Seven & i Holdings to focus on food and growth in North America
Japanese convenience conglomerate Seven & i Holdings told attendees at its ‘investor day’ briefing that going forward, it planned to focus on growth by investing in its service and food operations in North America after earlier rebuffing Alimentation Couch-Tard’s earlier takeover offer.
In fact, the $47 billion offer made to Seven & i Holdings was not brought up at all during the briefing.
Chief executive Ryuichi Isaka told analysts from Japan that the company’s earlier announcement of its plans to remain independent and its earlier announced restructure of the company and moves to sell some North American underperforming 7-Eleven operations was to “further increase our corporate and shareholder value by seizing growth opportunities in the global market.”
The company said that its earlier outlined new strategic direction would let it double sales to $197 billion by 2030 and expand its overseas markets in countries such as Vietnam and Australia, upping its global fresh food offerings to attract customers and bolster profit margins.
Joseph DePinto, chief executive officer of 7-Eleven Inc. in North America spoke after Isaka to outline the challenges for the North American and more specifically the U.S. market for the company.
He pointed first to the continuing pressures of inflation and high interest rates have had on consumer spending. “As you know, the U.S. government injected approximately $10 trillion into the economy to offset COVID,” DePinto said. “This led to a rapid rise in inflation and overall prices began increasing and have now increased by more than 20% since 2020. The Federal Reserve then raised interest rates from near zero per cent to the current 5.5%. However, the Fed is expected to slowly reduce interest rates in 2024 . . . So, with inflation pressuring retail sales since early last year, businesses have been slowing price hikes to consumers as consumers are less willing to accept increased prices. In response, many businesses are also reducing their own costs to offer the consumer more value.”
Focus on building fresh food and proprietary label offerings
DePinto added that high prices and inflation have cut into discretionary spending amongst consumers—in the U.S., consumers on average have US$900 less to spend per month on discretionary items—so now consumers are “trading down and they are seeking more value for every discretionary dollar they spend.”
For 7-Eleven operations, that means that consumers are putting a higher premium and are demanding “high-quality and affordable food and beverage offerings from convenience stores,” he continued. “They’re quickly shifting from national brands to private brands, as private brands offer a lower cost to them, and they are also leveraging digital platforms to receive rewards and discounts while at the same time showing a growing preference towards convenience delivery.”
7-Eleven in North America looks to enhance its fresh food offerings and to grow the company’s proprietary offerings, by focusing on four key strategic areas: investing and growing its fresh food and proprietary food offerings for consumers, accelerating its digital offerings to consumers, improving overall company efficiency, and growing and enhancing its store network.
In its fresh food offerings, 7-Eleven looks to have some 1.6% year-over-year growth in that category and looks to deliver by the end of 2025 some 51 new SKUs in the category, especially in the ‘grab-and-go’ segment, and in its restaurant operations, some 20+ new SKUs by the end of 2025. For the beverage segment, its looks to have a nearly 4% year-over-year growth and to introduce some 55 new products in the category, and for its private label it looks to have over 200 new items coming into its stores by the end of 2025.
“We currently have some 983 restaurants, and we will continue to grow those restaurants,” DePinto said. “They play an important role in the acceleration of both our food and beverage business . . . and we are modernizing our beverage program by launching new flavours across our coffee, frozen carbonated beverages and out fountain drinks.”
“Our private brand business is now over $1billion in total sales, so we are going to focus on adding more high-quality, differentiated brands to that to offer better value to our customers while providing us with higher margins. We are on track to add some 215 new private brand items and we will continue to focus on innovation and improvement to our private brand line to make it even more compelling to our customers.”
7-Eleven also looks to enhance its 7Rewards and SpeedyRewards programs that have between them some 97 million members. “These programs deliver value to our customers, and we provide personalized offers and targeted discounts to increase member loyalty.”
New store openings in the works
While no mention of these closures came up, Seven & i Holdings said it is planning to add to its 7-Eleven network in North America some 500-plus large-format, food-focused stores by the end of 2027. These new stores will be based on a prototype store its calls its ‘New Standard’ that according to DePinto will offer “a larger product assortment and expanded food and beverage offerings” along with a fresher look, along with new customer-friendly conveniences. “They offer more seating, self-checkout, 7Now delivery, and electric vehicle charging.”
One of these ‘New Standard’ stores is operating in Allen, Texas, part of Collin County and a northern suburb in the Dallas–Fort Worth metroplex.
