There is no doubt that 7-11 has become the world’s largest convenience store chain. it has set almost 7,000 stores in Japan and 5,000 in America. In summary, there are more than 17,000 7-11 shops in in 200 contries all over the world. The first 7-11 shop opened in Japan in 1974. Then its development has grown rapidly and become one of the most profitable companies in Japan listed on the Tokyo stock exchange. How can the company be so successful? It is mainly due to the company’s design of supply chain and management.
Recently, as the development of China chain supermarket stores is booming, some international chain enterprises such as Wal-Mart, Carrefour, Metro and so on occupy the market in China. Meanwhile, many small and medium-sized supermarkets, shopping malls in China have shut down.
7-11’s major strategy of location is opening dozens of new branches in the target area. In this way, it can obviously increase the density of its distribution, which is an important factor in a company’s consideration of opening or closing a shop. When 7-11 decides to open a new area’s market, it won’t set up in a sporadic way but usually use the strategy like a carpet bombing, that is centralized numbers of shops at a same time and small area. It can result in the formation of overwhelming advantages among other shops and lead to a considerable returns and scale.
7-11 has a very high requirement on product inventory in order to have a more convenient and timely product transportation. It is not hard to find out that in Japan, fresh food has occupied a high percentage of 7-11’s sale’s volume. Making fresh food in convenience shops is costly. It requires enough big room and high sanitary conditions and all of these will increase the cost to open a shop. Therefore, the company chose a better way to sell fresh food, that is food delivery from other places. 7-11 orders several times everyday electronically. For example, if the food is going to be delivered to customers in the evening, the shop should order the food at 10 in the morning. It means that each shop should order fresh food at least 3 times a day to make sure it can supply breakfast, lunch and dinner. The room of a 7-11 shop is usually very small, only about 30 – 100 m2. But it can supply more than 3,000 kinds of goods which requires a very effective system to be the back-up.
7-11 has a quite comprehensive data system. It collects a large number of detailed point-of-sale data, which contains product identification, quantity, time of being bought and even the ages and gender of customers. When chain stores send the massage back, the headquarters of 7-11 can analyze the data and identify specific relationships between customers and goods. It helps the company to decide which are better kinds of goods to supply.
Edited by Amy Wang from Daxue Consultant China
Credit Photo: baidu