Food Store Revitalizes Community: The Company That Doesn’t Say “NO”

August 19 2010

Nikkei Business, May 10, 2010 (page 26)

Lesson: Focus on Service to Customers, Employees and Community instead of Bottom Line and Profits Will Come

(Background) A former auto engineer was called back home to a small town of Kyushu. His family home center store was in a sales crisis and needed help. Right away he decided that the business would be operated based on the community’s needs, and the store became a 24-hour business in 1997. The main store is 18,000 m2 (194,000 ft2), super-sized by Japanese standards.

Mr. Makio focuses on repeat visits and total customer numbers, instead of on sales or profits. This shift in focus from the bottom line to service resulted in a doubling of the company’s profits; its tax contribution to the city now reaches 20% of the city’s tax income. Here are some examples.

Inventory. The store has more than 360,000 SKUs; its philosophy is that the store will provide whatever the customer needs, even if only one of an item is sold in a year.

Buy Local. More than half of the store’s 1,000 suppliers are local businesses. Mr. Makio says he tries to provide as much shelf space as he can to the local suppliers. His fish section is famous for freshness and inexpensive prices; the store purchases at the local fishing port, participating in three auctions each day. The store buys all the items that are left over from the auction, purchasing about 40% of the fish production at the port. Now the local restaurants and even fish stores shop at Mr. Makio’s store.

Smart Farming. The store specializes in organic supplies that are purchased from local farmers. It also operates its own 75 hector (185 acre) agricultural farm, using manpower from the store. While the company farm helps maintain a steady supply of local organic produce, it wasn’t part of the original plan. This is how the farm came about. The area experienced a steady outflow of younger people, leaving mostly elderly farmers. Many of these farmers were unable to sustain their farming operations; they approached Mr. Makio, asking him to buy and take over their farmland. So the company’s small vegetable garden grew and grew.

Paper, Plastic or Unwrapped? An elderly customer brought a family member, looking for a car, to Mr. Makio. Why not? As a result of that visit, the store now carries used subcompact and mini-cars. These cars are purchased in auctions and sold to customers at a small 5,000~6,000 yen profit ($58-$70 at today’s exchange rate); 20,000 yen (~ $234) is provided to used car dealers. Every car has window stickers listing taxes and all other charges. This enables a customer to purchase a car at the store’s cash register, taking an average of only 11minutes!

Going the “Extra Mile.” For those without auto transportation, the store provides door-to-door mini-bus pickup services for 100 yen (one way). This includes delivery of purchased items from the bus to house door.

Respect. The store provides a 5% discount for seniors and disabled people. And there is no mandatory retirement age for the employees.

Location: Kagoshima-ken, Akune-shi

Company: A-Z Super Center

President: Eiji Makio

Map of location

Category: Global Insights
Filed under: Food, Organic, Locavorism, Transportation