By TATIANA PROPHET
An upscale convenience store chain is continuing its advance into Orange County, despite disappointing sales since its California launch.
We’re not talking about Britain’s Tesco PLC and its Fresh & Easy Neighborhood Market chain. This time it’s Japan’s FamilyMart Co. and its Famima chain of convenience stores.
Famima, which opened its first U.S. store in 2005 and has 13 stores in Los Angeles County, doesn’t disclose U.S. sales.
But sales were lower than expected last year, according to Hidenari Sato, executive vice president of Torrance-based Famima Corp.
“We have a very big future ahead of us in Orange County and are looking into it more than ever,” Sato said. “We are newcomers. As our name comes out, and everybody experiences our shopping, the sales should get better.”
Sales are better this year, according to Sato.
Famima isn’t alone.
Tesco came to the U.S. with a similar strategy for its Fresh & Easy chain. Like Famima, Fresh & Easy is designed to be an upscale small store offering gourmet foods at low prices.
Fresh & Easy is ahead of Famima in OC with six stores here and more on the way. But the chain is taking the next couple of months to retool after reports that sales have fallen short of expectations.
“We had a period where we weren’t scheduling store openings, so we could sit back and take a look at the business and kick the tires,” Fresh & Easy spokesman Brendan Wonnacott said.
After opening its 61st U.S. store in April in Avondale, Ariz., the company plans to take a break until July, when it is set to open another store in Orange, Wonnacott said.
Famima plans to open its first store in the county in Fountain Valley by late June. It is planning a second one in Huntington Beach and is looking for a site there, Sato said.
The company also is retooling its stores. They’re set to stay open around the clock and tip the product mix toward more local offerings, according to Sato.
Most Famima stores now open at 6 a.m. and close at midnight or 2 a.m.
The company shuttered three stores this year, two in Long Beach and one in Glendale. But it still plans to open six more.
Trial and error, Sato said, is one of Famima’s techniques.
“In Japan, we open 500 stores and close about 200 to 300 stores every year. We are used to this,” he said.
Famima has lowered its growth strategy, with plans to open 50 stores by 2010, rather than the 200 originally planned by 2009.
Company’s Choices
The company chose the crowded Southern California retail market to start because of consumers’ openness to new things as well as the area’s large Asian population.
“Americans here, especially on the West Coast, like change,” Sato said.
Famima sells convenience staples alongside premium groceries including fresh prepared foods such as sushi, panini and bao (warm buns stuffed with meat or vegetables).
Famima and Fresh & Easy are trying to take advantage of a trend, said Jennifer Halterman, senior consultant with market researcher TNS Retail Forward in Columbus, Ohio.
“Shoppers are pressed for time and I think you’re going to see more smaller store food concepts,” she said. “And I think there’s going to be a heavy emphasis on fresh foods.”
Even so, both Famima and Fresh & Easy face a challenge with the state of the economy.
Rising prices, job losses and a halt in economic growth could send consumers to traditional grocery stores to save money, said Mary Gilly, professor of marketing at the Merage School of Business at the University of California, Irvine.
“I’ve seen a lot more trends in specialty stores,” she said. “But that was during the up economy. We’ve seen a downturn and people are going to be a bit more sensible.”
Famima’s Sato said he is concerned about rising prices and the shrinking purchasing power of consumers.
But the company plans to continue its efforts to import a Japanese store format.
“What we’re trying to do is redefine what convenience stores should be,” he said.
FamilyMart has about 7,000 stores in Japan and another 7,000 elsewhere in Asia.
Besides the one in Fountain Valley, the company plans to open three stores by June in Arcadia, Lakewood and Los Angeles.
Prophet is a freelance writer based in Los Angeles.
