Fictitious Japanese Convenience Store Analysis
Day to Day, Japan has clearly stressed upon its core competencies in Information Systems and Distribution while making business decisions.
Day to Day included both company owned stored and third-party owned franchises in Japan. The fact that only 1% of those who apply for franchise stores become franchise owners shows that everyone wants a piece of the Convenience Store pie. In 2004, franchise commissions accounted for 68% of the It is commendable that Day to Day invests resources into the training of franchise owners, ensuring the brand image and customer-relation dynamics of these ‘Conbinis’ remains intact.
Day to Day is clear it does not wish to compromise on its efficiency for a larger geographical presence. The market dominance strategy of the C-store chain is based on a high density market presence, with clusters of 50-60 stores around a dedicated distribution centre. This ensures
Timely delivery.
More deliveries on a given day without adding heavily to transportation expense.
Complete dominance in a given area.
Despite the absence of geographical expansion in the network strategy of Day to Day, they have stores in 70% of the prefectures in Japan. Following are a few statistics that justify the fact that Day to Day is indeed the leader in the Japanese convenience store market:
In 2004 average daily sales at the four major convenience store chains excluding DayToDay Japan totaled 484,000 yen. DayToDay stores, in contrast, had daily sales of 647,000 yen-more than 30 percent higher than the competition put together.
In 2004, DayToDays operating income of 165.7 billion yen positioned it as a leader not only of the convenience store sector but also of Japans retail industry as a whole.
In 2004 DayToDay accounted for 60 percent of the total net increase in the number of stores among the top 10 convenience store chains in Japan.
DayToDay follows the policy of regional merchandising, ensuring healthy demand-supply dynamics at a local level. The basic logic behind this strategy is that a store manager would be able to predict the arrival of a sports team and stock his store with food /liquor/cigarettes accordingly, but a CEO would not.
This policy has been successfully incorporated into the IT system, distribution system and indeed the entire supply chain of DayToDay.
The concept of a single distribution centre for a cluster of 50 odd stores helps stores track sales and achieve shorter replenishment times, which are crucial for C-stores that rely heavily on perishable items that are also quick to vanish from the shelves.
The existence of a dedicated distribution centre that receives items from all the suppliers enables