INTERNATIONAL NEWS: Japan's C-stores Benefit from Smokers

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INTERNATIONAL NEWS: Japan's C-stores Benefit from Smokers

TOKYO -- Japan’s convenience-store sales in 2008 rose at the fastest pace in eight years as a law restricting access to vending machines sent smokers to 7-Eleven and other retail outlets, according to a Bloomberg News report.

C-store sales rose 6.7 percent to $87 billion (7.86 trillion yen) from a year earlier, according to the Japan Franchise Association, based here.

Smokers moved to c-stores to buy tobacco and other products after a law in July 2008 required a smart card known as Taspo to purchase cigarettes at vending machines. The recession is also drawing budget-conscious consumers to the shops, where they can buy essentials without traveling far, according to analysts.

"Besides the Taspo effect, convenience stores do well in a recession," Dario Murata, a retail analyst at Credit Suisse Group, told Bloomberg News. "Consumers don’t want to spend a lot and go far to shop."

Seven & I Holdings Co., Japan’s biggest convenience store operator, expects profits and sales to rise this year in part because of increased cigarette sales.

"This is the turning point," noted Takeshi Niinami, CEO of Lawson Inc., the nation’s second-largest c-store operator. "Households aren’t keen to purchase luxury goods anymore. They purchase daily goods little by little."

Japan's c-store sales were higher than department store sales for the first time, Bloomberg News noted. Department store sales dropped 4.3 percent, extending the longest losing streak in 12 years, according to the Japan Department Store Association.