FamilyMart Challenge

Japan’s Family Mart Takes the Convenience Store Upscale
- (LA Times Business – February 20, 2006)

Tokyo-based FamilyMart Co. (Japan’s No. 3 convenience store chain) is betting that the US convenience store customer will respond to a new offering in convenience stores by carving out a profitable niche by going more upscale. It hopes to have as many as 30 of its upscale Asian-inspired Famina shops in the Los Angeles area by the end of this year and open another 250 stores in the US by 2009.

“They’re offering something no one else does in a convenience store format,” said an analyst.

FamilyMart stresses hospitality, with its one-on-one “smile training” for its employees in Japan. the company will have to muster that kind of enthusiasm as it moves into an increasingly competitive market in which maintaining consumer loyalty is one of the biggest challenges.

FamilyMart faces other challenges. Some customers wrinkled their noses at the prices and analysts say the company must overcome obstacles that typically accompany entering a new market, such as a lack of name recognition.

“7-Eleven is convenient but, you know, this sort of combines convenience with gourmet food,” said a 22-year student customer.

Another twist on the traditional convenience store model: Modern Design. Experts say differentiation makes sense in today’s market.

According to the National Association of Convenience Stores, the industry – with 2004 sales of #395 billion, about two-thirds of that from motor fuel – is increasingly looking to build loyalty beyond the traditional factors.