Japan convenience stores tackle food waste with point rewards for items set to expire

Convenience stores are starting to take action against food waste in Japan as they face growing criticism over their practice of discarding still-edible products.

Industry giant Seven-Eleven Japan Co. on Oct. 30 launched a test program at all of its 1,361 stores in the western island of Shikoku and the northernmost prefecture of Hokkaido, where shoppers who buy food items that are close to their expiration dates earn points on their prepaid electronic money cards, essentially getting a discount.

Seven-Eleven Japan President Kazuki Furuya, who visited Tokushima Gov. Kamon Iizumi at the Tokushima Prefectural Government in western Japan the same day, said, "To create a brand that is loved over time, we have to be truly committed to tackle Japan's social problems," emphasizing the significance of the major convenience store operator's initiative at its outlets in the prefecture.

Items covered by e-money point reward system include rice balls, sandwiches and spaghetti, among other food products, that are close to expiration. When a shopper buys these items with their "nanaco" e-money card, they are given points worth 5% of the price of the purchased products before sales tax. As the points can be used to shop at Seven-Eleven stores and other places, the shopper effectively gets a discount. The company plans to test this model until the end of the year and looks to implement it in other stores across the country next spring after examining its effects.

On the first day of the test run, Toshiko Hamano, 52-year-old manager of the Seven-Eleven Tokushima Higashidaikumachi store, was spotted placing stickers with barcodes on food items including rice balls whose sell-by dates were about to expire in three hours, while checking a list. The stickers indicated that the products were subject to e-money point rewards. Hamano told the Mainichi Shimbun, "The preparation (for the point reward system) is easy. I think we'll be able to reduce product waste and our sales will improve."

Lawson Inc., another convenience store giant, also tested a point reward system in June-August this year at some 450 outlets in the western Japan prefecture of Ehime and the southernmost prefecture of Okinawa, in which customers get 5 points per 100 yen when they buy food items nearing their sell-by dates. The firm is considering implementing the system on a full scale.

Meanwhile, FamilyMart Co. started an order system this fiscal year for sales of seasonal products that often lead to massive food waste, such as "eho-maki" good fortune sushi rolls, eel bento boxes and Christmas cakes.

In the convenience store industry, the sales model where food items including bento boxes and rice balls are delivered to each store several times a day has become the norm. This allows the stores to always have their shelves full of products, allowing them not to miss sales opportunities. Each shop also keeps fixed prices in principle to avoid discount wars, which have supported the industry's high-margin operation together with around-the-clock business hours.

At the same time, the stores throw out all the food products at their "sell-by time," which are set a few hours before their actual expiration dates, creating massive food losses. This has become a social problem after videos of eho-maki sushi rolls and other food items being thrown out in huge quantities spread on social media, prompting the government to intervene in January and ask convenience stores and supermarkets to operate appropriate sales schemes.

In addition, the cost of discarding food is mostly covered by franchise stores, and their owners have become increasingly discontent, claiming that the food waste cost is taking a toll on their businesses. Seven-Eleven and other convenience store operators had no choice but to shift their conventional sales policy.

However, Seven-Eleven's discount rate is only 5% -- a small discount compared to supermarkets where they mark down the price of food items sometimes by 50% right before the stores close. Furthermore, as Seven-Eleven's initiative only targets those paying with their nanaco e-money cards, future studies are necessary to examine how effective the measure will be to reduce food waste.

According to the Ministry of Agriculture, Forestry and Fisheries, the estimated amount of food waste such as unsold items, returned purchases and leftover foods at eateries in Japan totaled 6.43 million metric tons in fiscal 2016, meaning that some 1,700 10-ton trucks worth of food is discarded every day. By breakdown, food businesses produced 3.52 million tons of food waste while households threw out 2.91 million tons of still-edible food. Among food businesses, 1.33 million tons were discarded by restaurants and other dining places, while retail businesses including convenience stores were responsible for 660,000 tons of food disposals.

Japan implemented a law on Oct. 1 to promote a reduction in food waste, and businesses are now required to actively engage in initiatives to cut down on food losses, while national and local governments will also take part in the efforts.

(Japanese original by Kazuya Osaka and Sakura Iwamoto, Tokushima Bureau, and Kenji Wada, Business News Department)