Wal-Mart to Open Half of Japan Stores Shut After Earthquake

Wal-Mart Stores Inc. (WMT), the world’s largest retailer, is resuming normal operations at half the stores hampered by Japan’s strongest earthquake as residents struggle to find water, food and other necessities.

A dozen of Wal-Mart’s Seiyu stores in the quake-hit Sendai area are restarting full operations today after being limited mostly to relief efforts for two weeks, Scott Price, Wal-Mart’s Asia chief, said in an interview yesterday. Of the remaining 12 stores, 10 will be opened as soon as possible and two may take a “long time” because they’re covered in mud, he said.

Retailers from Wal-Mart to 7-Eleven operator Seven & I Holdings Co. are racing to open stores and replenish shelves after the March 11 disaster left hundreds of thousands in the Tohoku region, northeast Japan, scrambling for shelter, food and water. The magnitude-9 earthquake and tsunami knocked out more than 1,000 stores in the Tohoku and Kanto regions, according to estimates at Goldman Sachs Group Inc. (GS)

“Food, daily necessities and clothes are needed as the scarcity of goods will likely continue for some time,” said Mikihiko Yamato, an analyst at Japaninvest KK in Tokyo. “It’s better to open shops where they can as soon as possible even with limited operating hours.”

Tohoku Stores

In northeastern Japan, which bore the brunt of the tsunami, relief workers are struggling to provide residents with two meals a day, with self-defense forces helping provide food, local authorities said. Evacuees in the hardest-hit Miyagi prefecture may rely on authorities for basic needs for the next two to three months as temporary homes are built, said a spokesman for the local disaster control headquarters who asked to be identified by his last name, Tokairin.

Seven to nine percent of Japan’s convenience stores are in the earthquake-hit Tohoku region, with less than half having to close, according to March 16 estimates at Goldman Sachs.

Seven & I, Japan’s biggest retailer, has gotten about 95 percent of its 1,454 shops in Tohoku and Ibaraki to remain open, according to Katsuhiko Shimizu, a spokesman for the company. Still, communication with the devastated areas remains difficult, he said.

Tsuruha Holdings Inc. (3391), Japan’s third-biggest drugstore chain by market value, had to halt operations at 14 outlets in Tohoku and Ibaraki, said Hiroyuki Fukuuchi, a spokesman. After the earthquake hit, the company resorted to ad-hoc methods to serve customers, he said.

FamilyMart, Starbucks

FamilyMart Co. had 585 stores closed in Tohoku as of March 26, while Lawson Inc. (2651) has yet to reopen 911 shops in the region, according to spokespeople at the convenience-store operators.

More than half of McDonald’s Holdings Co. Japan’s 256 stores in the affected areas of Tohoku and Ibaraki were shut as of March 25, said Kazuyuki Hagiwara, a spokesman.

Starbucks Coffee Japan Ltd. (2712), a joint venture between a local company and the world’s biggest coffee-shop chain, said a team is in the region “to support the operation of shops that have been damaged.” The company has about 50 shops in Tohoku.

Doutor Nichires Holdings Co. said March 25 that it had opened about half of about 100 coffee shops closed right after the quake. The operator has approximately 800 outlets in Japan, of which about 85 are in Tohoku excluding Ibaraki, said Kazuhiro Sekine, a company spokesman.

Ikea Group today opened one store in Kanagawa prefecture, which is part of the Kanto region, Chiharu Ohhata, a spokeswoman, said today. Most Ikea workers moved from the Kanto region to the Kansai prefecture west of Tokyo, including Mikael Palmquist, the country manager, have returned, Ohhata said. The Kanto region encompasses Tokyo and six prefectures, including Kanagawa.

Handing Out Water

Wal-Mart, whose Japan operations consist of 371 Seiyu outlets nationwide, said it began handing out bottled water and noodles from the parking lots of its stores less than four hours after the earthquake hit. The company said it gave away about $650,000 of products in the first four days.

“The best service we could provide to our customers was to get our stores open in the affected area where possible, even if it meant just handing out mass amounts of bottled water and instant noodles,” said Price, whose wife’s family is from Sendai. Engineers need to test the structural integrity of the stores before they are opened, he said.

The distribution center in Sendai recovered to about 65 percent of normal operations within a week and 95 percent by yesterday, Price said. Wal-Mart used another distribution center in Kanto during the first week to keep up with demand, he said.

‘Panic Buying’

“There was a huge amount of panic buying going on,” he said in the interview. “Even our stores from Tokyo were stripped bare. We’d never seen anything like that before.”

To supply its trucks, Wal-Mart bought fuel from another multinational that shut for a week, and found a service station in northern Japan “to commit to us,” Price said.

Toru Noda, chief executive of the Japan operations, plans to visit Sendai today, according to Wal-Mart. Price, who was about to get on a plane to Hong Kong from the U.S. when the earthquake hit Japan, plans to visit April 4.

The company also said it would donate $5 million in cash and kind, on top of donations collected by a fund-raising campaign involving its international operations, from Argentina and Brazil to China.

“Wal-Mart has a lot of experience in dealing with disasters learning from the earthquakes in China, Chile and also the Katrina disaster,” Price said. “Within minutes of the earthquake in Japan we activated our emergency operations center in Bentonville and command centers in Tokyo and Hong Kong.”

To contact the reporters on this story: Shunichi Ozasa in Tokyo at sozasa@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editors responsible for this story: Frank Longid at flongid@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net

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