Page 152 - Accelerating out of the Great Recession

GO ON THE OFFENSIVE

ised customers a 3 percent discount on the price if they found a
competitor offering a lower price on the same product.
The strategy, which leveraged Yamada’s state-of-the-art con-
sumer-information and inventory-management system to stock
the widest and most popular range of products, proved to be
extremely successful. Although Yamada earned a lower margin
on its products, its selling, general, and administrative expenses
were lower than those of its competitors. Using its cost advan-
tage to keep prices low, Yamada maximized volumes and rapidly
gained share over Kojima. In 2000, Yamada leapfrogged into
second place, and by 2001, it had become the market leader.
While Asahi and Yamada Denki were smaller players that
competed aggressively to become market leaders, Seven-Eleven
Japan competed aggressively to cement its position as market
leader in the convenience store sector during the 1990s. It began
the Lost Decade as a market leader, but it was not complacent
about its privileged position. Between 1990 and 1999, the com-
pany doubled its 4,000-store network to 8,000, giving it a con-
siderable advantage over both its competitors and its suppliers.
Seven-Eleven leveraged its market leadership and brand
recognition to partner with Japan’s major food manufacturers in
developing cobranded products that would be retailed exclu-
sively at Seven-Eleven. Unlike private-label products that sold
at a low price point, these cobranded products could be sold at
a price equal to that of branded products—a new idea for con-
venience stores. Seven-Eleven, which had developed a good
understanding of customer needs and was able to apply that
knowledge to the development of cobranded products, realized
an increase in margins over its discount private-label products.
Of course, this meant a lower margin for Seven-Eleven’s part-
ners, but they did not complain because they gained an exclu-

■ 131 ■