Dateline Tokyo, Japan: Convenience store as Shinto shrine

WHEREVER YOU may find yourself in Japan, from the old temple neighbourhoods of Kyoto to the ski resorts of Nagano, you will never be very far from the gaudy, neon-lit comfort of what everybody here knows as the "konbini", a Japanised contraction of the English "convenience store".

The concept is American. But, like so many foreign imports, the konbini has transformed itself over the years into a uniquely Japanese institution. If the great Tokyo department stores, such as Tokyu, Seibu, and Mitsukoshi, are the cathedrals of Japanese consumerism, then the konbini are its local Shinto shrines.

In town and cities, they are found every 500 yards, like manned vending machines tucked into the narrowest of sites, between office buildings, neighbourhood restaurants and apartment blocks.

Within these cramped confines, the convenience stores cram as much as it is possible to pack along aisles barely wide enough for shoppers to pass one another - food (of the dried, sugared, processed or microwavable variety), magazines (including manga, the ubiquitous Japanese comic books), and the handiest of household items. If it's macrobiotic alfalfa shoots you are after, or an improving book, don't waste your time here. But if you find yourself at 1.30 in the morning without a toothbrush, a battery, toilet paper, a soft porn magazine, a packet of cotton wool buds, cigarettes or condoms, the convenience store (staffed by bored but impeccably polite teenagers) is always there and always open.

For years, the convenience store market was in expansion, including individually owned, family-run shops, along with the big chains including Seven-11, Sunkus and Lawson's, there are an estimated 50,000 of them, or one konbini for every 2,400 Japanese. Even before the intense economic gloom of the last two years, the country was already suffering konbini saturation, and the most serious recession since the war has hit the retail industry worse than most. Over the last two years, konbini sales and new store openings have varied from the stagnant to the negative. With an unprecedented consumer slowdown, convenience stores are being forced to find new ways of being convenient.

One bright idea, with which several chains are testing, aims to capitalise on two strands of Japanese consumer life. The first is the surprisingly low penetration of the Internet into Japanese homes, and the corresponding underdevelopment of e-commerce. The second has to do with the convenience stores' greatest advantage - their ubiquity - and their great drawback: their lack of storage space.

As the exact opposite of big, out-of-town hypermarkets, the konbinis must by their nature be close to the action and accessible to the pedestrian, meaning high rents and limited floor space.

The 6,400 shops run by Lawson, the country's second largest chain, have an average area of less than 100 square metres, and they maximise their space with the "just-in-time" system of delivery. Vans come and go several times a day so items, especially food, can be rotated around the shelves to appeal to consumers as they head to work, take their lunch break, or return home in the evening. But however cunning and flexible, the space limitation remains and the choice of merchandise on offer is thin.

Lawson is developing a system bearing the intriguing name of Loppi, which are online IBM terminals, using Internet technology, which dramatically expand the range of produce that convenience stores can offer. In the last 18 months, the firm has invested Y7bn (pounds 40m) in putting one into each of its outlets; similar systems can be found in shops run by other chains. The Loppi screens fall short of full Internet access but allow the stores to offer an additional 1,000 items with no extra stock. "The core value of a convenience store is its location close to a customer's home or office," says Makoto Tazaki of IBM Japan. "Now a customer can buy computer software or book a holiday as easily as pick up a carton of milk. This amounts to a revolution in the retail business model."

The Loppi resembles a bank cashpoint machine with a touch-sensitive screen, offering goods from CDs and luggage to video games and computer software. The release of a recent hit video game for the Sony Playstation increased sales of one convenience chain, Family Mart, by 9 per cent, although the boom was shortlived. Certain kinds of software can be downloaded on the spot, but most products are ordered and paid for in cash at the shop's cash till. Small items are picked up from the konbini a few day's later; larger goods are delivered to the customer's home.

Ticket sales for concerts and special events have been particularly successful . "On some days, we've sold more than 100,000 sports and concert tickets online," says Naouyuki Kiriyma of Lawson's new business division. "When a popular computer game goes on sale, we've had as many as 3,000 orders a minute." There is also a travel service offered through Loppi by the Japan Travel Bureau (JTB), although this is a bit of a cheat, hardly amounting to an on-line service at all. Through the terminal, the customer enters where and when he wants to go. Instantly, a telephone in the wall rings at the end of which is a helpful JTB employee, who confirms the details and accepts payment, either by on-line credit card or at the till. Not, in fact, much different from telephoning a travel agent directly.

Mr Kiriyama reckons that the terminals will lure five extra customers into each store every day - which sounds modest until you realise that the average konbini customer spends only 500 yen (pounds 2.78) per visit. The goods available on Loppi are expensive compared to the konbini's physical stock. "The use of on-line terminals in stores is far more advanced in Japan than in the United States," says Mr Tazaki. "Japan has developed a unique retail structure with a convenience store within five minutes of everyone's home. Although PC penetration in Japan is much less than in the US, the proximity of online terminals in convenience stores offers all Japanese people the chance to shop online."

Not everyone is convinced that the Loppi amounts to more than a novelty, or that it will even begin to offset the terrible effects of the consumer slump. "Overall it adds very little," says Michael Allen, retail analyst for ING Barings in Tokyo. "Games software is very cyclical: it does very well for a while and then tanks. They've tried catalogue sales in convenience stores before and they didn't work. This is just a catalogue, but on a computer."

But how many catalogues offer you seaweed-flavoured crisps, a holiday in Las Vegas and novelty packs of multi-coloured prophylactics, all within five minutes of home?