Taiwan in Time: The fledgling days of 7-Eleven in Taiwan - Taipei Times
Sun, Feb 04, 2018 - Page 8 News List

Taiwan in Time: The fledgling days of 7-Eleven in Taiwan

Despite its dominance today, the convenience store pioneer struggled after its launch in 1980, failing to make a profit until its sixth year

By Han Cheung  /  Staff reporter

A portrait of former 7-Eleven president Hsu Chung-jen, who played a key role in the rise of the convenience store chain.

Photo: Yang Ya-min, Taipei Times

Feb. 5 to Feb. 11

It’s hard to believe that today’s ubiquitous 7-Eleven was once labeled as the “prodigal son of Uni-President Enterprises Corp.” But during its early days, the convenience store cost the corporation more than NT$2 billion in total losses.

Launching its first store in February 1980 on Taipei’s Changan E Road, the venture had already eaten into about half the original capital of NT$1.9 billion by September 1982.

“Besides Uni-President, other shareholders had little desire to keep the stores running,” Lee Jen-fang (李仁芳) writes in the book, 7-Eleven Takes Over Taiwan (7-Eleven 統一超商縱橫台灣).

At the same time, foreign and local investors bombarded Uni-President with calls about acquiring the stores. But the corporation refused all offers, instead buying out the other shareholders and taking full control over the venture by incorporating it into the company as its “supermarket department.”

It would take several more years for the company to finally turn a profit, but this was the beginning of its 7-Eleven empire in Taiwan.

RISE OF THE MINIMART

The late 1970s saw the rise of the two food giants of Uni-President Enterprises Corp (UPE, 統一企業) and Wei Chuan Foods Corp (味全食品) in response to increased competition in the consumer market.and need for more streamlined and efficient operations.

However, the first mini-market chain was launched by the Council of Agriculture, Taipei City Government and Youth Development Administration in 1977. According to the a 60th Anniversary publication by Wei Chuan (who later purchased the chain), government officials launched this venture after visiting the US and noticing how clean their supermarkets were compared to the traditional markets of Taiwan.

In 1979, UPE simultaneously opened 14 “modern convenience stores” across the country. Run as a subsidiary, the company held half the shares and gave the rest to dealers, family and friends. The corporation not only wanted to create a clean and bright shopping experience, but also hoped to have complete control over the channels of distribution for its products by running its own stores.

It was a daring venture as the average annual income was less than US$2,500 back then, says Hsu Chung-jen (徐重仁), who played a key role in the rise of 7-Eleven.

“As a food producer, Uni-President jumped straight into the unfamiliar world of retail and chain stores, and opened 14 stores at once with the intent of opening more. They did not even understand the basic differences between an independent store and a retail chain,” he says.

Hsu says they started out working almost 20 hours a day. He and two colleagues borrowed two desks at the parent company to conduct business, but when the company needed the desks they were relegated to a couch by the receptionist.

Hsu adds that the stores struggled because they were not able to fully identify customer needs.

“To fulfill the one-stop-shop needs of our customers, if someone wanted a broom we would start selling brooms. By the end, we had seven or eight types of detergent and milk formula and even sold vegetables, fresh meat and fish,” Hsu says.

GROWING PAINS

Hsu tried to collaborate with US corporations, but talks were stalled due to the US cutting diplomatic ties in 1979. Finally, Southland Corporation, which ran 7-Eleven in the US, reached out and the two companies signed a deal to run the stores under the 7-Eleven module and moniker.

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