Japanese 7-Eleven arrives to the U.S.

Japanese 7-Eleven products have been brought to the U.S. As 7-Eleven CEO Ryuichi Isaka stated, the decision was to “change (their) business model from one that relies on gasoline and cigarettes to one in which customers choose us based on (their) products.” 

That solution led to bringing more fresh food from Japan. Looking back, the company started in Texas by selling ice, which was eventually brought to Tokyo, opening its first store in 1974. As 7-Eleven grew to become popular overseas, Ito-Yokado, the grocery company, got 70% percent of Southland’s shares (original name of 7-Eleven) in 1991, which led to 2005’s official announcement for the Japanese-owned companies, Ito-Yokado Co., 7-Eleven Japan Co., and Denny’s Japan to be merged and called Seven & I Holdings. With the country having over 21,000 stores out of over 84,000 worldwide, it has been an essential part of many Japanese customers’ daily lives.

Japanese convenience stores, also known as “konbini,” have been a place for customers to gain different services such as bill payments, obtaining fresh food, and concert tickets, among others. There is a visible reason for the plan to occur, which was the difference in operation. This year, it has been reported that 7-Eleven in the U.S. has a profit margin of 3.5% compared to the 27% in Japan. With 7-Eleven bringing approximately 200 different Japanese foods over to the U.S., the company hopes for the transition to increase the net profit. As the convenience store industry started to decline in revenue over the past four years by 19%, 7-Eleven needed a shift in business motives towards a different way to attract customers. The reasons for this are the rise in product and labor costs and fewer customers purchasing cigarettes and gas. The focus was necessary to move more towards the food products they sell.

While these motions are in progress, we also see that Seven and I Holdings has been brought into an offer from Alimentation Couche-Tard about a potential M&A. The company originates in Canada and owns Couche-Tard, Circle-K, and Ingo. Acknowledged for their acquisitions in the industry to expand their domain on the market, the company is offering up to $38 billion for the deal with 7-Eleven to occur. This relates to an interaction the two companies had back in 2005, as an offer was brought up to merge from the founder of Couche-Tard, Alain Bouchard, to the late founder of Ito-Yokado, Masatoshi Ito, who turned it down at the time to increase their presence more in the U.S.. The current deal is still in the works as more new information is getting brought to the public during this time.

But what could this mean for 7-Eleven as they are bringing Japanese products to the U.S.? CNN stated that “it will expand Couche-Tard’s already impressive footprint across North America.” Additionally, the Washington Post has written about Ulrike Schaede, a professor at the University of California, explaining the possibility of further motive to “export the Japanese model abroad” for 7-Eleven. As many speculations are being reported by professionals across the media, we will have to see what the final decisions will arrive at and how it will change the convenience store industry in the future.