Stores with differentiated goods and a low-cost structure will come out winners
Supply chain management is being efficiently systemized as a retail food business.
We have more than 300 of own and associated factories overseas, trading in our own independent line of goods which are developed and produced completely differentiated using identical ingredients & process. Moreover, we have created a retail trade system based on a low-cost structure to match the new age of convenient cash-and-carry style.
With the manufacturer running the FC Headquarters, synchronization of information means low-risk and the first realization in Japan of a mere 1% royalty on the purchase price.
Even goods manufactured in countries with a wage system less than 1/10 that of Japan's can’t be imported cheaply, mainly due to the large risk involved in trading. For example, even if a lot of time and money is spent leading to a successful trade agreement, there is always a lot of waste and loss incurred if that product doesn't sell as anticipated, quickly would be discontinued or requires several weeks of lead time after production to reach the customer, making trade a high-risk business.
In contrast, if the manufacturer has control of the FC Headquarters, then information can be transmitted in real-time to overseas factories allowing for the easy grasp of sales. As the FC head office holds the right to decide which goods to sell, marketing also becomes unnecessary creating a low-cost low-risk system where low-return distribution is possible.
That is why low cost delivery is feasible and a new franchise system in which royalties are a mere 1% of the purchase price becomes possible.
It is no longer necessary to borrow money from the bank in order to gain merit of scale with purchases.
It has been necessary for supermarkets to increase the amount purchased in order to purchase goods cheaply.
For this reason, until recently supermarkets have made growth over the years, repeatedly taking out bank loans and attaching importance to sales and ordinary income. However, a sudden drop in birth rates, deflation and economic deterioration has led to the break down of this high-cost sales system, with large loans becoming a problem and management deterioration resulting.
Therefore, being completely debtless such as in our company's case is a prerequisite of low-cost sales in the coming age of intense over supply. Moreover, a system where it is possible to boost scale merit without loans is sure to be the retail trade of the new era.
The deciding factor in an “over stored” age is the differentiation of products, sales and logistics.
A store just around the corner sells a domestic product at ¥100, next shop sells it at ¥90, then a store nearby see the price and sells it at ¥80. This kind of fruitless battle is being waged all over Japan on an everyday basis.
This is a completely futile affair, with all parties involved losing the ability to gain profit.
In order to avoid entering into such futile competition, we feel that as a manufacturer, development of identical goods based on production process & ingredient lists which are differentiated from others is of prime importance.
We feel that it will be difficult to individually differentiate goods in the coming 'over stored' age without manufacturers direct management of the FC Headquarters.