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06/24/2008
TOKYO -- Compounding Japan's 24-hour convenience store challenges, which to date consists of low sales and stunted growth, is a movement to limit late night hours.

Reuters reported that the province of Saitama, which borders Tokyo, may follow the western city of Kyoto, a former capitol, by urging convenience stores to close from 11 p.m. to 7 a.m. in an effort to limit carbon dioxide emissions an improve evening views.

The initiative is strongly opposed by the industry, which fears a withering impact on an already troubled sector also grappling with a higher tobacco tax, which could hit overall sales, reported Reuters. Japan has approximately 41, 360 c-stores.

"Even if we only operate the stores for 16 hours, we can't stop the refrigerators," Toshiro Yamaguchi, the president of Seven-Eleven Japan Co., said during a news conference on Tuesday. Seven-Eleven Japan Co. is owned by Seven & I Holdings Co. Ltd. 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."

While the impact the initiative would have on business is speculative, analysts said without a concrete plan in place, results will likely be negative.

"This could cut profits and lead to less efficient operations and the increased loss of opportunities," Masafumi Shoda, an analyst at Nomura Securities, told Reuters. "But it depends on the store -- urban stores do better than others. There are some in the countryside that are inefficient."

On the other side of the fence are those looking for an extension regarding the proposed closing hour. "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," Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, told Reuters.

Shoda and Ogawa told Reuters if governments were serious about reducing carbon emissions there were much more efficient methods in place such as cutting back on the countless automatic vending machines.