Convenience stores, or konbini, are an indispensable part of daily life in Japan, known for high-quality fresh food — from seasonal bento boxes to egg salad sandwiches that the celebrity chef Anthony Bourdain once called “pillows of love.”
Leading the push to expand Japanese-quality fresh food to 7-Eleven in North America is Stephen Dacus, a Japanese American former Walmart executive who started as chief executive of Seven & i Holdings, the 7-Eleven parent company, three months ago.
Seven & i is under intense pressure. Over the past year, it has fended off a takeover attempt by a Canadian rival. When Alimentation Couche-Tard, the owner of Circle K convenience stores, withdrew its $47 billion bid in July, Seven & i’s stock price collapsed. Mr. Dacus and his team were left to to prove they can deliver growth and returns on their own.
Now, facing a stagnant and highly competitive retail market in Japan, Seven & i’s growth is expected to come from overseas. The strategy could hinge, industry experts say, on Mr. Dacus’s ability to successfully introduce Japanese-level quality foods in the more than 13,000 stores that 7-Eleven operates, franchises and licenses in North America.
“Whether it’s hot food or cold food or any kind of food, we have to lean into how we improve the quality and the experience,” Mr. Dacus said in an interview on Friday. “That’s what Japan does extraordinarily well.”
Over the next five years, Seven & i is considering investing more than $13 billion to expand overseas. In the United States, this means initiatives like refreshing existing sites, adding more than 1,000 in-store restaurants and building a network of companies to provide more of its 7-Eleven brand prepared foods.
“And we’re launching the egg sandwiches,” Mr. Dacus said. They are, he noted, the top item purchased by the millions of American visitors descending on Japan each year and visiting 7-Eleven stores.
Seven & i’s new fresh-food push in the United States orients it squarely in a place already stocked with competition.
“Prepared food is increasingly what sets different convenience brands apart,” said Jeff Lenard, a vice president at the National Association of Convenience Stores. Prepared goods have relatively high profit margins, particularly important for convenience stores that face declining sales of traditional staples, including tobacco and gasoline, Mr. Lenard said.
In the United States, 7-Eleven is the biggest convenience store chain, but the market is fragmented. Tens of thousands of store operators compete for fresh food, not only with one another but also with fast-food retailers.
Mr. Dacus, 64, has worked in retail for more than three decades. He was on the Seven & i board of directors when he was tapped to spread overseas the qualities that make 7-Eleven so loved in Japan.
In the past, he said, “we took a low-risk, low-return approach.” Management was too focused on Japan and too hands-off with operations in other countries. “We could have been much more aggressive,” he said. “The flip side of that is there’s that much opportunity out there for us as we shift our focus.”
Industry experts and Mr. Dacus acknowledge, however, that there are a number of reasons the Japanese convenience store model cannot easily be replicated in the United States.
Two decades ago, the Japanese convenience store FamilyMart tried to introduce its concept to the West Coast, but the business struggled to adapt. The company found it difficult to convince Americans that a convenience store could be more than a gas station selling snacks. By 2015, all the stores had closed.
Challenges include the difficulty of transporting fresh food to locations in the United States far from city centers. In Japan, the average convenience store receives multiple fresh-food deliveries per day. Beyond that, “it’s the ways in which they maintain stock and freshness, attention to detail,” said Gavin Whitelaw, executive director of the Edwin O. Reischauer Institute of Japanese Studies at Harvard.
by River Akira Davis, NY Times | Read more:
Images: Kentaro Takahashi
[ed. Can't wait. See also: Why 7-Eleven and Other Convenience Stores in Japan Are So Special (NYT).]
