Competition in the retail sector is becoming complex and multi-faceted, cutting across industry and business lines. In the convenience store industry, larger companies are expected to rapidly outdistance medium-sized and smaller ones by capturing a growing share of the market. Furthermore, as Japan's aging population and declining birthrate lead to a falling population and changing social structure, the main customer base of convenience stores is tending to shift from younger to middle-aged and elderly customers. This means that Circle K Sunkus will need to satisfy new types of customer needs going forward. Furthermore, in response to growing public interest in corporate social responsibility (CSR), Circle K Sunkus will establish a management framework grounded on compliance by crafting and implementing an internal control system. Meanwhile, Circle K Sunkus also recognizes that CSR priorities, including environmental initiatives and community projects, must be reflected in management actions.
In this context, Circle K Sunkus has established three primary strategic goals. The first is to prioritize growth in operating income as a percentage of sales over growth in total store sales. The second is to prioritize quality improvements (i.e. increasing average daily sales per store) at individual stores over simply expanding the store network. The third is to prioritize winning a larger market share in prefectures where Circle K and Sunkus currently have stores, to become the market-share leader in more prefectures.
Circle K Sunkus formulated a Three-year Plan starting in fiscal 2009 to achieve these strategic goals. The Company will work to build a stronger earnings structure by strengthening sales capabilities and transforming its earnings (cost) structure across a diverse array of operations, including store operations and store development, as well as product and services development.
Based on the above strategies, Circle K Sunkus aims to strengthen sales capabilities across a diverse array of operations, including store operations, and store and product development, and to raise quality by tackling the following pressing issues:
Circle K Sunkus will work to enhance operating and management efficiency by successively unifying different franchise agreements in use at Circle K and Sunkus stores.
Circle K Sunkus will build a stronger business focused on profitability by closely examining the cost effectiveness of all investments and spending and eliminating inefficiencies in each area. Moreover, Circle K Sunkus will respond to higher costs and other changes in the earnings structure in the convenience store franchise business. This will involve continuously and systematically controlling costs such as store construction costs, rent incurred before stores open, and rent incurred after notifying the lessor of intent to cancel a lease contract. At the same time, efforts will focus on transforming the operating structure by raising the percentage of Type A agreements and scaling back commercial leasehold contracts.
Circle K Sunkus will work to boost customer satisfaction by enhancing friendly customer service. Through collaboration with store development departments, the Company will strive to convert Company-owned stores into franchised stores by means of the incentive plan for managing multiple stores, the “Operations Management Employee” system and the “Venture Employee System,” with the aim of reducing the number of Company-owned stores and related costs. Meanwhile, Circle K Sunkus will step up management guidance to franchised stores, with an emphasis on profitability. This will entail pinpointing management issues at the individual store level, while optimizing product disposals, payroll expenses, inventories, and other aspects of store operations.
Circle K Sunkus will implement strategies for opening stores by region. In profitable regions, it will make significant investments in opening new stores to reestablish a dominant presence in key areas. In other regions, the Company will focus on relocations and its scrap-and-build program. In addition, Circle K Sunkus will open new stores with an emphasis on low-cost, ROI-intensive operations as it gives top priority to quality (average daily sales at new stores) and profitability of stores. Additionally, Circle K Sunkus aims to maintain a net increase in the number of stores by steadily signing up franchisee candidates.
Circle K Sunkus will further enhance and refine the three major original brands that raise its distinctiveness, while embracing the challenge of developing new products and sales methods that better reflect the location characteristics of each store and customer needs.
By leveraging its newly installed KARUWAZA STATION in-store multimedia terminals in particular, the Company will offer many different kinds of content to open up new possibilities for service category products.