Seven’s Thorny Challenge in Casual Clothing: The Critical Difference with Famima and the Missing “Yokado” Know-How

7-Eleven, the largest convenience store operator in Japan, has recently announced a plan to strengthen its clothing lineup. Specifically, the company plans to develop casual apparel, starting with T-shirts with the “Seven” logo, which were the talk of the town at the Kansai Expo last October.

This is clearly intended to follow in the footsteps of FamilyMart’s casual apparel, known as “Famima Clothing,” which has been performing well in the market. Can apparel really become a “new growth engine” for Seven?

Impatience of Seven, the champion? Unprecedented reinforcement of apparel products

The convenience store industry used to be a place where many chains, such as Circle K Sunkus and am/pm, competed for supremacy. Today, however, it is an oligopoly among the three major convenience store chains: Seven, Famima, and Lawson.

Seven reigns at the top of the industry, but the number of stores in Japan has reached saturation point, and its growth rate is beginning to slow. It has become difficult for each company to differentiate its traditional mainstay products, such as prepared foods, boxed lunches, and sweets. Consumers are also less likely to perceive novelty, and it is not easy to build up sales any further.

It was the success of “Famima Clothing” that caught the public’s attention.

Was ITOCHU the mastermind behind the success? Behind the Strongest “Famima Clothing

Famima Clothing” started with socks in 1919 and attracted the attention of SNS and the media. The brand has now expanded to include T-shirts, blousons, and pants, and has teamed up with the designer of the fashion brand “FACETASM,” Hiromichi Ochiai. In 2012, the company announced that sales had reached 13 billion yen.

Until now, clothing sold in convenience stores had only been practical clothing such as underwear, shirts, socks, stockings, etc., with an eye toward such purposes as sudden business trips and overnight stays, but the large-scale launch of casual clothing was a groundbreaking event.

From the perspective of Famima, which has total store sales of over 3 trillion yen, 13 billion yen is not a scale that will affect the management of the company. However, it is extremely valuable as a billboard for improving the brand image. There is no way that Seven, the king of the market, would have sat idly by and let this success go unnoticed.

However, there is a big obstacle for Seven to follow the same path. This is because apparel requires a high level of expertise. Behind Famima’s success is a generous injection of know-how from its parent company, ITOCHU Corporation, which has overwhelming strength in the textile business.

LAWSON also failed… The high hurdle of “year-round sales

Looking at earlier cases, LAWSON is also trying its hand at original clothing, but like Famima, it has not been able to develop year-round sales. It has intermittently introduced knitwear in collaboration with the popular “Freaks Store” brand, but sales have been limited to spot sales. Most recently, a 12-gauge knit (2,999 yen including tax) was released last November as the fifth installment.

In order to continue producing apparel, it is essential to have a detailed “annual product plan” in addition to simply producing the garments. The plan is based on the following questions: “What will we launch, when, and how long will we sell it? The know-how to keep the endless cycle of “what to release, when to release, how long to sell, and what to introduce after that” is not something that can be acquired overnight.

T-shirt: 5,500 yen! The trap of Seven’s bullish setting

In the past, Seven had Ito-Yokado, a supermarket under its umbrella, and it would have been possible to transfer the know-how from Ito-Yokado. However, Ito-Yokado has already been sold, and the company’s own clothing department, except for underwear and socks, has been discontinued. Ito-Yokado’s know-how in year-round apparel sales has also faded away, and its relationship with 7-Eleven has also faded. We can hardly expect any backup from here.

At this rate, even if the logo T-shirts are successful, they are likely to end up as “one-off spot sales” like Lawson’s.

Another major issue is pricing. While Famima’s plain short-sleeved T-shirts are available at 1,490 yen (including tax) and long-sleeved plain T-shirts at 1,998 yen (including tax), the short-sleeved T-shirts with Seven-Eleven and NO COFFEE logos were set at a strong 5,500 yen (including tax). If the retail price were to be similar to this, it would not be so easy to sell.

There is nothing wrong with taking on challenges, but if you are going to try your hand at casual apparel, I recommend that 7-Eleven’s leaders sit down and take their time.