June 1, 2018 / 7:41 AM / 2 years ago

Japan's FamilyMart opens shop with discount retailer Don Quijote

The interior of a joint FamilyMart/Don Quijote convenience store is pictured in Tachikawa, Tokyo, Japan June 1, 2018. REUTERS/Sam Nussey

TACHIKAWA, Japan (Reuters) - Convenience store operator FamilyMart Uny Holdings Co Ltd on Friday stepped up cooperation with Japan’s largest discounter, Don Quijote Holdings Co Ltd, opening a joint store aimed at stemming a slide in business.

FamilyMart and other Japanese convenience stores, which are open 24 hours and sell everything from underwear to freshly-brewed coffee, have struggled with falling customer numbers in the past two years amid competition from discount drugstores and labor shortages.

It merged with Uny in 2016, and last year sold a 40 percent stake in its general merchandise unit to Don Quijote. The company is hoping the joint convenience store in the outskirts of Tokyo, one of three opening this month, will help rekindle consumer interest.

Don Quijote, also open around the clock, is known for stocking its stores floor-to-ceiling with an eclectic mix of products such as leopard-print rugs to designer goods. It calls itself a “dirt cheap jungle”.

Popularly known as Donki, it has delivered 28 years of unbroken sales growth and analysts said its voluminous and constantly changing merchandise could help make shopping at the reliable but predictable convenience stores more exciting.

“The entertainment value is as important as the price. Once you go shopping there you want to go back,” Jefferies analyst Michael Allen of Donki said.

Surrounded by towering shelves stocking everything from fizzy wine to children’s toys at the joint store in Tachikawa, a Tokyo suburb, Makoto Imaki, a general manager at FamilyMart’s store operation division, said he hoped the new format would attract customers such as young people and women back to its stores.

The company’s general merchandise unit Uny and Donki have already begun joint big-box stores early this year and sales at those stores have more than doubled since opening.

Reporting by Sam Nussey; Editing by Stephen Coates

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