Famima to Diversify U.S. Portfolio

Famima USA, a subsidiary of Japan’s second-biggest convenience store operator, FamilyMart Co., is shifting its U.S. retail strategy to open more outlets in middle-class U.S. neighborhoods to make the unit profitable by February 2012, said President Junji Ueda.

Since opening its first U.S. store in West Hollywood, California, in 2005, FamilyMart has tried to set itself apart from rivals such as 7-Eleven Inc. by projecting an upscale image and not offering services such as gasoline pumps for motorists. The strategy is yet to succeed, with the company’s U.S. operations posted an operating loss of $6.4 million, according to Bloomberg News.

Famima operates 13 stores in the greater Los Angeles area, FamilyMart had originally aimed to have 200 shops by the business year ending in February 2009.

Faced with these issues and slumping U.S. consumer spending, the retailer will relocate stores with daily sales of less than $4,000 to the outer suburbs of the greater Los Angeles area, the report said. More stores with ample parking space will be built in areas with high car traffic, and the shops will have sales floors that are about 30% smaller. The steps will allow FamilyMart to halve store costs, said Ueda.

The stores will boost its offerings of items marketed to middle-class Americans, such as doughnuts, he said. By the fiscal year ending in February 2010, Famima Corp. hopes to have as many as 50 directly operated stores, some of which will be converted into franchises.

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