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Much Changed Seven-Eleven Big Success in Japan

July 21, 1991

TOKYO (AP) _ If you’re walking the back streets of Japan hoping to find only quaint scenes of sushi shops and mom-and-pop green grocers, forget it.

Hardly any neighborhood is without its plastic and glass Seven-Eleven convenience store, an all-American standard that is scoring dizzying success in Japan and making its U.S. originator pale by comparison.

From a single Seven-Eleven store less than two decades ago, Japan has become a nation obsessed with 24-hour convenience stores. The company now has 4,328 franchises, or about one-fourth of Japan’s total convenience stores.

Seven-Eleven Japan, which last year rang up annual sales of about $7 billion, even bought out the troubled U.S. parent company of American 7- Elevens earlier this year. Analysts are skeptical, however, whether the stunning successes in Japan can be duplicated in the United States.

″On the surface, like the 7-Eleven logo, things may appear the same in Japan,″ said Masashi Wada, a retail specialist at the Dentsu Institute for Human Studies. ″But the internal systems are completely different.″

Seven-Eleven Japan’s success stems from a hyper-efficient delivery system that ensures the hottest products always are in stock. The wide variety of goods and services makes the stores something more than a place to pick up a late-night snack.

For example, a customer can pick up steaming fish cakes, canned tea and rice balls (kept at 68 degrees - the temperature at which research has shown rice tastes best), while paying utility bills and ordering Tiffany’s products by catalog.

The stores are always searching for new, hit products to cultivate a ″fashionable″ image. That’s why Americans looking for a slurpie - a perennial favorite at U.S. 7-Elevens - are in for a disappointment. The Japanese stores decided the ice drinks were passe and stopped serving them five years ago.

About two-thirds of the 3,000 items sold at a typical Japanese store will change in a year, said Seven-Eleven spokesman Hidetoshi Akiyama.

″If we don’t carry the latest products, people are going to come in and think we are a pathetically outdated store,″ Akiyama said. He scoffed at U.S. manufacturers who push their wares with last year’s market statistics.

To make sure the most popular products are always in stock, each purchase at a Seven-Eleven is immediately recorded in a computer that keeps tabs for the ″just-in-time″ delivery system.

Only the items that are sure to sell get delivered, and only as they are running out. Each store typically receives 12 deliveries daily. No excess products are kept on the shelves, an asset for space-tight Japan.

The omnipresence of convenience store delivery trucks on Japan’s clogged roads prompted a government study on potential harmful effects of just-in-time delivery, including traffic jams and air pollution. The panel ended up lauding the system, noting that each delivery truck was filled to capacity carrying goods for several stores.

The sex and approximate age of the buyers also are recorded by the sales clerk. That vital market information is relayed to manufacturers in exchange for getting first pick of hit products, such as a new brand of beer.

It is almost impossible to overestimate the popularity of Seven-Eleven and other convenience stores in Japan. They are so popular that this season’s hit toy is a game called the ″Barcode Battler,″ with robot heroes named after typical convenience store purchases such as instant noodles and oolong tea.

Surveys show the most frequent customers are young men such as Atsushi Tsukui, 20. He says he goes at least twice a day to buy magazines, newspapers and sandwiches at the convenience store across the street from work.

Indeed, walk-in shoppers are the main customers at Japan’s convenience stores - popularly known as ″konbini″ - including children who stop by on their way home from cram schools late at night to read comic books and buy snacks.

Analysts say predicting how Seven-Eleven Japan will fare in its attempt to revive the U.S. 7-Eleven stores is difficult. Koichi Hori, the head of Boston Consulting Group in Japan, put its chances at ″fifty-fifty.″

The corner convenience store may always remain marginal in U.S. retail, analysts say, primarily because American shoppers tend to patronize supermarkets.

Akiyama, the Seven-Eleven spokesman, suggested that one approach would be to increase the variety of goods carried by 7-Eleven stores.

″American retail, including supermarkets and department stores, have not kept up with the changing needs of consumers,″ he said. ″It has instead started a vicious cycle of price wars, and the number of items carried in the stores is decreasing.″

″American consumers have progressed to a higher level. They want a store with more than just a large supply of a limited brand.″

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