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7-Eleven Japan: Competitive advantage through information Resourcing
7-Eleven Japan has made information resourcing
the key to its success. Because of the unique information resources it offers
franchisees, it charges a premium priced franchise royalty rate , 43% of gross
profits versus 35% of its closes rival, reflecting a highly successful
competitive advantages based on differentiation. 7-Eleven’s use of information emphasizes
finding new ways its franchisees or their suppliers can better serve Japanese
consumers. As a consultant at the Boston Consulting Group’s Tokyo office puts it, ‘7-Eleven’s system is a
At the heart of every one of the
5000 plus stores is a custom designed NEC computer that collects data from each
point of sales cash register in the store. This includes not only what was purchased
and when, but other data the clerks key in on customers’ sex and estimated age.
The computer continually updates and analyzes this data and has it available
for use by 7-Eleven’s corporate headquarters; the local store, or suppliers.
Corporate headquarters continually taps into the data to see which of the 3000
items stocked by its stores are gaining or losing popularity. One store manager
linked the data to weather conditions and discovered the reason why sales of
cold noodle dishes were off 19%; now he orders less in cool weather. A Tokyo supplier receives
data on what sandwiches are selling and which are still on shelves just 5 hours
before its thrice daily deliveries and adjusts shipments accordingly for the
200 stores in its region.
All this is impressive enough,
but the chain does not stop here. To maximize learning, the corporate offices
at 7-Eleven use the computer network to flash messages to stores through the
system about patterns they see marginalizing in trendsetting regions; they also use
this analysis to help develop new products, such as a vitamin –enriched drink that
proved popular. Another form of learning takes place within individual stores.
The software is designed to allow it to provide more accurate estimates and
forecasts as it goes along, so, as the ordering and sales process continues,
projections grow more accurate. As one observer put it, ‘no other retailer in
the world has defined its business so tightly around information’- and the
results are impressive. Average daily sales per 7-Eleven stores in Japan
are 30% higher than those of its nearest Japanese rival. Even though the
average Japanese 7-Eleven is only half the size of its US counterpart, its average per
store sales volume is four times as high.