Fictitious Japanese Convenience Store Analysis

Day to Day, Japan has clearly stressed upon its core competencies in Information Systems and Distribution while making business decisions.

• Day to Day included both company owned stored and third-party owned franchises in Japan. The fact that only 1% of those who apply for franchise stores become franchise owners shows that everyone wants a piece of the Convenience Store pie. In 2004, franchise commissions accounted for 68% of the It is commendable that Day to Day invests resources into the training of franchise owners, ensuring the brand image and customer-relation dynamics of these ‘Conbinis’ remains intact.

• Day to Day is clear it does not wish to compromise on its efficiency for a larger geographical presence. The market dominance strategy of the C-store chain is based on a high density market presence, with clusters of 50-60 stores around a dedicated distribution centre. This ensures

 Timely delivery.

 More deliveries on a given day without adding heavily to transportation expense.

 Complete dominance in a given area.

• Despite the absence of geographical expansion in the network strategy of Day to Day, they have stores in 70% of the prefectures in Japan. Following are a few statistics that justify the fact that Day to Day is indeed the leader in the Japanese convenience store market:

 In 2004 average daily sales at the four major convenience store chains excluding DayToDay Japan totaled 484,000 yen. DayToDay stores, in contrast, had daily sales of 647,000 yen-more than 30 percent higher than the competition put together.

 In 2004, DayToDay's operating income of 165.7 billion yen positioned it as a leader not only of the convenience store sector but also of Japan's retail industry as a whole.

 In 2004 DayToDay accounted for 60 percent of the total net increase in the number of stores among the top 10 convenience store chains in Japan.

• DayToDay follows the policy of regional merchandising, ensuring healthy demand-supply dynamics at a local level. The basic logic behind this strategy is that a store manager would be able to predict the arrival of a sports team and stock his store with food /liquor/cigarettes accordingly, but a CEO would not.

This policy has been successfully incorporated into the IT system, distribution system and indeed the entire supply chain of DayToDay.

 The concept of a single distribution centre for a cluster of 50 odd stores helps stores track sales and achieve shorter replenishment times, which are crucial for C-stores that rely heavily on perishable items that are also quick to vanish from the shelves.

 The existence of a dedicated distribution centre that receives items from all the suppliers enables