Seven Eleven
Japan
MULTINATIONAL CHAIN OF RETAIL CONVENIENCE STORES
Efforts by:
Bhargavi Parekh- 20131009
Krina Tarange- 20131045
Samriddhi Gambhir- 20131081
Supriya Kumari- 20131093
Khuzema Raj- 20131146
Harsha Telwani- 20131183
Introduction
Seven-eleven started in the early 1970s in
Japan and quickly became the top
convenience store in the country. The
company's rise has been significantly
increasing both its revenues and profits in a
very short period transforming the retail
business in the country.
The company also operates in the USA and
has been able to improve its performance in
the country over time. The strategy of Seven-
Eleven has been market domination and
expanding quickly.
Introduction
They achieve this by building a cluster of 50 to
60 stores in a small geographical area serving
them through a single distribution centre. The
franchise system has also been both helpful
and has helped the company expand further.
Another significant advantage has been
provided by the information and data
collection system and technology in place
allowing the company to increase its
efficiency. The company has kept on growing
to offer in-store services and has remained at
the top of Japan's retail sector.
Introduction
67% of SEJ customer lived within 10min walk
from store .56%visit store twice a week.
Customer were largely male(66%), between
the ages of 29 and 39 (49%). An average
customer spend 5 to 6 min buying and
average of 601 rs worth per visit .
SEJ retail strategy emphasized freshness and
its information system was designed to
support freshness not only quality of
perishable products , but also provision of a
fresh set of merchandise to keep up with
changing preferences of customer
Problem Statement
Seven Eleven Japan had been successful but the
problem was that
Many of its supply chain techniques were
copied and matched by its main competitors.
Seven Eleven Japan developed corporate
philosophy titled “Modernisation and
Revitalization of existing small and medium -
sized stores and Co - existence and Co-
prosperity “ to respond changing need of their
customers but the general slowdown in
economic activities in Japan since 1992 had
drastically changed social and economic
environment of the Japanese retail industry.
Problem Statement
Seven Eleven Japan had used its supply chain
Strategies in U.S. As a result It had not
enjoyed the same level of dramatic
performance.
Analysis
RETAIL STRATEGY: FRESHNESS JOB #1
Sixty-seven percent of all SEJ’s customers lived within 10 minutes’
walk from a store. Most Customers (56 percent) visited an SEJ store
at least twice a week.
Bento, traditional Japanese boxed lunch, was an example of the
special attention SEJ paid to the Freshness of its product.
In general, SEJ kept perishables for about half the period that
regular stores did. They used Scanner Terminal (ST) to check the
freshness of products by just scanning the barcode on the label.
SEJ tended to retire items soon after employees detected a decline
in sales, generally earlier than other stores stopped stocking them.
SEJ’s freshness strategy was supported by the company’s
information systems.
Analysis
INFORMATION SYSTEMS
While large supermarkets often carried more than 100,000
SKUs, SEJ’s typical stores carried Only 2,500 SKUs due to shelf
space constraints.
SEJ viewed information systems as critical to managing all of its
SKUs, given the limited shelf Space at stores. Even though the
systems were expensive to establish and maintain, every stage
Of SEJ’s supply chain from its point of sale system to new
product development was implemented within the overall
information system. The system differentiated SEJ from other
convenience store chains and retailers throughout the industry.
Analysis
Evolution of SEJ’s Information Systems
Analysis
Analysis
Information Collection and Feedback Loop
Information about product sales captured at the register is passed on to SEJ’s HQ via
the fibre Optic network. The POS data collected at each store is processed by the SC
system. The SC enables the store manager and SEJ’s HQ to update and analyze POS
data simultaneously. Store managers can obtain real-time information through the
GOT on site, thus allowing the manager to analyze the following data:
1. Hourly sales trend for individual items.
2. Scrap trend analysis.
3. Stock out ranking by individual items.
4. Sales trends for new products.
5. Hourly sales trends by customer profile.
Hence, the SEJ’s supply chain forms a real-time feedback loop—information flows
from stores to HQ and manufacturers, and material flows from manufacturers to
stores.
Analysis
LOCATION/TRADE AREA (LTA) ANALYSIS
As part of the sixth generation information system,
SEJ introduced an additional store database to
facilitate the analysis of sales trends.
The five classes were: Office/Shopping Area,
Business, Residential, Roadside, and Compound
Location. In addition, the database captured the
presence of 20 types of “influential” facilities in the
neighbourhood such as railway stations, hospitals,
factory, city office, college, etc.
Analysis
DOMINANT OPENING STRATEGY
SEJ’s method of selecting new
stores was called the
"Dominant Opening Strategy" (DOS).
The sales zone for each store was within a 500-meter (0.6 mile)
radius of the store. SEJ’s goal was to have sales zones fully
cover a specific area with minimal overlap.
The main purpose of the DOS was to maximize efficiency of
distribution and minimize competition.
Logistics were optimized by servicing multiple stores in a small
geographic area with a single truck. This reduced both delivery
time and the number of trucks needed to service a given set of
stores.
Analysis
7DREAM.COM
In response to the Internet revolution, SEJ formed 7dream.com
as a new company along with six Japanese companies.
The concept was created as an independent project between
SEJ and NRI towards the end of 1997. The mission was to
create an electronic commerce model to complement the
convenience store business in Japan.
The basic idea of 7dream’s electronic commerce model was to
integrate “clicks” and “mortar” by allowing customers to order
from a large pool of products on the website of 7dream.com
and pick up their orders at an SEJ store two or three days later.
7dream.com enabled SEJ stores to sell millions of items without
carrying any inventory.
Analysis
Seven founding partners of 7dream.com are:-
Analysis
Daily Ordering System and the Supply Chain:
There is a daily ordering system in which the corporate
manager orders products which are delivered daily, with the
manufacturers being on board through the contact with the
HQ.
Analysis
Store layout
The store layout was predetermined into a gondola. This was dedicated to specific category
and this frequently changed.
8:30 AM 500 ml + sandwiches
350ml - people on
to - students
their way to work
11
0
:30
7:0
Am to 1:
00
Ev PM
eni
ng
1000ml - housewives
Solutions
Get patents for supply chain management
techniques
Open bigger stores in high-traffic and
business areas of Japan
Adapt the current supply chain according to
the USA's geographical, consumer trends, and
distribution network differences. Thus, SEJ
should innovate and adapt its supply chain
techniques according to the different global
markets.
Recommendation
As Seven Eleven is not holding much inventory,
the online store will only provide the consumers
with dissatisfaction as no physical appearance
or showroom is available, the trusting part of
the Japanese consumer takes time and so they
must focus on that part too.
Conclusion
To conclude, SEJ has a responsive supply chain.
Working since 1975, now the company should
think about it’s strategies, competitors, and
modernisation which can be achieved by our
given recommendations and solutions.
The goal of this case is to illustrate how a firm
can be successful by structuring its supply chain
to support its supply chain strategy.
Conclusion
Once Seven-Eleven Japan decided to provide
responsiveness by rapid replenishment, it then
structured its facilities, inventory, information,
and distribution to support this choice.
The case also brings up the question of whether
the same approach can work in the United
States, especially given the greater distances
and lower store density.
Thank you!
