Autobacs Seven Company Ltd. - Company Profile, Information, Business Description, History, Background Information on Autobacs Seven Company Ltd.

5-6-52 Toyosu, Koto-ku

Company Perspectives:

Mission: Our dream is to create a paradise for car enthusiasts. Our c ommon purpose in each country is to create a place where car-lovers c an come and enjoy the one thing that brings them together, enthusiasm for cars in any form. An Autobacs store is a place where you can exp lore the joy of car ownership, the pleasure of customizing your vehic le, improving its appearance, or performance. Autobacs' mission is to promote the idea that the car is more than just a means of transport , and the means of expressing this in every aspect of our customers' car lifestyle. We believe that this enthusiasm is something that goes beyond borders; that exists in a similar form in all countries, and is shared by people from various cultures and languages.

History of Autobacs Seven Company Ltd.

Autobacs Seven Company Ltd., Japan's leading retailer of aftermarket auto parts, has begun exporting its successful retail formula into th e international market. Unlike many of its foreign counterparts, Auto bacs targets the market for automobile customization and upgrades, ra ther than simply providing replacement parts. In Japan, Autobacs oper ates more than 530 stores, including nearly 350 franchised stores. Au tobacs stores operate under two major formats. The original Autobacs store features one-stop shopping for a full range of auto parts, as w ell as repair, installation, and maintenance facilities, service stat ions, and automotive sales. Autobacs remains the largest part of the group's network. Since the 2000s, however, Autobacs has been expandin g its second format, the Super Autobacs. These large-scale facilities , which reach up to 50,000 square feet and more, feature an extended range of products, as well as a variety of amenities--including three full-sized, 100-seat movie theaters showing first-run movies--in ord er to attract and retain customers in the stores. The Super Autobacs stores extend the aftermarket concept to include books, DVDs, music, apparel, gifts, and other items related to automobiles and automotive culture. The Super Autobacs format features prominently in the compa ny's plans for international expansion; the company opened its first Super Autobacs in the United States in California in 2003. The compan y operates six stores in Taiwan, two in France, in partnership with R enault, and one each in Singapore, Thailand, and, since 2004, mainlan d China. Autobacs also has begun to roll out a third retail format in Japan, Autobacs Hashiriya Tengoku, which specializes in sales of sec ondhand auto parts and equipment culled from the company's primary re tail network. Listed on the Osaka, Tokyo, and London Stock Exchanges, Autobacs remains controlled by the founding Sumino family and Chairm an Koichi Sumino. In 2004, the company posted sales of ¥227.07 bi llion (2.12 billion).

Auto Parts Wholesaler in the 1940s

The automotive market in Japan took off especially following World Wa r II. The country's fast-rising economy and its commitment to establi shing its own full-fledged--and internationally competitive--automoti ve industry introduced a variety of new business opportunities, such as the need to develop national networks for the wholesale distributi on of automotive parts. Among the entrants into this sector was Toshi o Sumino, who founded his company, called Suchiro Syokai, in Fukyushi ma-ku, in Osaka, in 1947. Less than a year later, Sumino reincorporat ed his company as a limited liability company, called Fuji-Syokai Ltd .

Fuji-Syokai quickly added a retail component as well, and by the 1950 s the group's retail sales formed a major part of its business. The g rowth of this activity was fueled by the rise of a culture of automob ile customization (called "tuning") among a segment of the consumer m arket. Unlike typical automobile owners, content with merely replacin g parts on their cars as necessary, tuning enthusiasts sought to upgr ade and modify their automobiles, and were prepared to pay for high-e nd components, customized paint jobs, and the like.

Sumino's company began to cater more and more to the growing tuning m arket. By 1958, the company restructured, spinning off its wholesale operations into a separate company, Daiho-Sangyo Co. Ltd. In that yea r, the company also created its Drive Shop division. Over the next de cade, Fuji-Syokai continued to expand its range of operations, adding automobile sales, and its own chain of service stations.

In the early 1970s, Sumino recognized a new opportunity in the Japane se auto parts aftermarket. Until then, the market remained highly seg mented, meaning that customers were required to shop at one store for their tires, at another for other parts, and continue on to yet anot her for repairs and installation services. Sumino saw an opening for a new type of auto parts retail store in Japan, one that would offer a one-stop shopping concept to the automotive aftermarket. In 1974, t he company opened its first one-stop retail store in Osaka.

The new store was called AUTOBACS, which stood for "Appeal, Unique, T ires, Oil, Batteries, Accessories, Car audio and Services." Opened in Higashi, Osaka, the first Autobacs paved the way for the company's g rowth into Japan's leading aftermarket specialist. The company quickl y began developing its plans to extend its reach nationwide, adding f ranchise operations in addition to stores under its own direct manage ment. The first Autobacs franchise store opened in Hakodate, Nakamich i in 1975.

The success of the Autobacs concept and the rapid development of the retail network soon encouraged the company to adopt its retail brand as its own, and in 1978, the company became known as Autobacs Seven C ompany Ltd. The following year, the company merged with its Daiho-San gyo and Autobacs Higashi subsidiaries into a single corporation, whic h also became known as Autobacs Seven Co. in 1980.

International Expansion in the 2000s

Autobacs continued its rapid expansion through the 1980s. The company marked its entrance into the eastern Japanese market in 1981, with t he opening of a store in Koshigaya. By the mid-1980s, the company boa sted nearly 300 stores in its total network, franchisees included. Th ese were organized along regional lines, with offices in Tokyo, Sappo ro, Sendai, Nagaoya, Takamatsu, and Fukuoka. Although the group provi ded direction from its headquarters (moved to a nine-story purpose-bu ilt building in Osaka in 1986), the company's regional offices were e ncouraged to operate more or less autonomously. By then, Autobacs had claimed the leadership in the Japanese automotive aftermarket.

Autobacs's growth suffered a setback in the mid-1980s, when a group o f franchise owners decided to break away from the company and establi sh their own business. The defection eliminated more than 50 stores f rom the Autobacs network. Nonetheless, the company remained focused o n expansion, with plans to expand its total network to more than 500 stores by the early 1990s. In preparation for this growth, the compan y turned to the stock market, listing its shares on the Osaka Stock E xchange in 1989. Four years later, the group added its listing to the Tokyo Stock Exchange as well. In 1995, in preparation for the future launch of international operations, the company opened its capital t o foreign investors, adding a listing on the London Stock Exchange.

By the mid-1990s, competition in the Japanese automotive aftermarket had grown increasingly intense. To distinguish itself from its fast-g rowing rivals, Autobacs began emphasizing a new range of customer ser vices. The loosening of Japanese restrictions governing the country's automobile repair sector allowed the company to begin marketing an e xtended range of repair services, in addition to its existing install ation services.

The company also began preparing a new retail format, introducing som ething of an automotive aftermarket retail revolution in Japan and es tablishing the direction of the group's future international expansio n. In 1997, the company unveiled the first of the new stores in Chiba . Called Super Autobacs, the new format featured more than 50,000 squ are feet of selling and repair space, set over two floors. The Super Autobacs featured more than mere auto parts. Indeed, in addition to a n expanded selection of goods, including books, DVDs, music, and appa rel, the large-scale stores also offered three in-house, 100-seat mov ie theaters showing first-run films to customers.

Autobacs began rolling out the Super Autobacs format across Japan, me eting with strong success. The format also became the company's flags hip for its international expansion. The group's first target was Tai wan, where the company quickly followed the success of the first Supe r Autobacs with the opening of five more stores by the mid-2000s. Aut obacs also entered Thailand, forming a franchising joint venture with that country's auto parts retailer Champion in 1997 to open a string of smaller format Autobacs in Thailand. The company opened its first Super Autobacs in Thailand at the end of the 1990s. In the meantime, the company expanded in Japan, acquiring a stake in the rival Auto H elloes Co. Ltd. The company acquired full control of Auto Helloes in 2002.

In 1999, Autobacs turned to Europe, reaching an agreement with French automaker Renault to form a new retail joint venture. That company, owned at 51 percent by Autobacs, opened two large-format stores in Fr ance and planned to expand the format throughout Europe through the 2 000s.

Autobacs moved its headquarters to Tokyo in 2001. In that year, as we ll, the company launched an e-commerce-enabled web site, extending it s retail reach to Japan's highly active Internet market. Also in 2001 , the company announced its plans to develop its own sports car, call ed the Garaiya.

Into the mid-2000s, Autobacs focused on two new, and potentially vast , markets. The first was the United States, where the company opened a Super Autobacs in 2003. Located outside of Los Angeles, the new sto re, at 50,000 square feet, easily tripled the size of its nearest com petitors' stores. The Super Autobacs proved an immediate success as w ell, posting sales of more than $9 million after its first year. The company began plans to introduce its franchise into the United St ates, and a future expansion of its network to as many as 200 stores.

Next, the company turned to a far different market. In 2004, the comp any opened its first auto parts store in China, in Shanghai, forming a joint venture, called Shanghai Autobacs Paian Auto Service Co., hel d at 65 percent by Autobacs. After opening a second store in China in 2005, the company announced plans to boost its Chinese franchise net work to as many as 100 stores before the end of the decade. After con quering Japan's automotive aftermarket, Autobacs hoped to repeat its success on an international scale.

Principal Subsidiaries: Autobacs Seven Europe S.A.S.; Auto Hel loes Co. Ltd.

Principal Competitors: Sears, Roebuck and Co.; SAM'S Club; Rit e Aid Corporation; AutoZone Inc.; Advance Auto Parts Inc.; Jardine Cy cle and Carriage Ltd.; Castorama France S.A.; Kohnan Shoji Company Lt d.; Pep Boys-Manny, Moe and Jack; CSK Auto Corporation; Yellow Hat Lt d.; Autoseven Company Inc.


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