FamilyMart looks to halt Asia losing streak after Thailand retreat

Japanese convenience store operator counts on trading house Itochu for comeback

SHIHO MIYAJIMA, KENTA ANDO and MARIMI KISHIMOTO, Nikkei staff writers

 

FamilyMart has decided to withdraw from directly managing convenience stores in Thailand. (Photo by Marimi Kishimoto)

 

TOKYO/BANGKOK -- For convenience store operator FamilyMart, the sign of trouble in Thailand may be traced back to its fraught rollout of Japanese oden stew pots to unfamiliar customers. 

 

The offering, widely popular in the home market, never gained much traction. "I have never tried that before," said one customer coming out of the store. "I don't like the fish smell," commented another.

 

With lackluster results in the broader market, symbolized by the oden flop, FamilyMart in May transferred its 49% stake in its Thai joint venture to partner and local conglomerate Central Group, marking an effective exit.

 

Full story: https://asia.nikkei.com/Business/Retail/FamilyMart-looks-to-halt-Asia-losing-streak-after-Thailand-retreat

 

-- © Copyright Nikkei Asian Review 2020-08-10

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

"I dont like the fish smell" commented another.."

 

Direct proof that something weird is going on in Thailand if a Thai said this. 

Maybe Thailand's problem is having a convenience store every 30 ft of road

No Family Mart. But, we have five 7/11s and a MaxValue within a few hundred meters of each other. Two of the 7/11 are directly across the street from each other. Anyone with a decent arm could toss a rock and hit a third! 

I'd be curious to see the difference in franchise fees, franchise agreements, and overall economics of opening a Family Mart franchise vs a 7/11.

 

 

Edited August 9, 20205 yr by impulse

7 11 has franchise stores and corporate. If your franchise is real busy, they open a corporate store metres away. 

There are appropriately 10,000 7/11`s in Thailand. Their largest market in the planet. What was their business model? If we build them, they will come? Is there never a point of saturation? How many convenience stores does this nation need? 

7-11 stores are everywhere, that's all the average thai person knows. Hard to change that mentality.

2 hours ago, pookondee said:

"I dont like the fish smell" commented another.."

 

Direct proof that something weird is going on in Thailand if a Thai said this. 

But somtum poo pla-raa is the nectar of the gods ????????????

1 hour ago, Colabamumbai said:

7 11 has franchise stores and corporate. If your franchise is real busy, they open a corporate store metres away. 

What's this have to do with Family Mart withdrawing from the market?

1 hour ago, spidermike007 said:

There are appropriately 10,000 7/11`s in Thailand. Their largest market in the planet. What was their business model? If we build them, they will come? Is there never a point of saturation? How many convenience stores does this nation need? 

I've driven in many areas upcountry and gone as far as 1-2 kilometers without seeing one...so there is still a lot of virgin territory out there.

1 hour ago, spidermike007 said:

There are appropriately 10,000 7/11`s in Thailand. Their largest market in the planet. What was their business model? If we build them, they will come? Is there never a point of saturation? How many convenience stores does this nation need? 

Good summary and good question.

 

But is it more to do with how clever the marketing folks are at 7/11, especially their strategies to get people through the door. About 5 years back I tasked my Thai MBA students, in small teams to study and define the step by step marketing strategies of 7. The Case Study labelled the 7/11 Supply and Value Chain.

 

Ninety % of the students weren't enthused and thought it would be a boring study. It didn't take long for them to realize what they were finding was very very clever, including the step by step strategies/methods 7 uses to take potential customers through the door, look at various products and buy, and how they have a range of strategies to get started / get the old and the potential customers through the door. 

 

But of course 7 in Thailand is a franchise from the master brand owner abroad. My students also discovered the master policies and regulations imposed by the master brand owner are very clever, all cleverly designed to bring good returns for: the brand owner, the franchisee and the customer.

 

 

It's been apparent for some time that Family Mart has been on the skids...many stores in disheveled condition in marginal locations with indifferent staff. I think the low point for me was when I saw "tip" jars at the registers at a couple locations. This was a sign of complete management indifference and/or breakdown. Meanwhile, 7-Eleven has been going from strength to strength...opening bigger more full service outlets around the country. They have been adding many new products and services at these expanded locations like the All Season's and Kudsons cafes. Their new selection of dairy based dessert cakes are very good and easily compete with others elsewhere at 3x the price. I have always found "Seven" workers to be a smiley and happy bunch, which is a sign they are being treated fairly (by Thai standards) by their employer. Also, during this Corona period, every Seven I've been in has been religious about taking my temperature and offering me a squirt of handsanitizer, while several FMs I went to didn't even have anyone at the door. Now that Central Retail group has taken full ownership of FM hopefully things will rapidly improve. If there is one company in Thailand that can give CP Foods a run for its money, it's the Central Group.

Edited August 10, 20205 yr by Pattaya Spotter

I don't like FamilyMart, in my local store you can't see the till display, and the bill always seems a bit high if you buy more than 1 item.

Edited August 10, 20205 yr by BritManToo

12 minutes ago, scorecard said:

Good summary and good question.

 

But is it more to do with how clever the marketing folks are at 7/11, especially their strategies to get people through the door. About 5 years back I tasked my Thai MBA students, in small teams to study and define the step by step marketing strategies of 7. The Case Study labelled the 7/11 Supply and Value Chain.

 

Ninety % of the students weren't enthused and thought it would be a boring study. It didn't take long for them to realize what they were finding was very very clever, including the step by step strategies/methods 7 uses to take potential customers through the door, look at various products and buy, and how they have a range of strategies to get started / get the old and the potential customers through the door. 

 

But of course 7 in Thailand is a franchise from the master brand owner abroad. My students also discovered the master policies and regulations imposed by the master brand owner are very clever, all cleverly designed to bring good returns for: the brand owner, the franchisee and the customer.

 

 

An operation on the vast scale of something like Seven in Thailand must surely be down to expertise in distribution and logistics...how they track inventory and restock all these thousands of outlets with fresh and perishable stock daily is truly amazing. Also, I dont know if the master franchisor is Seven in Japan or the USA...but the concept of Seven in the United States and the Japanese/Asian-Thai versions is completely different and serve totally different markets.

59 minutes ago, Pattaya Spotter said:

I've driven in many areas upcountry and gone as far as 1-2 kilometers without seeing one...so there is still a lot of virgin territory out there.

20 kms from my house in Changwat Udon Thani.

47 minutes ago, Pattaya Spotter said:

An operation on the vast scale of something like Seven in Thailand must surely be down to expertise in distribution and logistics...how they track inventory and restock all these thousands of outlets with fresh and perishable stock daily is truly amazing. Also, I dont know if the master franchisor is Seven in Japan or the USA...but the concept of Seven in the United States and the Japanese/Asian-Thai versions is completely different and serve totally different markets.

Sure and it is true that in each country the most profitable long-term market is different, so naturally 7/11 will target that market.

 

Convenience store operation is today very sophisticated in many countries including in Japan. When my MBA students did their case study they discovered that 2 or 3 highly successful operators in Japan owned 2 and even 3 different brand names, all targeted successfully at different customer profiles, but as said, all totally owned by the same master owner. And sharing the same infrastructure, same big picture management processes and staff.

 

Yes they are very well organized in terms of fast accurate supply and logistics into each individual store, impressively so.

 

But there' also the need for clever marketing and sales to ensure the stock in stores is quickly converted to revenue and margin, and again 7 does this impressively well.

Edited August 10, 20205 yr by scorecard

51 minutes ago, Pattaya Spotter said:

An operation on the vast scale of something like Seven in Thailand must surely be down to expertise in distribution and logistics...how they track inventory and restock all these thousands of outlets with fresh and perishable stock daily is truly amazing. Also, I dont know if the master franchisor is Seven in Japan or the USA...but the concept of Seven in the United States and the Japanese/Asian-Thai versions is completely different and serve totally different markets.

CP chicken owns 711 Thailand. 

they could start by selling more than the same stuff that is sold in 9,000 7/11s, 4,000 Big C MIni, 5,000 Tesco MIni.  There is no differentiation in Thai mini marts, so I can't see how they can all make a profit. Same old, same old. 

Around where I live we've got loads I only go to FM as a last resort I think the biggest problem they have is the staff they are not a patch on the 7/11 staff where I live I maybe use 4 different ones depends where I am infact I went to one a few weeks ago were I had not been for a while and right away the girls asked me where I'd been, Vely Hansum man,

Now we have a couple of the Big C extra's in the area the staff dont seem much better than FM.

14 minutes ago, scorecard said:

Sure and it is true that in each country the most profitable long-term market is different, so naturally 7/11 will target that market.

 

Convenience store operation is today very sophisticated in many countries including in Japan. When my MBA students did their case study they discovered that 2 or 3 highly successful operators in Japan owned 2 and even 3 different brand names, all targeted successfully at different customer profiles, but as said, all totally owned by the same master owner. And sharing the same infrastructure, same big picture management processes and staff.

 

Yes they are very well organized in terms of fast accurate supply and logistics into each individual store, impressively so.

 

But there' also the need for clever marketing and sales to ensure the stock in stores is quickly converted to revenue and margin, and again 7 does this impressively well.

7-Elevens (and "corner markets" and conveniece stores in general) in the US have a somewhat sketchy reputation, as they are often found in down-market areas and sometimes charge high prices for days old stock. Whereas in Asia, they are an integral part of the crowded urban landscape (as well as exurban and country areas) and feature a plethora of common everyday household and food items at competitive prices. In fact, in Asia, locals and travelers can satisfy all their food needs from the local Sevens and other convenience store chains (especially in Japan/Taiwan from my first hand experience).

5 hours ago, RichardColeman said:

Maybe Thailand's problem is having a convenience store every 30 ft of road

5 minutes from me we have a 7-11, 3 shops further down there is a Lotus lek and next door to that a CJ store... perfect for everything needed daily.

in Penang, you hardly see any 7/11

2 hours ago, BritManToo said:

I don't like FamilyMart, in my local store you can't see the till display, and the bill always seems a bit high if you buy more than 1 item.

I find that with the till displays at Tesco express. My local one always seems a bit grubby too. 7/11 seems a better experience.

1 hour ago, Bender Rodriguez said:

in Penang, you hardly see any 7/11

Sure and it might be interesting to know why. One possibility is that Malaysia doesn't allow franchise operations, or strongly limits them, perhaps by industry. . 

I will miss you FamilyMart.

So if Central will be running them, will they become mini Tops stores ??

 

I never liked Family Mart, and I was surprised to find it was Japanese.  The other Japanese supermarket chain Aeon is Japanese, and it’s expensive, and not so good either.

it seems these two are simply after the lower class cash at inflated prices-and the Aeon credit thing is a big scam also aimed at fleecing the not so well to do

11 hours ago, BritManToo said:

I don't like FamilyMart, in my local store you can't see the till display, and the bill always seems a bit high if you buy more than 1 item.

you've been falling for that trick for years i expect ,  your probably down thousands.

I am always struck the shear number of convenience stores in Thailand.

 

In Thailand, population ~60M close to 12,000 7-11's. California, population ~40M, 1700 7-11's.

 

Then add in the Family Mart, Lotus Express, the list goes on. 

 

When does it reach saturation?