A floorspace productivity relationship for Japanese convenience stores

In this paper two relationships are presented to evaluate the economic performance of Japanese convenience stores. These relationships have been used also in studies on French and Dutch supermarkets. The relationships are estimated with data of almost two hundred stores from a large Japanese convenience store chain. The results of this empirical study show that convenience stores located in shopping streets in Japan have a higher floorspace productivity than stores located in residential areas. There are decreasing economies of scale for floorspace, and the number of trading hours has a positive influence on floorspace productivity. Several convenience stores have a license to sell rice, tobacco and alcoholic liquors. The authors show that stores selling tobacco and alcoholic liquors, not only have a higher floorspace productivity, but that these products also stimulate the sales of the regular products. They furthermore describe how the results of the estimations can be used by management to evaluate the economic performance of a specific store, and in this process of deciding where to open new stores.