TOKYO \u2013 Kana Sekiya, 43, used to shop near a train station in Tokyo on her way back home from work. Now she drives more than 30 minutes on weekends to a discount supermarket to buy groceries in bulk \u2013 one of a growing number of consumers shifting their shopping habits as prices rise.<\/p>\n
\u201cI\u2019ve totally stopped going to convenience stores because of the rising cost of living,\u201d she said.<\/p>\n
Sekiya\u2019s changing shopping habits are not just a concern for Japan\u2019s once unassailable convenience stores, or \u201cconbini\u201d, but also a worrying sign for the economy, which has exited decades of deflation.<\/p>\n
Underlying inflation rose in September at the fastest annual pace in three years, according to Bank of Japan data, exceeding its 2% target.<\/p>\n
The bank is likely on Oct 30 to signal a rate hike that could come as soon as December, taking the economy into territory not trodden for more than 30 years.<\/p>\n
\u201cConsumers have become extremely demanding when it comes to prices,\u201d said Seiji Kitamura, head of group merchandising strategy at 7-Eleven owner Seven & i, which operates around 23,000 outlets across the country.<\/p>\n
\u201cTheir desire to save has grown more than we anticipated.\u201d<\/p>\n
Customer numbers at convenience stores have fallen for 15 consecutive months, according to data from the Japan Franchise Association. In September, numbers fell by 3.8% from a year earlier, the most since September 2021 during the Covid-19 pandemic.<\/p>\n
The increasing thriftiness of Japanese consumers \u2013 many of whom have never experienced widespread price gains in their lifetime \u2013 is likely to cause wider economic issues.<\/p>\n
\u201cWith private consumption accounting for about half of Japan\u2019s GDP, there are concerns that increased household belt-tightening could weigh on the broader economy,\u201d said Ryohei Ikeda, an analyst at Mizuho Research Institute.<\/p>\n
Japanese companies used to be famously reluctant to raise prices, with ice-pop maker Akagi Nyugyo apologising in 2016 for a 10 yen (eight Singapore cents) hike.<\/p>\n
But food and drink makers hit by the weak yen and higher oil prices raised the prices of more than 20,000 items in 2026 for a second year. Amid the increases, Japanese convenience store operators are facing squeezed consumers seeking cheaper alternatives.<\/p>\n
Competitors such as pharmacies and mini-supermarkets are \u201cputting value for money front and centre\u201d, Takeshi Inoue, a corporate manager at Itochu\u2019s FamilyMart, said at an earnings briefing.<\/p>\n
\u201cWe haven\u2019t been able to fully meet customers\u2019 needs.\u201d<\/p>\n
Sekiya said she is feeling the pinch when buying goods such as meat, vegetables and alcohol. She now shops at two discount supermarkets \u2013 Lopia and OK \u2013 to maximise savings.<\/p>\n
To attract customers back to its \u201cconbinis\u201d, Seven & i is introducing a lower-priced house-brand range, Seven The Price, which includes pre-cooked chicken and bacon rashers, and is priced around 20% below branded alternatives.<\/p>\n
In September, FamilyMart said it would offer morning discounts when customers bought bread or rice balls together with drinks such as coffee.<\/p>\n
Pork cutlet rice bowls<\/p>\n
In contrast to convenience stores, some supermarkets that compete aggressively on price are seeing robust customer traffic growth.<\/p>\n
Seiyu, which was acquired by discount chain Trial Holdings in 2025, recorded a 6.9% year-on-year increase in customer numbers at existing stores in September.<\/p>\n
\u201cWage growth has not kept pace with inflation, creating favourable conditions for discount retailers,\u201d said Seiyu president Hitoshi Narakino.<\/p>\n
Walmart previously struggled to make a success of Seiyu, with private equity firm KKR acquiring the business before selling to Trial.<\/p>\n
Kyushu-based Trial has brought its popular 299-yen pork cutlet rice bowls and 199-yen egg sandwiches to Seiyu stores, where it is also bolstering supplies of fresh meat and fish.<\/p>\n
Conbini are also under threat from mini-supermarkets, with Trial opening small format Trial GO stores in Tokyo and Aeon, Japan\u2019s biggest retailing group, expanding its My Basket chain.<\/p>\n
Crane games<\/p>\n
As higher oil prices due to the Iran war feed through to electricity and gas bills, inflation is likely to top 3% in early 2027, said Taro Saito, a research fellow at the NLI Research Institute.<\/p>\n
Real wages are also likely to turn negative in 2027, potentially further squeezing households, he said.<\/p>\n
With rising labour and utility costs squeezing franchisees, conbini operators are looking beyond food to grow revenue.<\/p>\n
FamilyMart is installing crane games and capsule-toy machines in about 5,000 stores by reducing space allocated for magazines and eating in.<\/p>\n
Lawson, which is owned by Mitsubishi and KDDI, has also installed toy machines at about 1,500 stores.<\/p>\n
There are also signs of price sensitivity across the broader retail sector.<\/p>\n