The future of 7-Eleven

It was in 1927 that 7-Eleven started as an ice vendor in Texas. Since then, it gradually became a general merchandiser selling pretty much everything.

It was a Japanese retailer Ito-Yokado that brought 7-Eleven to Japan. It required full ownership and turned into a wholly owned business in the 90s. Ito-Yokado perfected 7-Eleven’s business model. They made 7-Eleven the world’s largest convenience store chain that owns approximately 90,000 shops across 20 countries.

7-Eleven set an example that became a standard for convenience store business. It has literally become a part of our lives by providing not just food but also a lot of daily consumables and even social services. Their supply chain system is highly efficient and you can buy almost everything at any time.

But ironically, 7-Eleven is struggling to replicate its success in their birthplace, the US. The US is much bigger than Japan or any other country where 7-Eleven was successful. Due to that, it is not easy to build and maintain their supply chain system in the US. For example, processed foods make up a much bigger share in their US stores than the stores in other countries.

7-Eleven sales in the US have shown little to no growth for many years. Recently, it’s even starting to decline due to inflation. Price is not the greatest strength of 7-Eleven but people are becoming more and more sensitive to it.

7-Eleven makes about 30% of its sales in Japan. However, the Japanese economy has been struggling with deflation since the 90s but it doesn’t seem like there will be an exit anytime soon.

To find growth engines elsewhere, 7-Eleven has been trying hard to expand its sales in the US. But it’s been tough. Although it was originally a US brand, 7-Eleven was wholly reborn as a Japanese brand. Its brand identity and business model are Japanese.

Quebec company Couche-Tard Inc., the owner of Circle K stores, is looking to buy 7-Eleven. If the deal is made, then it will be the biggest foreign takeover of a Japanese business ever and reshape the global convenience store landscape. The Canadian firm also believes that 7-Eleven should explore the US market. However, it believes the brand must be reborn as a North American company to do that.

In the 90s, Japan was a consumption powerhouse and it acquired a US business to renovate how they spend. Today, 7-Eleven is struggling with Japan’s long-lasting stagnation and it is worried that a Canadian firm will attempt a hostile takeover.