdings Co., are investing overseas as declining birth rates and sluggish economic growth crimp growth at home. Lawson is reducing spending in Japan by 10 percent a year while it expands operations in China, where retail sales have gained by an average of 18 percent this year, Niinami said.
"It’s time to go to China,” Niinami said. “We have to take the ‘fast-moving’ advantage.”
Lawson will increase its stores in Chongqing to 100 from 3 and those in Shanghai to 360 from 330 by the end of next year. The company may spend as much as $200 million annually in China in about four years as it seeks to open as many as 10,000 stores by 2020, he said.
Lawson fell 0.5 percent to close at 3,815 yen in Tokyo trading. The stock has fallen 7 percent this year, compared with a 9.8 percent drop by the benchmark Nikkei 225 Stock Average.
Seven & I
Seven & I, Japan’s largest retailer and the owner of the 7-Eleven brand, said in April it aims to strengthen operations in China, the world’s fastest-growing major economy. Aeon Co., Japan’s second-largest retailer, also said in April it’s focusing on growth in China. Japan’s consumer prices, excluding fresh food, slid 1.1 percent from a year earlier in July, the 17th straight drop.
In China, Lawson’s convenience stores had a 1.7 percent market share by brand, the 10th-largest last year, according to data provided by Euromonitor International (Shanghai) Co.
China’s efforts to develop its less urbanized western regions has helped Chongqing attract more investment from companies including Hewlett-Packard Co. and Carlsberg A/S.
Lawson’s net income fell 32 percent to 4.08 billion yen ($48 million) in the three months ended May 31 as sales slipped 3.1 percent. The company aims to double operating profit to 100 billion yen by 2020.
