D Murali

Leverage the ‘pivot point’

D. Murali | Updated on January 04, 2012


When 7-Eleven was expanding its operations in China, what was the outstanding advantage that the company enjoyed? Cleanliness and service, says Good Strategy / Bad Strategy: The difference and why it matters by Richard Rumelt ( www.vivagroupindia.com).

“The Chinese consumers were used to being supplicants at a retail outlet, and 7-Eleven Japan’s tradition of spotless interiors and white-gloved service personnel who greeted customers with bows and smiles, as well as its good-tasting lunches, were producing twice as many sales per square foot than any competitor obtained.”

And, in Japan, the ‘pivot point’ that magnified the effects of focused energy and resources was the attention paid by the company to the extreme sensitivity of the customers to variations in local tastes, and their fondness for newness and variety. Understanding that Japanese consumers are easily bored, a 7-Eleven displays, for instance, fifty varieties of soft-drinks (out of more than 200 soft-drink brands and lots of new ones each week!) with a turnover of 70 per cent each year, the book informs.

To create leverage around this pattern, 7-Eleven Japan has developed a method of collecting information from store managers and employees about local tastes and forming quick-response merchandising teams to develop new product offerings, the author finds. He also notes that, to further leverage this information and team skills, the company has developed relationships with a number of second- and third-tier food manufacturers and found ways to quickly bring new offerings to market under its own private-label brand, at low prices, using the food manufacturers’ excess capacity.

Offers ready takeaways for the strategists who aspire to make a difference.


Published on January 03, 2012

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