Logistics centers – microfulfillment – konbinis – convenience shops – dark stores
Local decentralized hubs – Image: @shutterstock|Ingaga
There are around 50,000 general stores, so-called konbinis, in Japan. The most famous are FamilyMart, Laswson, 7-Eleven, New Days and Ministop. The largest of them is 7-Eleven with over 50,000 employees and a turnover of 35 billion euros.
To have a numerical comparison:
- Edeka generated sales of €55.7 billion in 2019, with over 381,000 employees.
- Aldi Nord and Aldi Süd have a total of around 220,000 employees. Aldi Nord made sales of 21.8 billion euros in 2015 and Aldi Süd 59 billion euros (2019).
- The Rewe Group had sales of 62.7 billion euros in 2019, with a number of employees of over 363,000. After Edeka, Rewe Markt is the second largest food retailer with sales of 23.8 billion euros and 140,000 employees. Penny also belongs to the Rewe Group and had sales of 12.4 billion euros in 2018.
Konbinis vs. Grocery Retailers
Konbinis are so-called convenience shops, a form of retail business and a type of neighborhood shop, mini market and general goods store. Also known as a corner shop in Germany and Switzerland. In Austria it is the Greißler and is often also referred to as Greißlerei.
Convenience shops include small-scale stores whose range is rather high-priced, narrow (i.e. a few product groups are covered) and flat (i.e. only a small selection within covered product groups) and the focus is on the food sector and here in particular on products that can be consumed immediately (convenience food). .
However, additional smaller services are often also offered (e.g. order acceptance for mail order companies, lottery acceptance points or postal agencies). Convenience shops rely on the convenience of their customers and are often tied to external frequency feeders (train stations, gas stations). In Germany in particular, you can also benefit from the particularly liberal opening hours at these locations (24/7). Convenience shops also include kiosks.
The importance of this form of business has increased significantly in recent years. They can be seen as competition to both traditional food retailers and catering establishments (bakeries, fast food restaurants).
Small grocery stores in particular are currently in the process of developing into convenience stores due to the liberalization of store opening times. A 24/7 operation, such as B. is common in the USA or Japan, but German shop opening times (with a few exceptions) do not allow this.
What makes convenience stores so successful in Japan?
In these you can not only purchase items for everyday life, but also pay your electricity and telephone bills. You can also have parcels delivered to you in these konbinis. You can also withdraw and deposit money here. Pay for online purchases, make copies, send faxes, buy tickets and much more. You can even park your luggage or shopping here. Also have these transported to a specific location. Often several konbini from the same chain are located in close proximity so that the distribution of goods is cheaper and more frequent.
Convenience shops we know of are 'Spar Express', 'Nah & gut' (Edeka), 'nahkauf' (Rewe Group), 'Lekkerland' (Rewe Group), 'Rewe To Go', 'Migrolino' (Switzerland) or 'Żabka' (Poland).
The aim of the Konbinis or convenience shops is to provide local supplies. The special thing in Japan compared to us is that it is based onドミナント戦略, which is known in business administration as the 'Dominant Strategy'.
It is a strategy that provides the highest utility among all possible strategies, regardless of what the other actors do. In contrast, the dominated strategy represents one of the worst strategies. Again, regardless of what the other actors do, the dominated strategy is dominated by an always better one, the so-called dominant strategy.
What is crucial in Japan is the ever-increasing number of Konbini branches in the fight for local supplies. This also requires addressing a broad target customer base. Presence is important, but simply being present is no guarantee of success. In order to be able to assert oneself against the competition, new products and innovations must be continually advertised. We know this from Aldi with its seasonal and temporary product offers. The same applies to Medion's temporary offering highlights of technical devices. Less obvious, but also the same concept, are 'The Lions' Den' products at Rewe.
The regional dominance of many branches is the aggressively applied 'dominant strategy' of Konbini companies in Japan, which rely on the system of decentralized hubs. This allows logistics and other costs to be reduced. The greater the regional dominance, the more specifically a broad target group in urban or rural regions can be served with their local conditions and individual regional characteristics, which in turn increases the attractiveness and retains customers. The aim is not only to expand broad customer loyalty, but also to prevent the entry or spread of competition.
Further efficiency gains lie in automation, autonomous power supply, marketing advantages through regional dominance, purchasing power (higher quantities through more branches, reduced purchasing prices) and fixed cost degression (distribution of costs across several branches and higher unit sales).
These positive economies of scale are therefore the basis of Konbinis' competitive strategy. The aim is to achieve the lowest costs of all competitors. This in turn means higher profits and larger market shares for the company. This explains why many companies or corporations aim for size and in this way can conquer new markets or buy up other companies.
This targeted development of markets is carried out by Walmart, for example, in the USA. Walmart's fiscal 2020 revenue was $524 billion. Walmart now dominates a large part of US retail and is the largest company in the world by sales. The group is also by far the largest private employer in the world, with over two million employees. Its biggest competitor, the French Carrefour group, is less than half the size of Walmart.
Walmart is also the largest consumer of energy and the largest developer in the United States. In order to reduce electricity costs, the company has made its roof areas available for the installation of solar systems. Companies like SolarCity have installed solar panels and sell the electricity directly to Walmart. Walmart benefits from cheaper electricity, which is also tied to a long delivery contract. 327 Walmart stores already have solar systems. By 2020, twice as many will be equipped with solar systems.
In the mid-1990s, Walmart tried to gain a foothold in Germany at great financial expense. However, Walmart was unable to adapt to German market conditions. In Germany, Walmart encountered a retail oligopoly whose companies operated on similar business principles to Walmart. The group had no competitive advantage from the start.
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In contrast, the Rewe Group is pushing its convenience business with the purchase of Lekkerland. This is intended to strengthen the convenience food business. Lekkerland AG & Co. KG mainly serves gas station shops and kiosks. 14 logistics centers in Germany . From here, over 61,300 sales points are managed.
It will be exciting to see how the Rewe Group optimizes the picking of goods through automation. the order pickers via a headset and mobile minicomputers through the Lekkerland logistics center is interesting, but in Japan they have already come a long way. While Lekkerland serves over 61,300 sales points with each order picker able to put together up to 6 orders at the same time, Japan is already planning contactless purchasing and full automation without staff. By 2025, the majority of the 50,000 Konbinis are expected to be fully automated. RFID technology should be used for this. This is essential for full automation. At a self-service checkout, goods can be billed automatically without the need for staff.
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In this micro-fulfillment variant, it is up to the logistics centers to ensure that the supply to the decentralized hubs runs smoothly.
How the concept of dark stores will establish itself in the market remains exciting. After Amazon purchased the organic market chain Whole Foods, six Whole Foods markets were converted into so-called dark stores. Only online orders are processed here. At Whole Foods, 91,000 employees (2015) generate sales of $12.9 billion (2013).
So there are some exciting and realistic approaches as to how rural infrastructure in particular can be expanded and basic services can be secured. As you can see in the example of Japan, it is also important that politicians set the right course for this.
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