With your coffee, you'll get some changes at new 7-Eleven

November 10, 1991|By John E. Woodruff | John E. Woodruff,Tokyo Bureau of The Sun

TOKYO -- Next time you stop by to see what's new at your neighborhood 7-Eleven store, there may be something new.

The mother of all convenience-store chains is getting a forceful face lift -- backed by a $430 million cash injection from its new parent, 7-Eleven Japan Co. Ltd.

The new backers plan to add the latest trends in Japanese shopkeeping to their country's ever-lengthening list of exports to the United States. And they pack the clout that comes from rescuing a troubled company, having acquired 68.98 percent of Southland Corp., the American operator of 7-Eleven and a pioneer of the convenience-chain industry.

Among the changes at the 6,800 7-Eleven stores in the United States: More items on the shelves, fewer price cuts and a renewed interest in customer preferences.

Customers will soon find more than 3,000 items on display, compared with about 2,000 earlier this year, Toshifumi Suzuki, -- president of 7-Eleven Japan, said recently. Customers also will find the goods on display changing faster, a 7-Eleven Japan hallmark.

"By its very definition, a convenience store must offer consumers convenience," Mr. Suzuki said. He did not say which items would be added to the shelves -- that will depend on customer preferences in each region.

To make such changes, the company will install sophisticated cash registers. Working with computers connected directly to registers, clerks in Japan's 7-Elevens record not only the item purchased and its price but also the customer's gender and a guess of the customer's age. That can yield important information about customer preferences.

Items that move are restocked daily -- sometimes several times a day. And items that don't move disappear within days after sales begin to slow.

They are replaced immediately by new items, identified as good prospects for the young-adult crowd that predominates among 7-Eleven Japan's customers.

The new management hopes to introduce similar computerized inventory systems this fall in Hawaii, where 7-Eleven Japan bought 50 stores in 1989 as it began to be drawn into the faltering U.S. operation, Hidetoshi Akiyama, a 7-Eleven Japan spokesman here, said.

"The priority right now is to assure that the goods in the U.S. stores are what the customers need," he said.

Ito-Yokado Co., Japan's most profitable retailer and owner of the 7-Eleven Japan franchise, averages about $4,700 a day in sales at each 7-Eleven store here, on an inventory of about $35,000. It is likely to aim for comparable results in the United States.

That means that even as the U.S. 7-Eleven stores boost the number of items offered by more than half, they may have to shrink their inventory cost to less than half of the $100,000 that prevailed, for example, in Hawaii before the Japanese purchase.

Daily sales in the U.S. stores, at about $3,600, also will have to rise significantly.

Meanwhile, what customers will no longer find at U.S. 7-Eleven stores is the discounting and price-cutting that became part of ,, the U.S. convenience-store scene in recent years, as chains and even some local managers sought to beat supermarkets at their own game.

"Convenience stores cannot hope to stand up to supermarkets when it comes to discounts," Mr. Suzuki said. "If convenience stores want to survive, they must think about differentiating themselves from supermarkets."

Mr. Suzuki believes that 7-Eleven's problems are part of a broader problem, which he calls "the ongoing failure of the U.S. retail industry to come to grips with the changing times."

"Deteriorating business fortunes, even for Sears, Roebuck and Co.," are that failure's leading symbol, he says.

Not only convenience stores but also discount stores and supermarkets were invented by U.S. companies, he pointed out. "Unfortunately, the industry has not been so skillful at adapting the businesses to the shifting times and trends."

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