In this exclusive Q&A with Japan’s Co-Op NET Home Delivery Director, Junichi Nagashima, Retail TouchPoints uncovers the strategies and technologies driving the success of Co-Op Deli Consumer’s Co-Operative Union (Co-Op NET). With 4.64 million members (30% of households in the areas it serves), Co-Op NET generated 386.5 billion yen ($3.45 billion) in home delivery sales and another 131.6 billion yen ($1.18 billion) in store sales in 2016.
Established in 1992 as a membership organization in the Tokyo metropolitan area, Co-Op NET has been a global leader in developing the grocery home delivery market. UK businesses kicked off their efforts in the late 1990s; the U.S. has lagged behind, starting in earnest only in the early 2000s.
Recently, Co-Op NET was challenged with creating efficiencies around assortment planning, customer segmentation and category management. To help optimize business processes and practices, the company partnered with SAS to implement SAS® Customer Intelligence 360, SAS® Marketing Automation and SAS® Visual Analytics. Nagashima noted: “This isn’t about product. It is not about software. It’s about becoming an analytics-driven decision-making organization.”
While these improvements were planned before Amazon entered the grocery home delivery arena, they will help Co-Op NET fend off the mounting competition.
Retail TouchPoints: How does the Co-Op NET business model differ from a typical U.S. grocery model?
Junichi Nagashima: Our home delivery business (named Co-Op Deli) consists of four businesses:
Weekly: Delivery is made once a week to the member’s home or other designated location. Orders are placed one week before delivery. This is Co-Op NET’s main business, and this is where SAS is primarily used.
Daily: Mainly boxed meals and other items delivered daily.
Specified Delivery: With Amazon and other electronic commerce sites in mind.
Direct Delivery: Delivered directly from the production area or factory mainly through electronic commerce sites.
Co-Op NET also operates stores, modeled after U.S. retail businesses adapted to Japanese culture. Think Whole Foods Market or Trader Joe’s on a smaller scale.
RTP: What was the business challenge that led you to seek outside tech support?
Nagashima: Competition has intensified due to the rise of Amazon and domestic Internet supermarkets. As a result, sluggish growth became a concern. To cope with such competition, Co-Op NET has focused on meeting the needs of individual members. In individual home delivery, which is a costly service, raising the average…