Seven-Eleven Japan to cover 15% of costs in disposal of unsold items+

TOKYO, June 23 Kyodo -
Seven-Eleven Japan Co. said Tuesday it will introduce a new system on July 1
under which it will shoulder 15 percent of the cost of unsold items such as
boxed lunches that its franchise stores dispose of shortly before their
expiration.

The nation's largest convenience store chain, which has nearly 12,000 stores
nationwide, will be the first convenience store chain operator to shoulder part
of the losses incurred by franchise stores in disposing of expired food
products.
Seven-Eleven Japan is expected to shoulder around 10 billion yen annually under
the plan which was announced a day after the Fair Trade Commission, Japan's
antimonopoly watchdog, ordered the company to stop prohibiting its franchise
stores from selling food products at discount prices.
Products are usually sold at fixed prices in the Japanese convenience store
industry.
Seven-Eleven Japan franchise stores currently have to cover the losses incurred
on disposed food items.
Attention is now focused on whether rival convenience store operators will
follow suit, since their operations are similar to those of Seven-Eleven Japan
in terms of the losses incurred on disposing of unsold products.
The FTC said Monday that Seven-Eleven Japan has prevented franchise stores from
selling boxed lunches and other food items close to their expiration dates at
bargain prices and that the restriction constitutes a legal violation that
capitalizes on its dominant position.
On Tuesday, Seven-Eleven Japan said the new measure aims to support franchise
stores in overcoming the tough business environment.
The chain's President Ryuichi Isaka told a press conference, ''We have decided
to make up for the losses (related to the disposal of unsold items) after
taking into consideration the opinions of our franchise stores and consumers.''
Isaka said Seven-Eleven Japan decided to review the current system out of
concern that franchise stores could refrain from placing orders for merchandise
with the company.
The measure was approved at an extraordinary board meeting earlier in the day.
Industry watchers said Seven-Eleven Japan has decided to take this measure
partly to forestall the wider sale of products at discount prices as the FTC
decision could encourage more franchise stores to follow suit.
But Seven-Eleven Japan franchisees appear divided, with some welcoming the
measure as helping them in their management and others criticizing it as
falling short of improving the situation of their stores.
The issue came under the spotlight as some Seven-Eleven Japan franchise stores
began selling items close to their expiration dates at discount prices,
prompting Seven-Eleven to protest and press them not to do so. ==Kyodo
2009-06-23 22:19:40