Ubiquitous Japanese convenience store to debut in L.A.

Having conquered Japan and made significant headway in China, the Tokyo-based FamilyMart Co. convenience store chain is ready to make its U.S. debut later this year in West Hollywood.

The company, known here as Famima Corp., has signed a lease for a West Hollywood location and is scouting space in Westwood and Santa Monica. The L.A. effort is the start of an expansion plan that envisions 200 U.S. stores by 2008.

Hidenari Sato, a vice president at Famima (a play on the Japanese pronunciation of "FamilyMan"), said the company held off opening stores in the United States until this year, when it had better established itself in China. FamilyMart, which opened its first store there two years ago, has more than 40 units across the country and plans to have 350 by 2007.

In the U.S., the chain is looking to attract upper-middle class Americans and Asian-Americans between ages 21 to 44 and is meant to resemble a compact version of Whole Foods or Bristol Farms.

While Los Angeles isn't lacking convenience stores, Famima won't be much like a 7-Eleven or AM/PM mini-mart. FamilyMarts sell more prepared meals and, like other Japanese businesses, they place a greater emphasis on customer service.

"What we're trying to launch is not convenience," Sato said. "It's something more than convenience. We're trying to get customers from premium grocers and also quick-service restaurants."

FamilyMart is the third-largest convenience store in Japan, behind Seven-Eleven Japan and Lawson Inc. Founded in 1973, the publicly traded firm has 11,000 stores worldwide, with 6,000 in Japan.

FamilyMart employees greet customers when they arrive, thank them when they leave and provide attentive (some say robotic) service. The Japanese stores, which offer a large selection of prepared meals, are typically spotless and contain multimedia kiosks where customers can make hotel, train, airplane, bus and car rental reservations, develop digital photographs and make copies. Customers can also pay utility bills at the register.

"Our (U.S.) retail stores are not just for the Japanese," said Sato. "We want to give Americans a new lifestyle. A few years ago, there were people shopping on the weekends for the whole week. People are changing now--they don't cook at home and they try to eat out, which is why we're seeing the growth of restaurants and pre-made groceries."

To appeal to a higher-end audience, the stores will feature hardwood floors and shelves made of stainless steel and wood. Famima is aiming for twice-daily product deliveries to ensure foods are fresh.

The U.S. stores will be offering sandwiches, pasta, salad, sushi, bento boxes and rice balls. They will also sell some imported Asian products, coffee, stationery items, and standard merchandise like milk, cheese, beverages and chips. While only 7 percent of U.S. convenience store sales typically come from prepared foods, Famima expects those products to comprise 30 percent of sales.

At first, Famima will not offer bill payment services here.

Hurdles to overcome

Like many commercial transplants from Japan, the success of FamilyMart is not assured of translating.

"Any new concept coming into the U.S. is faced with the same challenge--we still have too much retail in the U.S. and not everyone can be a survivor," said Aubie Goldenberg, a partner in the retail group of Ernst & Young in L.A.

Not only are there entrenched convenience store competitors, but larger grocery chains have been moving toward offering more prepared foods and "convenience" products, he said.

Goldenberg also suggested that Los Angeles might be a more difficult market to crack than more concentrated cities like New York or San Francisco.

"In Los Angeles, there are so many large supermarkets and they really are superior by every stretch, offering everything from banking to postal services to prepared meals," he said. "That's one-stop shopping."

But Robert Brasch, former director of convenience store chain AM/PM Japan Co. Ltd. and current president of Pacific Partners, a Beverly Hills-based company that specializes in strategic alliances between Japanese and American companies, thinks there is a market for Famima.

"If they can get the delivery of delicatessen items down and it becomes more of a home-meal replacement, they may be quite successful," he said.