Back in 2005, Doug Doust was at a crossroads. After a successful career that included stints at A&P Canada and Eaton’s, the vice-president of logistics for Wal-Mart Canada happily could have retired with his wife in Toronto and spent more time at their cottage in Muskoka. Doust could also have worked a few more years at the Wal-Mart Canada office in Mississauga, Ont. It would have made sense for him to stick close to home; after all, he’d been living in the Toronto area with his wife since the two married 35 years ago. But Doust had a third option. In December of that year, Wal-Mart became the majority shareholder in Seiyu, a struggling Japanese retailer that had lost the equivalent of $1.1 billion in the fiscal year ended February 2003. It needed someone with supply-chain expertise to help turn it around. Doust had visited Wal-Mart’s operations in countries such as China, Germany, the United Kingdom and Mexico, and he enjoyed seeing how the retailer operated in other parts of the world. So he jumped at the chance to take over the position of senior vice-president of supply chain for Seiyu. Within a matter of months, Doust was immersed in a totally different culture, and loving every minute of it.
Learning to live in a community where the population is very concentrated can be challenging, says Doust. Toronto is a big city, but Tokyo is three times larger. “When you ride subways or trains here, they are full,” he says. “They’re very safe, very clean and very neat. But they’re full.” He and his wife live in an apartment in one of the city’s many “downtowns” with a view of the 333-metre-tall Tokyo Tower, and she spends her time meeting new people, taking language lessons and trying out her Japanese cooking skills.
Things at work are different, too. Seiyu, a general merchandise chain with nearly 400 stores, doesn’t have much in common with its North American Wal-Mart counterpart, Doust says. Seiyu stores tend to be smaller, are generally situated in dense urban areas and have a large focus on food. In fact, food accounts for between 60% and 80% of sales at Seiyu stores.
Doust is particularly struck by the Japanese obsession with freshness. “When you think of the amount of sushi and sashimi and other product that’s eaten by the Japanese consumer, freshness is incredibly important,” he says. That means more deliveries, more often. Product is sent to the stores in compartmentalized, climate-controlled trucks that are less than half the size of the common 40-foot trailer used in North America. The smaller trucks make it easier to deliver in tight downtown areas.
The distribution centres are also quite different than those in North America, built up rather than out. A new centre that Seiyu built in Misato, near its home office, is constructed on land measuring a mere 500,000 square feet. Real estate is very expensive in Japan, Doust says, so “you put the most you can on the minimum piece of land that you can do it on.”
Wal-Mart’s plan for turning Seiyu around is to cut costs and use its Everyday Low Price strategy to bring customers in. But Wal-Mart has had mixed success growing outside its U.S. home base. While Canada has been a great market since 1994, the world’s largest retailer pulled out of Germany last July after eight years, saying it couldn’t obtain the scale and results it wanted. Could Japan be a similar disappointment? Doust, for one, is optimistic about Seiyu. “We’re just at the beginning,” he says. “My expectation is [that] we’re going to be successful.” And for at least the next couple of years, Doust will be busy in Japan, doing his best to make his prediction a reality.