---
title: "Interview with 7-ELEVEn Executive Director: Why We Are the No.1 Convenience Store Brand"
description: "7-ELEVEn explains why it is the leading convenience store brand, and you can find the answer in Uchida Shinji's elaboration and thinking. This article is from the WeChat public account Retail Boss Insider (ID: lslb168). The communication with Mr. Uchida Shinji was an unusually open process. This Japanese 7-ELEVEn Group Executive Director and Chairman and General Manager of 7-ELEVEn (China) Investment Co., Ltd. does not avoid questions, uses no diplomatic rhetoric, and is straightforward. If you have any questions about 7-ELEVEn's store operations, his answers make it seem as simple as eating when hungry or sleeping when tired."
author: "New Distribution"
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published: "2018-05-17"
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# Interview with 7-ELEVEn Executive Director: Why We Are the No.1 Convenience Store Brand

> 7-ELEVEn explains why it is the leading convenience store brand, and you can find the answer in Uchida Shinji's elaboration and thinking. This article is from the WeChat public account Retail Boss Insider (ID: lslb168). The communication with Mr. Uchida Shinji was an unusually open process. This Japanese 7-ELEVEn Group Executive Director and Chairman and General Manager of 7-ELEVEn (China) Investment Co., Ltd. does not avoid questions, uses no diplomatic rhetoric, and is straightforward. If you have any questions about 7-ELEVEn's store operations, his answers make it seem as simple as eating when hungry or sleeping when tired.

7-ELEVEn explains why it is the leading convenience store brand, and you can find the answer in Uchida Shinji's elaboration and thinking.
**Text | Wan Deqian**
**This article is from the WeChat public account Retail Boss Insider (ID: lslb168)
**The communication with Mr. Uchida Shinji was an unusually open process.
This Japanese 7-ELEVEn Group Executive Director and Chairman and General Manager of 7-ELEVEn (China) Investment Co., Ltd. does not avoid questions, uses no diplomatic rhetoric, and is straightforward. If you have any questions about 7-ELEVEn's store operations, his answers make it seem as simple as eating when hungry or sleeping when tired. For example, when asked about the launch of fresh vegetables at 7-ELEVEn's Beijing stores, he replied bluntly: "Beijing's urban construction and governance have reduced vegetable sales outlets, and customers in the central urban area need a place to buy vegetables, and the vegetables provided by 7-ELEVEn are guaranteed."
Uchida Shinji is also the main spokesperson for 7-ELEVEn in China. At the annual convenience store conference hosted by the China Chain Store & Franchise Association, he always emphasizes through core operating data why 7-ELEVEn has become the undisputed No.1 global convenience store brand after 44 years in Japan.
Continuously improving factory and supply chain levels, developing proprietary distinctive products and improving quality, and expanding franchising in more regional markets are the three strategies that the industry summarizes as the reasons for 7-ELEVEn's 44-year global leadership.
In 2018, 7-ELEVEn has more than 65,000 stores in 17 countries and regions worldwide. It holds an absolute leading position in East Asia and Southeast Asia. It also has good coverage advantages in North America, Northern Europe, and Australia.
As the highest-ranking executive of 7-ELEVEn in the Chinese market, Uchida Shinji has in-depth understanding and thinking about the Chinese market. He has distinct insights on supply chain management, product development, and market expansion that made 7-ELEVEn famous, as well as the new retail trend led by internet companies.
**Product Development: The Most Important Thing in Retail Is Still Products**
> By the end of 2016, 7-ELEVEn convenience stores achieved global revenue of 267.7 billion RMB. In mainland China, 7-ELEVEn convenience stores' daily average sales per store are about 70% from daily distribution products and fresh processed foods (bento, rice balls, sandwiches, salads, etc.). This makes the profit structure and product composition of 7-ELEVEn convenience stores mature and stable.
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> In July 2017, 7-ELEVEn's No.1 store in Beijing, also the store with daily average sales of 60,000 yuan—Dongzhimen store—took the lead in launching vegetables and fresh produce. The fresh produce shelves at the Dongzhimen store feature more than 20 types of cleaned vegetables, including tomatoes, potatoes, carrots, winter melon, and garlic sprouts.
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> For consumers, cleaned vegetables save the process of sorting, washing, cutting, and matching, but they also come with higher prices than similar market products. Chinese cooking habits and consumption concepts have not yet generally accepted the service costs in fresh produce. The target customer group for cleaned vegetables is not nonexistent, but it clearly has not reached the scale that fresh produce sales should match.
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> Why did 7-ELEVEn increase the supply of cleaned vegetables, and what adjustment thinking does this reflect?
**Q&A Dialogue:**
**Q:** In July 2017, why did 7-ELEVEn suddenly launch fresh vegetables in Beijing stores?
**Uchida Shinji:** Beijing's urban construction and renovation are very fast now, and traditional community vegetable markets are gradually decreasing. People in the central urban area have such purchasing needs, hoping to buy safe, reliable, and quality-assured vegetables. So we thought that since there is such a demand, we made this attempt, especially because around the stores where vegetables were launched, there are very few places to buy vegetables.
**Q:** If following this thinking, are other meat and aquatic products also possible?
**Uchida Shinji:** Indeed, it would be better if there were. Actually, it's not that if a product is sold in supermarkets, convenience stores cannot sell it. There is no restriction on what convenience stores can sell. It mainly depends on what consumers need and what products they want; we sell what they want.
**Q:** Are you already considering launching meat and aquatic products?
**Uchida Shinji:** Such products are more difficult to manage, and we haven't considered it deeply for now. Moreover, if we do it, we will definitely choose good products.
**Q:** Japan's 7-ELEVEn private brand products include not only fresh food but also many general products, such as nuts, and even curry and rice. Why hasn't China touched this area? Will private brand products be expanded to more categories in the future?
**Uchida Shinji:** Currently, 7-ELEVEn in China has 120 items of private brand products, all of which are general products besides fresh food, and they are OEM products from Chinese factories. These private brand products sell very well, and we will continue to expand the variety. Additionally, we are considering importing some Japanese private brand products, and some single items have already been introduced.
**Q:** Is the pace and frequency of new product development at Beijing 7-ELEVEn different from that in Japan?
**Uchida Shinji:** Compared with Japan, it is relatively slower because the store scale is completely different; Japan's store scale is much larger. Also, for general products, there are limitations from the Chinese market itself; Chinese suppliers' speed of developing new products is relatively slow. Every product has its life cycle. As a new product, it sells particularly well at launch, then gradually sales decline, and finally it may disappear. In China, the product life cycle is very long, while in Japan it is relatively short, with some products lasting as short as one week.
**Why do Chinese food manufacturers develop products slowly?** On one hand, as mentioned, the product life cycle is relatively long, making their development speed slower. On the other hand, retailers charge various fees, such as entry fees and shelf fees, leaving manufacturers with no extra money for product development or production line renovation.
We launch private brand products also because the life cycle of private brand products is relatively long, and we do not charge manufacturers entry fees or related fees; instead, we ask them to lower supply prices. In fact, retailers that charge entry fees get very low gross margins and can only increase gross profit through volume. We are not like that; we rely on gross profit because we are confident in increasing our sales.
**Why are our private brand products priced slightly higher? It's not because we do advertising and put the costs into the selling price.** Actually, we do not do advertising; instead, we put the costs into raw materials, using good, high-quality raw materials to produce high-quality products.
Our next policy is to increase the number of stores nationwide. Currently, there are 65,000 stores worldwide, and we hope to achieve 20,000 stores in China as soon as possible.
**Q:** You mentioned that the speed of new product development and updates at 7-ELEVEn in China is slightly slower than in Japan. But compared with other Chinese brands, it is relatively faster. For 7-ELEVEn, what standards and dimensions are used to develop new products and update old ones?
**Uchida Shinji:** When canceling products, they are definitely slow-moving products; if they don't sell, we cancel them. To facilitate independent cancellation, this is one of the reasons we do not charge suppliers entry fees. If we charged, it would not be so easy to cancel. Although charging entry fees would bring this income to headquarters, it would affect our objective judgment. Also, it is bad for franchisees; if headquarters recommends slow-moving products to them, sales will definitely not increase.
We currently recommend about 30 new items per week, including both fresh and non-fresh products. In Japan, there are 50-60 new items per week.
**Q:** When developing new products, do you consider the difficulty of the supply chain? For example, if a product seems to have market potential, but to make it, you may need to make significant adjustments to existing production processes and flows, and it might not be cost-effective. Would you give up developing some new products because of high development costs?
**Uchida Shinji:** Fresh food products are made in dedicated factories that supply only us. There will definitely be cost issues, but this is a communication issue. Because of long-term cooperation, suppliers are already profitable. Whether to invest in new equipment and develop new products, even if the existing production line cannot meet the needs, there should be some new investment.
Moreover, we arrange these in advance; it's not like placing an order today and having the supplier ship next week. We plan several months ahead. For 7-ELEVEn, we must achieve a win-win relationship with suppliers.
**Q:** Can you introduce the process of developing a new product at 7-ELEVEn?
**Uchida Shinji:** Raw materials, recipes, and equipment are the three main decision conditions for 7-ELEVEn to develop a new product.
At the end of March, 7-ELEVEn in China exclusively sold a private brand product called Ippudo Ramen, which is also a very famous ramen chain in Japan, and it tastes very good. 7-ELEVEn cooperated with Ippudo to develop this product and commissioned Nissin to help produce it.
This time, it was sold nationwide, including Hong Kong and all places with 7-ELEVEn, with 2,500 stores selling it. In Beijing alone, an average of 80 units were sold per store per day, and other regions basically sold an average of 40 units per store per day. Such sales data surprised the manufacturer, who was amazed that it sold so well.
As you know, general instant noodles have fried noodle cakes, but our Ippudo Ramen noodle cake is non-fried, which is healthier and lower in calories. Previously, there were quality issues with fried noodle cakes in Chinese instant noodles, causing the overall market share of instant noodles to decline. So at this time, we launched this very healthy instant noodle private brand product, which actually has more market opportunities.
Our stores are closest to consumers and can hear various feedback from them. We convey consumer needs to manufacturers and suggest what products they should produce. The development of private brand products is actually a joint development between us and manufacturers, not just commissioning them to change packaging.
7-ELEVEn's private brand policy is very different from other convenience stores. When they make private brand products, the quality may be similar to existing products, but the price is lower than national brands. We do not do this; if we did, national brands could just lower prices and achieve the same effect as private brand products.
Our private brand policy first focuses on product quality, from the perspective of safety and reliability, ensuring high quality. Only with high quality can others not imitate. If you just lower the price, it's a price war, and anyone can imitate.
I am very confident in our products. Neither Alibaba nor other Chinese internet e-commerce giants will have a significant impact on us.
In my view, as long as we continuously develop exclusive differentiated products, we will not be defeated by e-commerce. Conversely, if we have such products and then do e-commerce ourselves, even the products sold on e-commerce platforms are differentiated, which is also a good way.
So it is very difficult to go from internet to physical retail, but from physical retail to internet is actually very simple. Because the advantages of online platforms are logistics, digital systems, and convenient experiences like apps. But for consumers, what they want to buy is not the app or logistics, but the products.
Retail, compared with business models, the most important thing is still products. It depends on whether you can develop products that consumers need and then sell them well.
**Store Franchising: Headquarters and Franchisees Should Win-Win**
> 44 years ago, 7-ELEVEn's first store in Japan was a franchise store. Founder Toshifumi Suzuki had a very important view: 7-ELEVEn must help franchisees make money.
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> Currently, the number of entrusted franchise stores at Beijing 7-ELEVEn has exceeded 70%. The expansion of franchise stores is also actively underway.
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> Even so, compared with the proportion of franchise stores in Japan, there is still huge room for improvement in the development of 7-ELEVEn franchise stores in China.
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> As Uchida Shinji said, only franchising can bring rapid expansion of store numbers. Through headquarters direct operation, 80 directly operated stores is the limit for self-operation.
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> What 7-ELEVEn brings to franchisees is a globally renowned brand, differentiated product development and supply, single-item management experience and systems, store development, and the world's top-level operational know-how.
**Q&A Dialogue:**
**Q:** Among the individual franchisees that 7-ELEVEn faces in China, besides meeting the regular conditions, are there any special conditions of the franchisees themselves that would particularly attract 7-ELEVEn's attention? For example, if they meet these special conditions, would 7-ELEVEn prioritize cooperation with them?
**Uchida Shinji:** Mainly three points: people, money, and property. We need to judge the person, whether they have certain financial strength—franchising definitely requires some capital. Also, property resources; if there is a good property, it's even better.
Now when recruiting franchisees, those with investment willingness are also acceptable. What matters is judging the person's willingness to join 7-ELEVEn. Currently, the most stores a franchisee in Beijing has joined is 6, with quite considerable monthly income. Because they operate very well, have special skills, and excellent performance, headquarters entrusts them with more stores, and they keep growing. This is our entrusted management franchise, where headquarters rents the property.
Another type is franchisees who bring their own property, and they bear the rent themselves. This model works well in Tianjin. The best franchisee in Tianjin can earn 70,000-80,000 yuan per month.
Why can store numbers grow rapidly if franchising is done well? It's actually through word of mouth. When franchise owners benefit, they will definitely tell people around them how 7-ELEVEn is, attracting more people willing to join.
This also means that what we pursue is definitely opening high-sales stores, not a large number of low-sales stores like small grocery stores. We think the current model is completely fine, and we are very confident. Costs and profits are transparent. So this is the right way.
**Q:** You mentioned earlier that one of 7-ELEVEn's competitive points is rapid, high-density store expansion. Guangdong local brand Meiyijia has opened more than 10,000 stores and is still expanding rapidly. Beijing's Bianlifeng is also accelerating expansion with a dense store opening method at 500-meter intervals. What is the difference between 7-ELEVEn and this dense store opening? Because their site selection thresholds and franchise conditions are lower than 7-ELEVEn's, do you feel great pressure?
**Uchida Shinji:** The average daily sales of 7-ELEVEn in Beijing is 24,000 yuan, which is about 3 times that of other convenience store brands. So our more than 250 stores in Beijing, converted by this sales figure, are equivalent to 750 stores of other convenience store brands.
As I mentioned, our competitiveness has three points: besides high-density concentrated store opening, there are products and franchising. Actually, the most important is franchising. It is precisely because of franchising that our stores can continue to grow. If headquarters directly operates stores, 80 stores is the limit; beyond that, management will be poor.
Our franchise model is not about headquarters earning more, but a win-win between headquarters and franchisees. Because there are many people in China who want to start businesses now; they would rather be the head of a chicken than the tail of a phoenix, and doing it themselves is better than anything. In March 2017, we held a franchise briefing in Tianjin. So far, more than 2,000 people have attended, and 1,200 are queuing to join.
**Q:** Does this 1,200 people theoretically correspond to 1,200 stores?
**Uchida Shinji:** Yes. Why do so many people want to do 7-ELEVEn? Just go to the Tianjin stores and see; you don't need to ask to know why sales are so good. Other stores have few customers a day, so no one would want to join.
We are fair and transparent to franchisees. On one hand, we do not charge manufacturers various fees, such as entry fees and shelf fees. On the other hand, rebates obtained from manufacturers are also distributed transparently to franchisees.
Actually, there are mainly three ways to distribute franchise profits: sales distribution, gross profit distribution, and profit distribution. If it's profit distribution, franchisees work particularly hard to reduce labor costs, and although they get more profit, they still have to share part with headquarters, which is unfair.
If it's sales distribution, headquarters tends to let franchisees boost sales with low-margin products, and then take rebates from manufacturers without sharing with franchisees. This way is not good.
We choose gross profit sharing. Headquarters has the obligation to recommend high-margin products to franchisees, and with franchisees' own efforts, each does their part, and both sides can get higher returns.
In this franchise system, only by helping franchisees increase sales can headquarters get more returns. We have dedicated store operation instructors for franchise stores, with one instructor responsible for 6-8 stores, visiting at least twice a week for guidance. This model seeks win-win, not just headquarters profitability; both headquarters and franchise owners can profit. If our store sales are low, we cannot do franchising, and we do not want to develop in this way. Supporting the franchise system is not only products but also operations and other aspects; everyone becomes one to support the franchise system.
**Q:** There are many mom-and-pop stores in Beijing. If such store owners apply for franchising, compared with those without retail work experience, are they more suitable?
**Uchida Shinji:** Both are fine, because some people may not have retail experience but are very suitable for business; it's hard to say. If it's a mom-and-pop store bringing their original store, it may not necessarily work; if the area is small and conditions are unsuitable, it cannot be done.
**Q:** We visited the Dongzhimen store and noticed one reason for high daily sales is the special customer base around it, composed of multiple targeted customer groups. There are foreigners, students, and it is also a large community, and this place is a transportation hub. In any franchise model, is this kind of site selection success a very important dimension in choosing franchisees?
**Uchida Shinji:** Actually, there are three reasons: one is the store location, the so-called trade area. Then products and operations, and the three are multiplicative; if any one fails, it equals zero. Now other convenience store brands open stores next to us very often. Because the brand is different, even if they open next door, their sales are far behind ours.
**Regional Markets: Convenience Stores Can Be Opened in Every Provincial Capital**
> On March 6, Uchida Shinji went to Xi'an, Shaanxi, and in a discussion with local government officials, said he would accelerate the pace and land in Xi'an, the bridgehead city of the national "Belt and Road" initiative.
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> At least from public statements, this is the first time 7-ELEVEn has connected with Xi'an, an inland city. It represents the beginning of 7-ELEVEn's comprehensive expansion into China's inland market beyond coastal provinces and Chengdu-Chongqing.
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> In 2017, with urbanization reaching a certain stage, consumption upgrade driving residents' purchasing power, the convenience store market finally saw rare counter-trend (retail) growth in years.
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> This is also the historical opportunity Uchida Shinji repeatedly emphasizes for ultimately opening 20,000 stores in China. In December 2017, 7-ELEVEn reached cooperation with Nanjing Golden Eagle Commerce for the Jiangsu market. It is believed that similar cooperation is being connected in succession.
**Q&A Dialogue:**
**Q:** You just said that 7-ELEVEn's next policy is to increase the number of stores nationwide, hoping to achieve 20,000 stores in China as soon as possible. How long will it take to achieve this?
**Uchida Shinji:** There are already brands with hundreds or thousands of stores in some provinces or cities. But to achieve tens of thousands of stores nationwide, it can only be a national brand, and it requires continuously increasing scale in various regions simultaneously. Now 7-ELEVEn is also contacting local retailers and retail enterprises in various regions and provinces to see if they are willing to do 7-ELEVEn.
**Q:** Is there no specific timeline or plan?
**Uchida Shinji:** I really cannot judge the specific time.
**Q:** According to the proportion of 20,000 stores, how many should Beijing have?
**Uchida Shinji:** I don't know.
**Q:** In China, 7-ELEVEn China has directly operated or authorized in Beijing, Tianjin, Shanghai, Chengdu, Shandong, Chongqing, and Zhejiang. In 2017, 7-ELEVEn finally made another important move: choosing Golden Eagle Commerce in Jiangsu Province to develop the Jiangsu market. Why choose 2017? Why Jiangsu Nanjing?
**Uchida Shinji:** Last year's timing was accidental, and choosing Jiangsu was also accidental; it had nothing to do with other companies' entry. It was just that we reached an agreement with Jiangsu Golden Eagle at that time. We feel very honored to cooperate with Golden Eagle Commerce, a retail enterprise ranked very high nationally.
When we entered Beijing in 2004, we did not copy Japanese convenience store practices. Instead, we used Beijing as a pilot to seek a development model suitable for the Chinese market. Now Beijing is very successful, and Tianjin's performance is also very good, with daily sales exceeding 20,000 yuan last year. We are confident that we can do well in China according to this model.
China is developing very fast now, and all provincial capitals have reached the level where convenience stores can be opened. This is one of the reasons we are seeking partners in multiple places to develop 7-ELEVEn nationwide.
Now it's also a convenience store craze; various investors are investing in convenience stores. Their thinking is simple: as long as they decorate like 7-ELEVEn and import the same equipment, they can do convenience stores well. But it's not like that.
When seeking partners, we hope to cooperate with enterprises with retail experience. Because those who have done retail understand retail; this is our basic condition for seeking partners. So for retail, what matters more is people, not just having the same equipment and store appearance; that's how you do convenience stores and retail well. This is also one of the reasons internet giants are acquiring retail enterprises.
**Q:** Does choosing Jiangsu mean that before this, 7-ELEVEn had already established its fresh food processing base in Jiangsu? According to industry common sense, you should do the backend first, then the frontend store opening.
**Uchida Shinji:** The supply chain is still being built, and it is simultaneous with store opening, because China has high requirements for speed, and everyone is pursuing speed.
**Change and Constancy: Stores Worldwide Should Be Unified**
> We believe the ideal development state of convenience stores is definitely to be the "first choice" for consumers' daily outings.
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> The ultimate product of this concept is that convenience stores in Japan and Taiwan have become one-stop comprehensive solution platforms that help surrounding residents solve local life services, which is rare worldwide.
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> According to Uchida Shinji's understanding, 7-ELEVEn in mainland China cannot achieve the comprehensive functional design (shopping, payment, mailing, garbage disposal, etc.) as in Japan and Taiwan, simply because mainland China has strong mobile internet penetration.
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> This is the difference between different regions, in deep-level fields, condensed in the microcosm of convenience stores.
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> Regarding 7-ELEVEn stores in China, Uchida Shinji elaborated his views on store functions and the relationship with surrounding related business formats.
**Q&A Dialogue:**
**Q:** In Japan, when a person goes out and doesn't know where to go or how to solve daily needs, everyone will prioritize thinking of convenience stores. But in China, convenience stores cannot achieve this atmosphere yet. What do you think is the reason?
**Uchida Shinji:** Actually, some services provided by 7-ELEVEn in Japan can be done with mobile phones in China. For example, buying tickets and paying utility bills are done at convenience stores in Japan, but in China, they can be done with mobile phones.
**Q:** Do you think the ideal situation of coexistence and non-interference between vending machines and convenience stores in Japan will appear in China?
**Uchida Shinji:** Vending machines sell mostly non-fresh general products, so this coexistence is possible. According to statistics, Japan has 5.8 million vending machines, but China has only about 1 million. In terms of per capita, it cannot be compared with Japan.
The reason vending machines are not popular in China is that cash transactions have security issues, and change may also have problems. But now mobile payment is realized, so vending machines will become more and more popular in China in the future. Of course, vending machines cannot sell all products, so convenience stores still have meaning, but mom-and-pop grocery stores will become fewer and fewer.
**Q:** There is an opinion that an important reason why the Beijing convenience store market is less developed than Shanghai and Guangdong is that Beijing has many mom-and-pop stores. Now mom-and-pop stores are decreasing. Will brand convenience stores have greater development opportunities, or will these people be more easily recruited as potential franchisees?
**Uchida Shinji:** I think the development opportunities of brand convenience stores have nothing to do with changes in mom-and-pop stores. The biggest reason for the poor development of brand convenience stores is high rent. Because 7-ELEVEn's fresh food products account for more than 50%, it is completely unaffected by mom-and-pop stores. Of course, brand convenience stores that do not focus on fresh food may be affected by mom-and-pop stores, leading to poor development.
**Q:** 7-ELEVEn's store format, whether it's decoration style, interior decoration, or even lighting and music, seems to have basically not changed for many years. Chinese convenience store peers, on the contrary, have many changes, such as decoration styles imitating cafes and setting up comfortable tables and chairs. Does 7-ELEVEn's store design and style in the Chinese market need change and innovation?
**Uchida Shinji:** We will not consider changing the image. What we pursue is image unity. If the external door head light box is different, some customers may think this is a fake 7-ELEVEn. This actually happened in Tianjin, so we think it's better to keep it unchanged.
Now we even consider keeping a unified image for all 65,000 stores worldwide. Everyone is the same. No matter where you go, when people see this image, they know it's the 7-ELEVEn they use daily and can use this store with confidence.
Only 7-ELEVEn can be called a world brand; other convenience store brands are developing in Asia. So you will see that McDonald's and Starbucks also have basically unified images globally.
**Q:** Speaking of McDonald's, many McDonald's stores are now iterating and changing. Especially after adding McCafé, fast-food restaurants have become a mix of cafe style. Compared with McDonald's, do you still not approve of setting up tables and chairs in convenience stores?
**Uchida Shinji:** Yes. If the store area is large enough, we can put some, but we mainly sell products. There are so many products to display, so we should prioritize product display. Because rent in Beijing is relatively high, this way can more effectively use the area. Only with higher sales can franchising develop faster. Shanghai convenience stores are actually the opposite; almost all stores have dining areas, and the number of displayed product items is relatively small.
**Q:** Is the reason Beijing 7-ELEVEn does not set up tables and chairs just because they occupy product display area?
**Uchida Shinji:** Yes. We are not a furniture store selling chairs; we sell products.
**New Retail: We Have Not Communicated with Alibaba Yet**
> Regarding e-commerce, especially the new retail transformation that has attracted global attention, Uchida Shinji, from the perspective of traditional retail, holds an unafraid attitude. He even does not fully believe that internet companies can fully possess retail capabilities. Regarding the general trend of new retail driving overall transformation of consumer retail through big data and driving digital transformation and upgrading of traditional physical retail, Uchida Shinji's attitude is also cautious observation.
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> In fact, the indirect "confrontation" with the internet has occurred in the operations of China 7-ELEVEn led by Uchida Shinji. In May 2017, at the China Chain Store & Franchise Association 2017 (Shanghai) Convenience Store Conference, he revealed that he once worried that online food delivery would impact 7-ELEVEn. But after a period of adjustment and response, and observing the actual customer diversion that delivery might bring, Uchida Shinji said 7-ELEVEn has resolved the impact from online food delivery.
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> As mentioned above, Uchida Shinji's strategy to deal with the impact of internet platforms is still 7-ELEVEn's strong product development capability. As he himself said, in retail, the most important thing is still products.
**Q&A Dialogue:**
**Q:** In May 2017, at the Shanghai convenience store conference, you mentioned that you attached great importance to the impact of online food delivery and successfully dealt with it later. This year, facing the rapidly changing retail market last year, do you also feel some external factors impacting the convenience store industry?
**Uchida Shinji:** Now there should be no impact. 2017 was a relatively good year for us. Last year, our average daily sales per store in Tianjin exceeded 20,000 yuan. Last year was a very good year for us.
Products are one of our strengths. Besides products, we also have operational capabilities, including franchising strength. So the good development is due to multiple reasons.
Our success is mainly due to three reasons: high-density concentrated store opening, franchising, and product development and supply chain construction.
**Q:** Consumers feel that food delivery has developed greatly in the past two years. Food delivery has a characteristic: it provides customers with a sense of freshness through more choices. This characteristic can be achieved by convenience stores. In the past two years, facing the development of food delivery, will 7-ELEVEn promote the cycle and frequency of new product development? Including stimulating consumers' sense of confidence, will there be new changes and practices?
**Uchida Shinji:** We will also consider accelerating the cycle, speed, and frequency of new product launches. The advantage of food delivery is providing consumers with various choices; consumers can choose products from any store, but one thing cannot be guaranteed: the products consumers choose may not necessarily be really delicious. Because stores that can sell food on delivery platforms may not ensure safety and reliability. But through our brand, we can always ensure product safety and reliability.
**Q:** How do you view the overall situation of the Chinese convenience store market in 2018, and the possible impact of the very hot new retail now?
**Uchida Shinji:** The impact of new retail is mainly the impact of e-commerce. Department stores, supermarkets, and hypermarkets are greatly affected by e-commerce. Because the products they sell are clothing, food, and groceries, which are not differentiated from e-commerce products and can be bought anywhere.
It cannot be said that 7-ELEVEn is completely unaffected by new retail, but the impact is not particularly large. Because as the name of this industry suggests, convenience stores are meant to provide convenience. In fact, there is no fixed rule for what convenience stores sell; they should sell products that customers need according to customer demand.
Japanese convenience stores did not start selling fresh food like bento from the beginning; they started after discovering that customers had such needs. So what we need to do next is continuously explore customer needs and develop and sell products according to their needs. We also believe that the opportunities for convenience stores in the future are still very large.
**Q:** In 2017, new retail had a tendency and change: some small supermarkets are becoming restaurant-like and convenience-store-like. For example, Hema made a restaurant-style convenience store called F2 in Shanghai. Maybe its services are far from convenience stores, but the concept behind it does have the convenience of convenience stores. This kind of mixed跨界 store that combines dining and shopping and is also a small format—will it affect 7-ELEVEn?
**Uchida Shinji:** The emergence of such store formats is actually a good thing; it can lead the industry's development in various forms. Because the employment rate of Chinese women is very high, the proportion of eating out is actually very high. In Japan, there is a so-called "nakashoku" (ready-to-eat food) where people buy ready-made things and eat at home. What we provide is such a service and convenience. Various forms of dining developing together is not bad.
**Q:** How do you view unmanned retail? Many opinions regard unmanned retail as the opposite of traditional convenience stores represented by 7-ELEVEn.
**Uchida Shinji:** Actually, unmanned retail is also a way. For example, selling instant noodles and snacks; such products might be better unmanned. But our model focuses on fresh food products, which definitely cannot be put in vending machines.
**Q:** Now unmanned retail can sell many products, such as fresh orange juice.
**Uchida Shinji:** But that is just a single item. Fresh food through unmanned sales may still be difficult. If automatic recognition technology can be realized, and inspection and checkout do not need manual labor, costs in this area can be saved, and fresh food may also achieve self-service vending. Now when ordering fresh food products, many factors are considered, such as surrounding environment and weather changes. In the future, if AI can be realized, it is also possible, but it depends on different products. Maybe certain categories and services can achieve IT and systematization. But if it's just to save labor by doing unmanned, the effect may not be good.
**Q:** Let's push the imagination of this issue further. Currently, there is a trend in the entire retail industry: large internet companies acquire offline retail enterprises. Although it has not involved the convenience store field yet, let's assume this acquisition wave involves convenience stores, and possibly leading convenience store brands. Would 7-ELEVEn respond or notice this?
**Uchida Shinji:** Why do internet giants acquire physical retail enterprises? For large internet companies, they are actually good at logistics know-how and system management. Their apps may also be very user-friendly, but they lack retail experience.
I think the biggest purpose of internet companies acquiring retail enterprises is to learn this product development capability. We are very confident in product development. 7-ELEVEn has more than 65,000 stores globally, and we can use such a large store scale to develop various products. Especially in Japan, private brand product development is particularly good, and the proportion of private brand products among all store products is very high.
**Q:** Let's assume another question: if a giant company like Alibaba comes to 7-ELEVEn to discuss cooperation, whether at the equity level or product level, even just O2O-style shallow cooperation, what attitude would you hold?
**Uchida Shinji:** We are not considering cooperation now, such as opening stores on Tmall. But there are many ways of business cooperation; it depends on the specific method and needs case-by-case analysis. Alibaba or Tencent is the same; they should be very eager to get involved in the retail industry. It's just that we have not had direct and in-depth communication with such internet companies, but there may also be various forms of cooperation.


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