Lawson Brews Success With Foodservice Sales

September 4
NACS Daily News

The Japanese chain is adding higher-margin foodservice items in an effort to boost earnings over the next five years. In India, Essar is also targeting new customers with products ranging from ice cream to tires and mobile phones.

NEW YORK – Lawson Inc., the second-largest convenience store chain in Japan, is making a push to offer more foodservice items, such as fried chicken and hot coffee, to increase its earnings 62% in the next five years.

Bloomberg BusinessWeek writes that the company expects to increase operating profit to 100 billion yen ($1.3 billion) in about five years with the help of higher margin foodservice items, said Lawson CFO Yoshiyuki Yahagi.

Lawson is also trying to attract a more diversified customers base, beginning with the coveted female shopper and seniors. The retailer began selling fresh product in 2005, and as of February this year, 5,085 Lawson stores were selling fresh vegetables, which the retailer says helped attract more women and seniors. It plans to increase the number of such stores to 6,220 by February 2013.

“We call fresh food magnets — a tool to attract more customers,” Yahagi told the news source, adding, “Fresh food has lower margin, but we want customers to buy a dish of hot ready-made food along with it.”

Lawson’s operating margin of 13% for the year ending February 29 topped 7.3% at its larger competitor Seven & I Holdings Co., and 4.2% at Japan’s largest retailer Aeon Co., according to Bloomberg.

“Lawson is moving in the right direction in terms of increasing profitability by increasing food that they cook inside the store,” Satoshi Yuzaki, Tokyo-based general manager at Takagi Securities Co., told the news source. “However, rivals are doing similar things so the competition may intensify.” Both Seven & I’s Seven Eleven chain and Aeon supermarkets already have a hot foodservice offer.

In India, private-sector fuel retailers are also finding new ways to boost their profits. Essar Oil Ltd., with 1,400 outlets across India, is trying to draw more customers by offering goods ranging from ice cream to tires to mobile phones in its outlets.

Last week Essar opened the first of its Café Coffee Day chain at a fuel station on a highway in western India, reports the Wall Street Journal. In the past few months Essar has teamed up with companies ranging from banking and financial services and food and beverages to seek new opportunities for attracting customers.

“Non-fuel business is a strategic business for Essar Oil and we expect it to contribute significantly to the company’s growth in the coming few years. Our tie-up with Café Coffee Day is part of this strategy and it also results in effective use of available land in a retail outlet’s premises, thus leveraging on the available resources to a maximum level. It also gives a choice to the consumer, who can now refresh themselves with CCD’s [Café Coffee Day] delightful range of food and beverages while tanking up their vehicle,” said Essar Marketing Chief S. Thangapandian in a press release.