This article is reprinted from Genbridge Capital
In the current global economic context, the uncertainty and complexity of the macro environment are bringing unprecedented challenges to people. The combination of various factors not only affects the purchasing behavior of consumers, but also brings huge challenges to the consumer industry.
Therefore, prior to this in-depth trip to the Japanese food industry, we conducted a preliminary research on what our partner companies wanted to learn during the study tour. The issue that everyone is most concerned about also represents the general anxiety of the majority of consumer entrepreneurs: "In the face of a highly uncertain external environment and internal and external business challenges, where are the opportunities for structural growth in the new cycle?"
Qi admits that even in the current internal and external environment, there is still huge growth potential in the consumer industry. The growing consumer demand for high-quality, good-priced products provides a huge market space for consumer companies that can adapt to changes and innovate products and services. During the "lost 30 years" of Japan's consumer industry, the experience in retail management and product development is worth learning from.
From the perspective of retail management, Japan still gave birth to many excellent consumer companies during the economic recession, such as the world-renowned 7-Eleven convenience store chain, don Quijote discount stores, Nitori, the "Japanese version of IKEA", the community aquatic product chain Lopia, a fish and meat killer business in the corner, and Ozeki, a food supermarket that maximizes the efficiency of single-store sales through product selection, and Seico Mart, a chain of convenience stores that have achieved great success through unique positioning. Although the solutions they provide are different, they have undoubtedly been proven over a long period of time and have become the benchmark for each vertical category.
From the perspective of product research and development, the "craftsman spirit" of Japanese companies has always been studied and respected by everyone, and their products are not only delicious but also good-looking, providing consumers with a "must buy reason" in terms of packaging, shape, texture and cost performance. Behind this is not only the requirement for product developers to have a unique perspective and values, but also a set of very scientific and detailed product development, product portfolio and supply chain management methodology, which is very worthy of Chinese consumer entrepreneurs to learn back, adapt measures to local conditions to integrate into their own business management, and finally create products with high quality and price ratio for Chinese consumers.
In this article, we have summarized the wonderful sharing content of the four experts invited during the study visit, and shared it with our peers in the consumer industry who want to learn and progress together. You can learn about the very universal and important views of the four consumer fields of retail format, retail operation, product development, and product marketing, and I believe that everyone can get corresponding inspiration and solutions from them.
1. Katsumi Fujimaki: "Evolution to the Retail Supply Chain, Building Moats and Endogenous Growth"
The Association is Japan's oldest consulting company, with consulting projects covering more than half of Japan's listed companies, and has been popularizing the methodology of "efficiency improvement" in all walks of life in Japanese society.
The sharing of the Ability Association mainly focused on the changes in the "retail supply chain". Katsumi Fujimaki, a senior consultant, talked about the three key points of retail supply chain competitiveness for the visiting group, namely the attractiveness of store products brought by 52 weeks of MD, the efficiency of the supply chain brought by the combination of manufacturing and sales, and the differentiated products and cost performance achieved by private label retail.
1、零售业态趋势和52周MD（MD，Merchandise Development）
There is a trend towards the increase in the number of small and medium-sized retail stores in Japan. The small and medium-sized stores that are rising are mainly positioned as community stores, with a store area of 300~400 square meters, focusing on "fast, provincial, good, multi, and thorny (exciting)". One of the stimulus, i.e. low prices every day. But if the low-priced goods are always the same, consumers will get tired of it, and it will be difficult to keep customers coming back. Therefore, the store conducts weekly surprise activities (MD) to attract customers to the store, so that consumers can buy their favorite products in a short time. The 52-week MD makes a weekly plan to change the product line, and the company formulates a weekly plan, and quickly verifies whether the plan is accurate through execution, adjusts based on the original plan, and feeds back into the next week's plan for continuous improvement.
Balancing promotions with high value-added products through 52 weeks of MD to provide products that meet customer expectations: Japanese consumers go to supermarkets 4.8 times a week to make purchases, and stores want to provide products that "meet customer expectations" and attract customers to their stores on these "4.8 times". However, the premise of attraction cannot be completely "promotion", otherwise the gross profit margin will decline, and more consideration needs to be given to providing higher value-added products, such as menu sets (consumers will eat hot pot in winter, and pack all the ingredients related to hot pot, so as to increase the unit price and profit margin).
2. Manufacturer and Dealer Alliance: Combination of manufacturing and sales
From a retail point of view, prices in China and Japan are basically on the rise, and consumers will try to save money on the basis of health and safety, and their choices have become more "savvy". In the face of such a reality, manufacturers should pay more attention to reducing supply chain losses to improve efficiency while pricing remains unchanged. This requires the cooperation of retail enterprises and manufacturers.
Taking 7-11 as an example, the combination of manufacturing and sales will be the direction of future supply chain development: 7-11 has achieved strong combination and complementary advantages by jointly developing products with suppliers. 7-Eleven is able to achieve quality control and low-cost supply through joint product development, and manufacturers can think backwards about what products they need to produce by using 7-Eleven stores as a starting point.
3、自有品牌零售:Seico Mart案例
Seico Mart是谁?
Founded in 1971, Seico Mart is a convenience store chain brand originating in Hokkaido. There are about 1,200 stores nationwide, and about 8 percent of the stores are directly operated stores, with store-side sales of about 10 billion yuan. The company has been ranked first in customer satisfaction with convenience store brands in Japan all year round.
3.1 Business model and differentiation
Unlike the top three national convenience stores, Seico Mart, which ranked fourth, has developed product development capabilities based on Hokkaido's abundant agricultural products by taking advantage of Hokkaido's abundant agricultural resources.
The supply chain adopts the model of manufacturing + retail, and realizes the model of "from crop cultivation, animal husbandry and seafood product procurement, to the processing and manufacturing of goods, to the distribution of goods", and realizes the provision of cost-effective private label products, and can open stores in Hokkaido villages and towns with a population of only 3,000, establishing a unique positioning that the top three convenience stores in Japan cannot break through.
3.2 Seico Mart品类丰富
The total number of SKUs is ~3000, of which 1200 are private label products.
Hot bento boxes cooked on site: Unlike other convenience stores, bento boxes are delivered by the factory, and Seico Mart processes them in-store. On the one hand, it can ensure the demand for goods in real time, reduce opportunity loss and food waste, and on the other hand, the bento cooked on the spot has a better taste and is more popular with consumers.
A wide variety of cost-effective pre-made dishes: Seico Mart has the largest variety of pre-made dishes in convenience stores, and given that Hokkaido has a large number of singles and elderly people living alone in rural areas, consumers need to save time and effort, and at the same time, they need to add an extra side dish. Seico's side dishes are priced within ~110 yen (5 yuan).
Rich wine selection: It has self-produced and overseas directly sourced products, among which the gross profit margin of self-produced red wine is ~70%, and the gross profit margin is very high through the self-controlled supply chain. South American wines harvested directly from overseas are known as the most cost-effective wines in Japan, enhancing the store's professionalism and cost-effective image.
Products developed based on local demand and specialties: The company develops products such as melon-flavored ice cream based on Yubari's own cultivation of cantaloupe (high added value) to increase the utilization value of raw materials, specializes in the development of instant noodle products that are more suitable for Hokkaido, and grows and supplies processed foods under its own brand such as pre-made vegetables on its own farm.
2. Nariaki Kawahara: "The Direction of Change in the Retail Industry"
Mr. Nariaki Kawahara is an expert in retail reform in Japan, and is also the former president of Lawson 100 and president of Seijo Ishii, who has worked in Ito-Yokado, Boston Consulting Group, Lawson convenience store and other companies, and has 20+ years of experience in the retail industry.
In the class, Mr. Kawahara introduced the current development trend of Japan's retail industry from a macro perspective, analyzed the difficulties faced by Japan's large supermarkets, and dismantled the development status of different retail formats. In addition, Mr. Kawahara also focused on the case of Japanese convenience store format and Lawson convenience store, and gave suggestions for the development of convenience stores to professional stores "EDLP" (daily low price) in the future.
Mr. Kawahara believes that the retail industry should actively deploy the upstream (such as UNIQLO's SPA model), improve the upstream and downstream information sharing chain, connect suppliers and retailers, help shorten the delivery cycle, improve inventory management, etc. Second, the retail industry should also actively collect user information from consumers and provide upward feedback to improve the overall supply chain efficiency.
1. The Japanese retail market and consumer demand are changing at an accelerated pace, and these complex variables are finally reflected through business competition:
Japanese retail, which is dominated by large supermarkets such as department stores and shopping malls, is facing very severe challenges, while category stores and specialty stores are on the rise;
Taking the 2022 annual performance data of the Japanese retail industry as an example, in the top 20 rankings, large-scale comprehensive formats and specialty stores have been evenly divided, which is also similar to the development of the Chinese market in the general direction;
2. Large-scale retail formats have the following pain points:
The number of stores is too large, and the larger the scale, the lower the operating profit margin;
The product structure of large-scale supermarkets cannot meet the needs of consumers; at present, the selling points of supermarkets are only food, and the growth points of large-scale supermarkets in the future are medical care, clothing, home appliances, etc.
When Japan's economy developed rapidly, the foundation of some industries and enterprises was not solid;
3. When the large-scale retail format is declining, the retail format with good business development has the following practical experience:
First, for the big retail format to recover, it needs to provide these values to consumers:
Necessity - Essential, to become a "place that cannot be without";
Destination is the place where consumers "want to go";
The emotional value of the place - Sense of Place, which can "connect the area or a place of friends" to grow together with the region and provide high-quality services to the region. For example, AEON and Xiyou's EDLC strategy (Every Day Low Cost);
4. Small retail stores began to divide the entire retail market, and comprehensive stores began to transform into professional stores, constantly iterating the category and format combination, among which there are several key points:
The most popular type of supermarket in Japan is discount retail;
The business supermarket started by providing cost-effective ingredients to restaurants, selling a large amount and relatively cheap prices;
Cheap supermarkets, which are purchased at a cheap cost and then sold at a lower price;
Second-hand stores, Japan has different communities and people, and everyone wants to buy clothes at a cheaper price;
Improvement of technology: Due to the improvement of technology, the quality and taste of frozen food have been greatly improved. Consumers will think that frozen food is a delicious pre-made food category;
Featured services: Seijo Ishii Supermarket, which sells fish, meat, and some processed foods, and Seico Mart, a retail convenience store, which provides special services and sells specialty products to local residents in Hokkaido;
5. Taking Lawson convenience store as an example, Mr. Kawahara analyzed the potential growth opportunities of small retail formats:
On the surface, Japanese convenience stores are doing very well, but they are also facing a very big dilemma. In the market environment of declining birthrate and aging population, the number of existing stores is too large, the market is saturated, and the operating profit margin is declining.
In the face of challenges, Lawson adopts 4 brands with different positioning (Lawson, Lawson 100, Lawson Natural, Chengcheng Shijing) to meet the diverse needs of subdivided groups, which is a multi-brand competition method for small stores;
According to different customer groups, the four types of Lawson stores have differences in business hours, store models, and main products. For example, there is Lawson 100, which is aimed at housewives and silver-haired people, and all products are 100 yen, focusing on the strategy of "price first", and Lawson Nature, which mainly responds to the needs of women and pursues a natural lifestyle;
Suggestions for the future development of convenience stores: The key to the future "EDLP" (low price every day) of professional stores lies in supply chain control, for example, Lawson will cooperate with upstream + downstream users to complete the cycle of supply chain management;
Upstream: The retail industry should actively deploy upstream (such as Uniqlo, etc.), improve the upstream and downstream information sharing chain, connect suppliers and retailers, help shorten the delivery cycle, improve inventory management, etc.
Downward: At the same time, the retail industry should actively collect user information from consumers and provide feedback upwards to improve the overall supply chain efficiency.
3. Hiroyasu Yamamoto: "The Ability to Make Commodities Sell Explosively"
Mr. Yamamoto, an expert in the development of explosive products and a researcher of potential user needs, introduced the secrets behind the explosive products to the Qicheng visiting group. Mr. Yamamoto worked in Itoen, a Japanese beverage company, and experienced the development of the company from 1 to 100, and then joined Coca-Cola Japan and Japan Tobacco Industry Co., Ltd., working as a brand manager for 20 years, and guiding the company in "self-branding" for 10 years.
Focusing on the logic of product development and marketing, Mr. Yamamoto analyzed the thinking logic and pitfalls behind each popular model based on his own successful cases in the past. Topics include how to change perspectives to win consumer recognition, how to position products and develop explosive products. In addition, Mr. Yamamoto also elaborated on the practical application of product development methodology by sharing practical cases of explosive products in the Japanese beverage industry.
Mr. Yamamoto emphasized that evergreen products must be a win-win situation, accompanied by the unanimous recognition of enterprises and customers. Companies need to think about how to develop best-selling products in the long run, so that consumers can really feel that the company is helping them.
1. The product research and development logic of the evergreen brand
Only by "helping consumers" can sales and goodwill be boosted, otherwise bad inventory will accumulate and profits will be damaged. The origin of best-selling is the "altruistic model", not the sales model. Evergreen products must be a win-win situation, accompanied by the unanimous recognition of enterprises and customers.
Find accurate product positioning and produce products that meet consumer pain points. At the same time, engage consumers and improve consumer trust through sharp responses, ultimately improving brand strength and influence. This can be done by using the "non-...... No", that is, if there is no product, it will be more difficult for consumers, so that the road of the product will be wider. McDonald's, Starbucks, and Apple all have certain brand value, and many Apple users are "must Apple".
There is no universal experience in the development of explosive products, but each popular model has commonalities in product naming, appearance/packaging, and the ritual sense of unpacking. First of all, the naming of the product is very important, which determines 50% of whether a product can be sold out, and secondly, the exquisiteness of the product's packaging and appearance contributes to the success rate of 20%. The quality of the product itself is less important for whether it can become a hit, but this does not mean that the product itself is not important, but the hit needs to provide more added value on the basis of a good product.
Examples: Many food manufacturers in Japan (such as crabs, rice, agricultural products, etc.) are doing branding, such as pasting photos of farmers on vegetables to create a brand impression that the products can be traced, and high-end pork brand Super X (with a good product name, 50% success) by putting a very cool Super X label on pork to achieve product sales.
2. How do enterprises select and develop products according to consumer needs?
First of all, it is necessary to select unique products in the matrix of "competitor/customer" and "aware/unaware" to create a first-mover advantage.
Second, the emphasis should be on "discovering the needs that the customer has not discovered", rather than directly asking the customer "what do you want". For example, Suntory's sales of whisky have increased tenfold without raising the price of the product, due to Suntory's introduction of a new way to drink whisky, Highball (with ice cubes and carbonated water).
3. Product R&D cases in the Japanese beverage industry
Background: In the 90s of the last century, Japan's economy was in decline, and the consumption of beverages showed a trend of "health", such as adding vegetable juices and vegetable fibers to drinks. Japanese consumers' demands for beverages are gradually tending to be "delicious" + "healthy", and there is a demand gap for healthy drinks.
Product positioning: In response to such consumer needs, each company has different product positioning: Suntory's oolong tea adds "digestion" ingredients to create a "healthy drink" product image; Suntory's black oolong tea adds "plant fiber" to help control sugar, which is a "solution" drink, and Kirin's black tea has become a best-selling product because it innovatively uses spices to create a very realistic black tea taste.
Product naming is half the difference between success and failure. Take "Japanese sencha" as an example: because the brand name is difficult to pronounce, it makes consumers feel very unfamiliar, and sencha sales are very small. After the problem was reported on 7-11, the company adopted the method of "changing the brand name + advertising investment". For example, the emphasis on "tea fields" in advertising to help with marketing. In the 80s~90s, the Japanese public drank tea like drinking water, but in the past, Japanese society did not have the habit of "consuming bottled tea", and later the company was inspired by "Evian bottled mineral water" and sold tea drinks in bottled form, which further increased sales.
4. Tomoaki Kuzuka: "Food R&D from the Perspective of Living"
Mr. Kuzuka worked at Ajinomoto and later served as deputy general manager of Coca-Cola's Tokyo R&D center. In his class, he talked about how to disassemble the real needs of consumers, so that manufacturers can capture the details of the consumer side with a bird's-eye view of the overall situation, and make products that lead the future trend.
Mr. Hisuka emphasized the application of tacit knowledge in the field of food development, for example, in the process of developing white sauce, the tacit knowledge of the master's cooking experience is explicit through testing technology to produce a universal industrial product, so that ordinary consumers can make the same dishes as chefs.
1. The manufacturer of the product should have "three eyes":
The first is the "bird's eye", which can overlook the overall situation, the second is the "insect eye", which can carefully and accurately observe the changes in details, and more accurately capture the trend of the world, and the third is the "fisheye", which can read the trend of the water flow, and understand the trend and future direction.
2. Dismantle the real needs of consumers by dismantling the "subject-verb-object" of demand:
The subject is the object of the need (1) who will use it, the predicate is what needs to be done (2) how to use it, and the object is what needs to be done (3) what is used. Use a chair as an analogy. Chairs are for people to sit on, and when you think about the verb and predicate of "sit", you will think about its subject or subject, who will sit on it. Many manufacturers, including food manufacturers and factories, think in terms of nouns and only consider "chairs". But for example, a wheelchair is also a kind of chair, let Porsche do it, it will develop a different wheelchair. A person in a wheelchair may need to pick up something in a higher position, or the person who is talking to him is taller and he needs to adjust the wheelchair to the same height.
3. If you want to find the real needs of consumers, you must look at the needs from the perspective of customers
President Suzuki, the president of 711, used to think "for the sake of the customer", but this philosophy has been changed to "think completely from the customer's point of view". Only by empathizing can we imagine the goods and services that customers really need.
By extending the product matrix + tacit knowledge explicit, we can meet the needs of consumers.
Extend the product matrix: Manufacturers can explore the diversity of food, such as aromas and sauces, to make the cooking process interesting, and add something new to increase the value of the product, such as the fact that there is no essential difference between opening the door upwards and opening it to both sides, but driving upwards can increase the value of the car.
Explicit knowledge: In the development of food, it is necessary to effectively use the combination of tacit knowledge and explicit knowledge, for example, when developing a sauce: the manufacturer monitors the whole process of cooking a Parisian chef with equipment (tacit knowledge, relying on experience), trying to find his muscle memory and experience when cooking, hoping to generalize and productize this master's craftsmanship (explicit knowledge, objectivity), so that ordinary consumers can also make the same dishes as chefs.
The innovation and progress of Japan's retail and food industry does not only come from the efforts of individual enterprises, but also from the collaboration and consensus of various enterprises in the industrial chain. Enterprises on the link deepen cooperation with each other, and jointly contribute to the maximization of the circulation efficiency of the whole society.
The purpose of the study visit is also to share with experts and visit the site so that partner companies can gain enlightening experience for future business development. Through the introduction of experts' perspectives, we will promote retail enterprises to obtain the perspective of manufacturing enterprises, and brand enterprises to obtain the perspective of retail enterprises, and collide with more sparks and opportunities under the mutual exchange of various aspects, and work together to bring more good products and good services to Chinese consumers. Fellows in the consumer industry who are interested in this kind of content are welcome to communicate and discuss with us.