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Golden Service Entrepreneur Hsu Chung-jen

My Competitor Is My Customer

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Grasping, and even creating, the latest lifestyle trends is what keeps President Chain Stores one step ahead of their customers, making themselves indispensable through constant improvement.

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My Competitor Is My Customer

By Yueh-lin Ma
From CommonWealth Magazine (vol. 477 )

Laundry shops across Taiwan must brace themselves for fierce competition as the President Chain Store Corporation, which runs the 7-Eleven convenience store chain in Taiwan, prepares to launch a "laundry express" service. During the test period the cleaning of three overcoats will cost just NT$199. Customers apply for laundry services online, take the clothes to the nearest 7-Eleven, and get them back after four days. Once the service is rolled out, Taiwan will immediately have an additional 4,700 laundry outlets.

Whenever President launches a new service, it rewrites the rules of the game in the respective industry.

The Logistic Sub-Conglomerate of Uni-President Enterprises Corp., which is headed by President Chain Store Corporation, took half of the top spots in CommonWealth Magazine's 2011 "Golden Service Awards."

As one would expect, it was voted No. 1 in the field of convenience stores (7-Eleven), but it placed equally high for coffeeshop chains (Starbucks) and domestic express delivery services (Kuroneko Takkyubin).

The company ranked among the top five for home product stores (Muji), as well as department stores and malls (Dream Mall). But it did well in more than just brick-and-mortar operations. Online bookstore books.com.tw and the 7-Eleven online sales arm 7net took second and third places among online shopping services, pushing old hand Yahoo! Kimo into fourth place.

Spearheading this business model of taking complete care of all aspects of people's lives is President Chain Store president Hsu Chung-jen.

The Biggest Secret Is to Constantly Improve

"The biggest secret of the service industry is that you need to constantly improve, to constantly upgrade," notes Hsu. As far as he is concerned, the biggest competitor "actually is your customer. The point is whether you are able to grasp changes in customer lifestyle."

The many retail outlets and brands under the President banner, introduced by Hsu from abroad, are the best proof that the company grasps, and even directs, Taiwan's latest lifestyle trends.

Thirteen years ago Hsu saw Starbucks coffeeshops in Japan and decided to bring the brand to Taiwan, opening the age of pricey coffee in a trendy setting. Back then Taiwan was only the second country outside the United States to introduce Starbucks, earlier than any country in Europe.

Two years ago President Starbucks Coffee became the first local Starbucks worldwide to introduce its own new product series, locally grown Full Leaf Tea beverages. It also made efforts to promote Taiwanese tea through the coffee chain's global procurement platform, to make it part of the global supply chain.

Learning and innovating through cooperation with international brands, the Logistics Sub-Conglomerate always seeks to stay ahead of the consumer.

7-Eleven continues to open large outlets and run islandwide integrated marketing campaigns. The logic behind this approach is that convenience stores must provide even more convenience on a new level.

"In the past 7-Eleven stores were only a place for quick transactions, but now we want to create interpersonal connections between consumers. We want to provide topics that parents and children as well as office workers can talk about, and create a sense of space," notes Hsu in explaining the new business strategy.

The Cloud of the Service Industry

After President Chain Store bought up books.com.tw in 2000, it gave customers the option of picking up their orders at 7-Eleven convenience stores. This new approach thoroughly changed the way Taiwanese consumers use e-commerce. At the beginning of this year books.com.tw stealthily deleted the words "online bookstore" from its Chinese name, underlining the company's determination to become an all-round online shopping site.

Jan Hung-tze, chairman of PChome Online, Taiwan's largest online shopping mall, thinks that the ability of President Chain Store to integrate brick-and-mortar retailing with online shopping resembles the "cloud" concept in computing. Jan believes that in the future not only data computing and storage will be cloud-based, but the service industry will become cloud-based as well. "In Taiwan this cloud will be President," he predicts.

Acer founder Stan Shih, the father of Taiwanese branding, once proposed a "mega micro structure," which entails building a mega e-infrastructure for the development of customer-oriented micro e-services. With its strong back-end system and 4,700 front-end stores, President Chain Store Corporation is Taiwan's most efficient mega micro structure, able to provide services to any business or individual.

Actually about 30 percent of customers who set foot in a 7-Eleven store do not buy any products, but use services – paying bills or fees; picking up or preordering goods; buying tickets or coupons or placing orders via the ibon touchscreen terminal; accessing the Internet and so on. President early on transformed itself into an online platform. Therefore, it only needs to design a new operating mechanism in its application system to roll out a new service.

With its giant mix of traditional and online shopping, President works at the front end to track customer preferences and other retail information. At the back end it has also begun to cross over from the service industry into manufacturing.

Four years ago, President Chain Store began to develop its own brand, 7-Select, which includes beverages, snacks, and frozen foods. Currently, more than 200 items are marketed under the premium brand, which contributes more than 5 percent of the company's overall revenue.

"Development of brands for sale in the Taiwanese market is not very aggressive. And compared to Japan there aren't many new products that attract consumers," Hsu observes. The 7-Select products stand out for their stylish packaging and are usually small in size and easy to carry, meeting the needs of the modern consumer, who wants convenience and does not want to be tempted to eat too much at one time.

What do you miss in your life? Hsu Chung-jen, who speaks at a leisurely pace, will always help you answer this question. He makes consumers feel pampered, but keeps competitors on their toes.

Translated from the Chinese by Susanne Ganz

Keywords:

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