Suzuki TrucksSuzuki became a director of the company in 1971. By then, the small markets had succeeded in imposing legal limits to the superstores too, and Ito-Yokado began shopping around for other growth options. In 1973 Suzuki was instrumental in licensing the Denny's name for a chain of restaurants. During his repeated visits to the United States to clinch that deal, he became enamored with the country's thriving convenience-store chains, especially the brand leader 7-Eleven of Dallas, Texas. He immediately recognized the potential of convenience stores for Japan.
Japanese consumers had long been in the habit of shopping several times a day for small quantities of food. They placed a high value on freshness, and their homes tended to be small, with tiny kitchens and little storage space. Frequent shopping and crowded roads reinforced the need for small, local food shops carrying a limited range of staples. The small shops suffered, however, from antiquated management styles, poor capitalization, and a weak position in the face of distributors and manufacturers. It had become conventional wisdom, shared by most Ito-Yokado executives, that only large stores could achieve productivity, through economies of scale and professional management. Backed by economic consultants and industry experts, Suzuki's colleagues saw no demand for any additional small markets in the crowded Japanese retail scene.
Acting the part of visionary, Suzuki argued that Southland, the 7-Eleven parent company, could supply the management expertise and systems that might transform the Japanese mom-and-pop markets. Rather than continually fight these politically well-connected entrepreneurs, a well-run chain might tempt many of them into buying franchises, trading their valuable locations and customer loyalty for security and higher revenues. Suzuki managed to win over the company boss, Ito; the franchise ideal may have appealed to a man who always preferred leasing his locations rather than incurring the high bank debt typical of land-hungry Japanese retailers.
Suzuki still had to convince Southland executives, who had imbibed the same conventional wisdom about Japanese retail, but again his dogged determination won the day. In November 1973 Southland agreed to license its name and supply expertise and systems, in exchange for a 0.6 percent gross-profit royalty and a pledge to open 1,200 stores within eight years.