TORRANCE, Calif. -- Famima Corp., the U.S. subsidiary of Tokyo-based FamilyMart Co. Ltd., is opening its third Famima!! convenience store on the West Coast today, in Santa Monica, Calif. As reported in CSP Daily News, the first store, in West Hollywood, Calif., opened in late July 2005. A second store, in Los Angeles, opened in December.
The company has more than 6,000 outlets in Japan and another 5,500 throughout Asia. It is exporting a version of its upscale stores to the United States, using Southern California as a beachhead. The firm also hopes [image-nocss] to roll out stores in New York and other parts of the country. It plans to have as many as 30 stores in the L.A. area this year, according to the Los Angeles Times. But Famima faces a marketing challenge as it tries to carve out a niche with its difficult-to-define format in a highly competitive sector, added an Associated Press report.
Jack Kyser, chief economist for the Los Angeles Economic Development Corp., told AP that Famima will fight for customers on several fronts. It will get squeezed by an increasingly competitive c- store industry that includes players like 7-Eleven, which has been owned by parent 7-Eleven Japan since last year. And Britain's dominant supermarket chain, Tesco PLC, announced this month that it is entering the U.S. market with a string of mini-marts it plans to start opening on the West Coast in 2007.
FamilyMart is part of Itochu Group, a conglomerate with interests ranging from retail to natural resources and banking. The company would not release sales figures for its U.S. stores, but told AP that sales at its store in West Hollywood have increased by about 20% since it opened last summer.
Famima is reluctant to call its shops convenience stores because of what AP called the low-rent, hot-dog-and-soda association. It is also wary of identifying its stores as Japanese imports because sushi and rice bowls only make up part of the menu. It does not want to ward off customers looking to lunch on a sandwich or salad, said Hidenari Sato, the Famima executive overseeing the U.S. expansion.
In a prospectus for potential franchise owners, Famima dubs itself a sophisticated store concept...enhanced with upscale delicatessen and premium foods tailored for the savvy American customer.
We're trying to be somewhere in the middle of a premium grocer and a quick-service restaurant and a convenience store, Sato told AP. If you can find a really good word for what kind of industry that is, I think we would be very eager to pay for it.
On the other hand, the company is mindful of this country's ongoing fascination with the popular culture of Japan and does not want to squander that advantage, Sato said. In the beginning, we didn't have as many Japanese products, but there were so many requests from non-Japanese customers saying they wanted more Japanese items such as sweets, stationery and comic books, he said.
The Japanese have traditionally been very successful in appealing to American tastes, branding expert Rob Frankel told the newspaper. Japanese products, marketing and design, he said, seem to engage faster and better with white, Anglo-American markets than, for example, Middle Eastern culture, and certainly far more than African culture.
Famima hopes entrees such as pork medallions with steamed vegetables and salmon eggs over rice will attract busy, affluent customers who do not have time to prepare meals and want something healthier and more sophisticated than fast food.
FamilyMart is wagering that it can carve out a profitable niche by going luxe, said the Times. They're offering something no one else does in a convenience store format, Adam Sindler, an analyst at Morgan Keegan & Co., told the paper. They're really going beyond convenience stores' core offerings: cigarettes, beer, hot dogs, coffee.
The chain faces other challenges, the report said. Some customers have wrinkled their noses at the prices, pointing to such items as $25 canisters of tea bags. And analysts say the company must overcome obstacles that typically accompany entering a new market, such as a lack of name recognition and nuances in customer preference. That is particularly significant for c-stores, where limited inventory leaves little room for error. But FamilyMart's formula appears to be winning converts. On a recent Friday afternoon, the Westwood Famima was humming with activity, the report added.
Famima does offer the obligatory convenience items, with cigarettes behind the counter and an ATM in the corner. But it is the upscale goods that take center stage--safflower oil, ponzu sauce and sherry vinegar. Workhorses such as sushi and dim sum are offered too, as well as less familiar fare such as almond tofu and rice balls, Japan's answer to the sandwich.
Industry experts say differentiation makes sense in today's market.
It's not enough anymore to have your best offer be We're in a great location' or We're open extended hours' or We have a pretty good price', Jeff Lenard of the National Association of Convenience Stores (NACS) told the paper. The industryis increasingly looking to build loyalty beyond the traditional factors.
Another twist on the traditional c-store model is the modern design, the Times said. Dark wood floors offset stainless-steel counters, and lime walls and mango-hued signs add pop. Hand rolls are displayed on bamboo trays, and signs explain unfamiliar items.
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