CSD Cover Story: All in the Family — Inside Japan’s FamilyMart
By John Lofstock, Editor-in-Chief, Convenience Store Decisions
Through special arrangement with Convenience Store Decisions magazine, what follows is an excerpt of the current cover article, presented here for
discussion. Click to view the entire article: All in the Family — Inside Japan’s FamilyMart.
With the experience of operating 12,452 convenience stores worldwide, Tokyo-based FamilyMart Co. felt the time was right to take on the complex U.S. market. So while much of the attention over the past six months was being paid to Tesco’s much-anticipated entry into the U.S. early next year, FamilyMart was quietly building a network of six stores in Southern California.
Japan’s No. 3 convenience store chain is now poised for rapid expansion in the U.S. It hopes to have as many as 30 of its upscale, Asian-inspired Famima shops in the Los Angeles area by the end of this year and 250 in the U.S. by 2009, according to Shiro (Sho) Inoue, president of FamilyMart’s Famima Corp. subsidiary.
At first glance, Famima stores have the look and feel of modern convenience stores. The front counter is well organized and free of clutter. It features two registers to minimize the wait in line during busy times and carries high-impulse, high-margin items like gourmet chocolates and snacks.
Famima also makes good use of display cases and hardwood floors, both of which make the company stand apart from its c-store competitors.
Shelves are stocked with the upscale items you would expect to find at specialty retailers. Organic products dominate the offering highlighted by organic coffees, cereals, candy snacks and even health and beauty items like toothpaste and mouthwash.
The price tag on some of these items is also atypical for a convenience store. Some of the specialty coffees and teas retail for as much as $20.
The foodservice offering is supported with indoor and outdoor seating, fresh baked goods, gourmet coffees and teas and a Coke branded soda fountain. At press time, the company was in the process of securing liquor licenses to sell beer and wine.
Price point is one area where Famima seeks to differentiate itself from specialty marketers. Prices for menu items are in line with its convenience store competitors rather than the specialty stores. Meals range from as little as $4 to $6.95, a relative bargain compared to local restaurants.
Geared toward on-the-go consumers, Famima is a hybrid featuring successful components of convenience stores, supermarkets and natural foods stores.
“When we first opened our West Hollywood store, many people did not know what type of business we were,” said Mr. Inoue. “From our modern store design, some people mistook us for a bookstore or cell phone store. We understand the need to build our brand awareness and this will take time. But we believe we can steadily increase awareness by expanding to new markets and continuing to provide satisfying products and services.”
FamilyMart’s focus is on maximizing space and, to that end, parts of its stores are reset daily. As an example of how it might work in the U.S., many stores market single-serve doughnuts, cookies and cakes on high-end gondolas near the front of the store. This is great for the morning rush, but sales of those items normally fall off as the day goes by. Rather than maximizing this prime real estate, the items do little more than simply taking up valuable space. Famima’s Japanese stores avoid this entirely by rotating items throughout the day so, no matter what time customers come in, the items that greet them are relevant to the meal or snacking occasion.
“Consumers in America rarely say they are going to go to the convenience store for the majority of their shopping, but people in Japan do it all the time,” said Hidenari Sato, Famima’s chief operating officer. “We thought this kind of concept could be successfully recreated in the U.S., and, so far, it seems to be working very well.”
Discussion Questions: What aspect of Famima detailed in the Convenience Store Decisions‘ article do you believe will have the most resonance with
American consumers? Will Famima be successful as it expands its operations to other parts of the U.S.?