“I believe all change presents opportunities”

Seven & i Holdingsstarted in the US but in 1974 you brought it to Japan where everyone, from executives to market consultations, thought it would fail. What did you see that everyone else didn’t? Where are you going to work your magic again and where are your targets for international expansion?

I restructured 7-Eleven in the US and at first I was going there because I felt that the US distribution business was very advanced and I was planning to learn from them. However, once I got in I realized that because distribution is really rooted in the domestic market, each market is very different and there was actually not much to be learnt from the US market and businesses. Therefore, I developed products and systems unique to Japan and that fit the Japanese environment. I believe the reason that 7-Eleven went out of business in the US is because it was no longer fitting the current environment of the American society. So when I did the restructuring, I made it in a way that fit the current social trends.

About extending our operations to South-East Asia and the Middle East, where we will be opening a store soon, I plan to adapt them to fit the local environment rather than just bringing in the Japanese way. In every country there is a tendency to continue doing what has led to success; Japan has its history of retail and the way it got to be successful, and it is same in the US. The problem with 7-Eleven in the US was that they kept following the way that led to their past successes without realizing that they needed to adapt to the new era, which led to their failure. Change happens in every country so I believe that it is important to become objectively aware of the changes and to come up with innovation based on that.

Seven & I Holdings is doing that again with the world’s first omni-channel retailing strategy, which is a seamless integration of all available shopping channels for a better customer experience and has been described as “providing a unique service that brings together the flexibility of face-to-face sales and the convenience of Internet shopping”. Can you outline this corporate strategy for our US audience and why this is the future of Seven & I?

Even 10 years ago, I began to feel that the integration of the Internet and real life in distribution was going to be crucial, and that this business cannot continue without it. I kept saying this within our group and two years ago we started conceiving the omni-channel strategy, which as you said it is the first in the world. What I am trying to do is something very unique while we keep on testing; we are planning to implement this from November onwards. I believe there may be some trial and error at the beginning but I am convinced that after that we will have success. As long as we put serious efforts, success will follow.

What opportunities do you see for Seven & i Holdings with the signing of the TPP, not only because of your significant operations in America but also in the Asia-Pacific region?

Regarding the TPP, as you know, it is currently being widely discussed. I believe that in the first stages of implementation there may be many difficulties and some small failures, but the important thing is that we work together to overcome them. I am not quite sure about how the final state of the TPP is going to plan out, but I do not believe that this will be a major problem. There are going to be some problems at the beginning but they will overcome them. 

In the fiscal year ended February 28, 2015, Seven & i’s sales exceeded 10 trillion JPY for the first time in Japan’s retail history, and this year is shaping up to be your fifth record-setting year in a row in terms of operating income. You have attributed this to Seven & i’s ability to continually respond to customer’s consumption patterns. What are some of the trends that you identified and capitalized on and how do you remain flexible and agile to these market needs?

As I said earlier, there is always change and the issue is how to overcome it. I believe that by directly facing changes, most things can be overcome. There are so many things that we can anticipate about what is going to happen in one year ahead, but rather than trying to forecast what is going to happen and trying to deal with that in advance, the issue is to maintain this attitude of dealing with change and willingness to overcome and adapt to it.

Taking 7-Eleven as an example, when I first decided to begin in the business of convenience stores, I faced opposition both internally within the company as well as from other distributors in the market and specialists of the field. They said that there were already many small stores in Japan and that creating more was not going to be successful, but I opposed that idea. At the time, the pervasive thinking was that large-scale supermarkets were the way to go, but I felt that there would always be demand for small convenience stores, so I overcame the opposition. Then, what I have been doing in my history of work has been to overcome the opposition of many of the norms of society, as I believe that norms cannot remain the same forever. They are always going to change, so as I said earlier, I believe that we should not try to forecast what is going to happen but just be ready to adapt to change. 

Do you believe Japan has been able to adapt to change with time or is it still a little bit stagnated, while other economies such as China or South Korea are catching up with the international business environment?

When you speak of Japan as a whole, it is a fairly conservative country, but once people become aware that the status quo needs to be changed it advances quite quickly. I believe Japan has this power and a strong point is that we have a fairly small socioeconomic gap, which makes it fairly easy for the country to adapt to change. 

What would you say has been the impact of Abenomics on the convenience store sector or indeed Seven & i Holdings specifically?

With Abenomics, many different propositions have been made, but we have not been particularly surprised by these proposals. We are in a position where we are naturally accepting them, and what I would like to emphasize is that change comes from both the government as well as societal trends. The most important thing for us is to be able to adapt to change. 

Considering the importance that Seven & i Holdings places on Japanese society and the intrinsic role it plays in the Japanese economy, what responsibility does it have in the country’s current transformation and what opportunities does it present for the company to capitalize on?

Before replying to your question directly, I would like to discuss the fact that I believe all change presents opportunities. Even these phenomena of ageing and population decline, I see them as opportunities. For example, with population decline we can forecast what that will lead to, what kind of situation will follow, and then we can think about how to deal with that. Concerning ageing, we can see that it will lead to the ratio of elders in the population being larger, but we can see opportunities in that. These are all changes that present major opportunities and I believe that we can perceive them positively, and that by providing solutions we will be able to contribute to society. Then, we should not be pessimistic about change; instead, we should see it as opportunities.

To give you an example with the ageing population, people may find it difficult to go shopping and they may find that having convenience stores in the neighborhood close-by will make it easier for them. In addition, further on maybe even going to the convenience store is going to be difficult for them, in which case we can offer them delivery options. Hence, these are all various opportunities.

I believe that opportunities are unlimited, so again, ageing and population decline are not negative things for us. They are opportunities and we should not just perceive the situation in macro terms, we should also consider them in micro terms and see how we can take hold of them. For example, in 7-Eleven our product line-up in the stores is changing constantly because otherwise we will not be able to satisfy the customers. We have developed a new 100-yen coffee, which is selling about 130 cups a day in each store, and nobody else in Japan had thought of the idea of providing tasty coffee at 100 yen.

Developing a new product is obviously difficult, but it can be done and once it is done new customers find it desirable. At the same time, the competition tries to imitate that but they are not able to provide what we provide. I always tell the 7-Eleven employees that they should not feel satisfied that the company is currently doing well, as you can never rest because then the convenience store business will fail. It must continue to develop new products that the public has not imagined, for example, in customer service.

What advice would you give to other Japanese CEOs and chairmen who aspire to follow your footsteps and build truly global empires?

I think that because we are a case study of success, this would stimulate other companies to incorporate our strengths. 

You operate in a highly competitive retail sector, so how do you differentiate from the increasing competition, not only domestically but of course internationally, where you have to expand as the domestic market shrinks?

You just said that the Japanese market is shrinking, but actually I do not agree that will happen as long as Japan continues to face new challenges and provides quality above the average. If we kept the same level of quality we would shrink, but as long as we are ahead of the quality of others, I believe Japan’s market will not shrink.

Therefore, we are not trying to expand our business overseas or increase the number of 7-Eleven stores in the US because the Japanese market is shrinking and that we need to rely on international market. Actually, there is still room in Japan and I believe that we will not come to saturation. The media often reports that there is now a total of 30,000 or 40,000 convenience stores in Japan and that it has reached a saturation point, but I have always told them that that is not the case. Our competition may drop out from the market but that does not mean that as a whole we have reached a saturation point 

From a demographic standpoint, because of the ageing society, demand will shrink as the population will be shrinking. Isn’t that one of the reasons that you are expanding internationally?

When you think in macro terms, yes, theoretically that would happen, but I am saying that this is not something that we need to be concerned about in the short term.

Do you view your company as an ambassador for the Japanese values of efficiency, high quality and commitment to society and to your consumers?

I do agree that such cautiousness is needed, but I also believe even more that the attitude of continuously challenging the changes that we are facing is going to lead to a positive effect on society.

I would like you to do a brief balance of your life as a CEO of Seven & i Holdings. How do you feel after so many years fighting against these challenges? What is your balance?

I was able to reach the point where I am now thanks to the support of everyone around me, and my strongest intention is to be able to pass this on the future to people who will be able to develop the company further.

What would you say to international investors who are still hesitant about investing in the Japanese economy or partnering in business with Japanese firms such as Seven & i Holdings?

What I want to convey is that there will be some fluctuations and change, but the Japanese people have the energy to overcome them. That is my main message.