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7-Eleven heads to Okinawa to expand its reach in Asia

7 Eleven Japan - Retail in Asia

Seven-Eleven Japan is finally setting up shop in Okinawa, the only Japanese prefecture where it has yet to open an outlet. The convenience store operator plans to use the southern island as a stepping stone for expanding sales of its in-house brand across Asia, where demand for Japanese food and snacks is growing.

On Friday, Seven-Eleven Japan announced it will enter Okinawa in 2019 and open around 250 outlets there over the following five years, mainly in Naha, the capital.

While the company is keen to boost domestic business, Okinawa’s proximity to foreign markets also proved an attractive draw for Japan’s largest convenience store operator. President Kazuyuki Furuya said the company plans to use the prefecture as a “transportation hub” for expanding sales of its Seven Premium brand.

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“Asia is full of attractive markets, including China,” Furuya added.

Okinawa has traditionally not been an ideal location for the company’s so-called area-dominant strategy, which involves concentrating stores in specific areas to rapidly raise brand recognition and reduce transportation costs.

The company also needed a factory within the prefecture to get food onto store shelves more efficiently. With prospective local partners lined up, however, the operator now plans to open a factory and distribution center as soon as possible.

With local partners, rival convenience store operators FamilyMart and Lawson already have outlets in Okinawa — around 300 and 200, respectively. Seven-Eleven Japan will establish its first 100% subsidiary this year in the prefecture to better cater to local needs.

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Launched in 2007, the Seven Premium brand now has over 3,600 items, ranging from snacks and ready-made meals to fresh meat and vegetables. By fiscal 2019, the company plans to increase the number to 4,200 items, with a revenue target of 1.5 trillion yen ($13.6 billion), up 30% from fiscal 2016.

Though the details are still being worked out, Seven-Eleven Japan plans to use a cargo hub in Okinawa operated by All Nippon Airways. Okinawa’s ideal location would allow more efficiently to deploy Seven Premium brand to Asian markets.

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Okinawa is closer than Tokyo to a number of major Asian cities: Taipei, Seoul, Bangkok and Singapore are all within five hours or so. This has allowed ANA Cargo’s air freight network to offer next-day parcel delivery from Japan to these cities. Products are first brought from around the country to Haneda Airport in Tokyo and then to Naha, which permits late-night air traffic and runs customs services around the clock.

While these trials have has been limited to around 20 items, mostly snacks, Seven-Eleven Japan plans to roll out its Seven Premium brand at its first Vietnamese store in Ho Chi Minh, set to open on Thursday. The company aims to open 20 stores this year and 100 by 2019.