Will 7-Eleven’s plan to deal with worker shortages in Japan migrate to America?
Seven & i Holdings, the owner of 7-Eleven, has an employee shortage problem in Japan. The situation has become so serious that the convenience store chain has resorted to using technology such as radio frequency identification (RFID) technology to reduce or eliminate its dependence on human workers.
The worker shortage has resulted in higher recruitment and retention costs for businesses. The convenience store giant took the unprecedented step, according to Reuters, of reducing royalty fees paid by franchisees. The goal is to ease the burden on existing franchisees while making it easier to recruit new ones.
According to reports, 7-Eleven has joined convenience store rivals FamilyMart UNY Holdings, Lawson and Ministop, along with East Japan Railway, in plans to introduce RFID by next year. The three chains represent 90 percent of the convenience stores run in Japan, according to the Nikkei Asian Review. The goal of the RFID program is to eliminate manual barcode scanning. This, in turn, will help the stores achieve their goal of having fully automated checkouts by 2025.
The costs associated with using RFID can be substantial for the number of inexpensive products sold in convenience stores. The technology, which is more frequently used to track higher ring categories such as apparel and consumer electronics, is still seen as the best alternative in Japan as worker-associated costs have gotten out of hand. The convenience stores will also benefit from a pledge by the Japanese government to subsidize some of the costs associated with the transition.
In the U.S., competition for workers has picked up in recent years with many chains raising wages. At the same time, employers have deployed technology to improve performance while reducing costs.
Amazon Go, the e-tail giant’s convenience concept, has been designed without checkouts. Amazon is using a combination of technologies — “computer vision, deep learning algorithms and sensor fusion” — to eliminate a perceived pain point for shoppers. The concept is still in beta with the first store open only to Amazon employees as management works out technological challenges it has encountered.
- There’s trouble in the convenience store – Nikkei Asian Review
- Labor shortage a stress test for Japan’s 24/7 convenience stores – Reuters
- How 7-Eleven Will Beat Worker Blues – Bloomberg
- Will the tech behind Amazon Go redefine convenience at retail? – RetailWire
DISCUSSION QUESTIONS: Will 7-Eleven’s RFID plan in Japan make its way to American stores? Do you see full automated checkouts as a goal that many U.S. retail chains will pursue over the next decade?