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G R O U P 4

S E C T I O N A

7 Eleven

Convenience stores

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Story of 7 Eleven

y http://www.youtube.com/watch?v=YfXF1INhTbY

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Similarities b/w US and Japanese situations

In US they introduced products like BigGulp and Slurpee

Japanese introduced original items likeLunch boxes and Home meal service

Pioneeringnew products

Franchisee model was encouraged as itallowed to free up the capital and allowcompany to grow faster.

Use of IT in methods of inventory controland merchandising handling

Company

Forming of Combined Distribution Centers (CDCs) based on temperature categories Wholesalers and Direct-Store-Delivery (DSD)Suppliers were encouraged to use CDCs for supplies.

Outsourcing to Third-Party Logistics Providers andFood suppliers

Distributionnetworks

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Differences b/w US and Japanese situations

Eating habits were different Historically viewed as pit stop for cigarettes, beer, gasoline and

lottery ticketsConsumer

Much more intense from competing food outlets than JapanCompetition

In Japan Paying commission to primary wholesalers maintaining relationship whereas in US relationships did notmatter much

Continuous R&D and innovation done in IT and products inJapan whereas in US it fell behind

Company

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STP for SEJ

Segmentation

Age Growing number of Senior citizens

Young Professionals Gender Enormous no of women entering the

workforce did a survey on females to knowtheir opinions on food

Income Increasing disposable incomes Suzuki

wanted to target the average Japaneseconsumer who spent 500 1000 Yen formeal in an inexpensive restaurant

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STP for SEJ

Targeting

Age Senior citizens target for Home Meal Service Concept of convenience based on young

professionals in the workforce who needed thestores to be open at odd hours

Gender Enormous no. of women entering the workforce

new lunch boxes featuring small portions ofvariety of vegetables and nutritious germinated

rice Mothers who send their children to private

tutoring schools in the evening Income

Pricing good quality meals(lunch boxes) around

500 yen

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STP for SEJ Perceptual Mapping

y Positioning: Excellent quality at reasonable price.

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3 Cs Customer Focus

y Suzuki concentrated on what customers wanted:

y Still we start from customers viewpointThats

how we planned our logistics and location of foodsuppliers.In United states today, companies like

WalMart are doing well using the push system. Butin future, customers will want something different,

and even WalMart will have to change or be leftbehind.

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Product

Processedfoods

Soft drinks Alcoholic drinks Pocket confectionary Ice cream Nutritional drinks

Fast foods

Rice balls

Box lunches Sandwiches Bread-based and delicatessen item

Daily foods

Milk and milk based drinks Pastries Deserts

Fresh foods

Non foods

Newspapers Magazines Cigarettes Household sundries Game software

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Place

y Expanded geographic reach clustering several stores within thesame district.

y SEJ changed the distribution system requiring manufacturer in aparticular area to deliver goods to a single wholesaler who deliveredit to the stores.

y The company followed combined distribution center (CDC) whichfacilitated delivery of high quality, fresh food products to the stores.They received products from multiple suppliers, sorted them anddelivered to stores in consolidated shipments.

y Stores decided which products to keep and used POS system tocollect data on customer preferences.

y The distribution system was outsourced to third party logisticsproviders, the company did not own infrastructure so not burdenedwith large fixed costs.

y Opened large number of stores in residential areas and near trainand subway stations.

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Marketing Strategy

y Other Services:

Photo Finishing Color print copiers(selfService)

Bill Payment

Ticket booking formovies, airplane

etc.

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Challenges

y Seven-Eleven products or services must be available at the right placeand time. The risks associated for replenishment of the Seven-Elevenchain can have possible miss outs on certain replenishment signalsgeared towards product inventories that have to be always within thecorrect place and level that may lead to shortage of stocks.

y Ideally, several Japanese consumers passion for innovative productsmeans that Seven-Eleven may stock proliferation of lines with littleback-up inventory in store. The concept then places considerablestrain on the logistical network as marketing channels can be highlyfragmented within multi-layered system that includes manufacturers,wholesalers and retailers

y

Under Chairman and CEO Toshifumi Suzuki, SEJ had positioned itselfas a company that responds to change. Committed to responding tochanges in expectations and demands from customers accordingly andwithout delay Mr. Suzuki stresses "breakthrough thinking" and not tobe constrained by the past

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Challenges Contd.

y Effectiveness of other services like payment of utilitybills, copiers, ticket booking etc. as according toExhibit 8 other income dropped from $ 112 in 2001

to $ 103.1 in 2002.y Whether the company is able to build a core group of

repeat customers as they are now targeting workingprofessionals and also the countrys growing number

of senior citizens who preferred eating at home.Performance in outlying suburban areas to whichSEJ is expanding.