Among last week’s dispatches from earthquake-hit Kyushu was an article in Yukan Fuji (April 19) about the “battle for food provisions” in the city of Kumamoto.
“When we re-opened for business in the evening, we were immediately flooded with a rush of customers,” a 30-year-old female convenience store employee relates. “We limited entry to two people at a time. Some had been waiting outside for an hour or longer. At first we didn’t limit the amount they could purchase, and they nearly bought out all the water and food items, so the ones who came afterwards couldn’t buy what they needed.”
At other stores as well, the shelves quickly emptied of essentials, leaving little for sale except alcoholic beverages and magazines.
Convenience stores’ vaunted logistics clearly cry out for a prearranged emergency rationing system to prevent hoarding and ensure that more people in disaster-stricken communities can obtain short-term emergency supplies.
The ubiquitous konbini (convenience stores), which according to the Japan Franchising Association currently number more than 54,000 nationwide, have a history in Japan dating back to the 1960s. But it was not until November 1973 that the Ito-Yokado supermarket chain inked a tie-up with 7-Eleven founder Southland Co. — formerly an ice delivery company that was established in Dallas in 1927. Tokyo’s first 7-Eleven store opened in Koto Ward in 1974.
The senior managing director of York-Seven, the Ito-Yokado affiliate that started the ball rolling in 1973, was Toshifumi Suzuki. Over the next four decades Suzuki, now 83, figured prominently in the transformation of retailing and distribution in Japan, earning a well-deserved pedestal on the pantheon of contemporary business titans beside such luminaries as Softbank’s Masayoshi Son and Fast Retailing’s Tadashi Yanai.
According to its corporate website, Seven & I Holdings Co. currently operates 18,613 7-Eleven franchises — one-third of the nation’s total — including several hundred in Kumamoto Prefecture.
Earlier this month, a dispute surfaced between Suzuki and other corporate directors over the appointment of the next company president. After the other corporate directors agreed with a major foreign investor who opposed Suzuki’s move to appoint his 51-year-old son, Yasuhiro, as the next company president, Suzuki on April 7 announced his resignation as the organization’s CEO.
“Suzuki was the first to introduce the POS (point of sale) system that performs data management at the moment of sale,” a business reporter for a national newspaper tells Friday magazine (April 29).
“By setting up ATMs on the store premises together with the launch of the Seven Bank, he boosted the stores’ convenience, attracting more customers,” the reporter said. “And Suzuki was also behind the introduction of merchandise with its own brand label that didn’t use preservatives and artificial coloring.”
But in the view of some, Suzuki’s tendency toward micromanagement bordered on the eccentric.
“One of the private brand items was a type of instant noodles called Kin no Men,” journalist Akira Katsumi is quoted as saying. “In principle, no new product would be put on sale without Suzuki sampling it first and giving his OK. But Suzuki wasn’t offered a taste until just one day before the scheduled sales launch, and he wasn’t satisfied with the product. Sales were halted and the merchandise recalled, resulting in losses of ¥60 million.”
Reputed at one time to have a “cast-iron stomach,” Suzuki was briefly hospitalized last December and, while recuperating, may have decided the timing was right to promote his son to the position of Seven & I Holdings president.
“Last December, directors at Seven & I Holdings Co. received photos and revealing documents from an anonymous source about the romantic indiscretions of one of the company’s executives,” the aforementioned business reporter is quoted as saying. “The man was demoted and Suzuki decided to use the opportunity to consider a personnel shakeup.”
Those moves, however, clearly backfired, and Suzuki made the decision to step aside.
Will his departure have any impact on what has become a major pillar of consumer retailing?
The cover story of Nikkei Business (April 18), titled “Beginning of the end of the Seven-Suzuki Empire,” did not go so far as to imply the company’s business interests were under any threat, but it did point to some worrisome cracks in its foundations.
One in particular concerned Seven & I Holdings’ allegedly heavy-handed procurements of private brand items. An unnamed supplier confided to the magazine, “Recently the company has become particularly demanding. We did our best to accommodate them up to now, but when we couldn’t come to terms on costs, they abruptly dropped us for another source. We’ve ended our dealings with them.”
Another point of disagreement reportedly concerned resistance to Suzuki’s “Omni-channel” strategy, calling for consolidation of the entire business group, which includes not only convenience stores but such diverse businesses as Denny’s restaurants, Tower Records, Ito-Yokado supermarkets and the Sogo and Seibu department stores.
“In the wake of Suzuki’s departure, Seven & I may find itself in a situation analogous to what happened to Yugoslavia following the death of its strongman Josip Broz Tito in 1980,” suggested an unnamed securities analyst. Tito had succeeded in forging diverse ethnic and religious groups into a single socialist nation, but by the end of the East-West confrontation, Yugoslavia split apart after a series of continuous civil wars.
What the company clearly needs, Nikkei Business asserted, is the emergence of a new “leader” with the ability to make practical business decisions, enabling the group to restructure while avoiding a “civil war” of its own.
Yukan Fuji (April 21) opined that, both internally and externally, undoing Suzuki’s legacy in one clean sweep would present difficulties. The likely outcome is that at the annual shareholders’ meeting on May 26, the board of directors will announce that Suzuki will maintain some affiliation with the organization — probably as “adviser emeritus.”
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