Seven & i Holdings looks to transform under changing market conditions
In the over three months since the collapse of Alimentation Couche-Tard’s over US$44 billion dollar bid to acquire Seven & i Holdings, the parent company of convenience retailer 7-Eleven looks to make some major strategic investments and transformation to enhance its business operations and in a rapidly changing market.
During a set of financial and investor presentations this month, Seven & i Holdings said the company needed to become more agile and focused on its business operations so as to improve overall customer experience and enhance shareholder value.
CEO Steve Dacus said while the company experienced solid financial results for the second quarter of this year – with a first half consolidated operating income of ¥208.3 billion and a strong net income of ¥121.8 billion – overall performance of the Japanese operations remained soft.
“Though our consolidated result was good, performance at our Japanese convenience stores fell short of expectations, with operating income 7.2% below plan,” Dacus said. “We expect these difficult conditions to continue into the second half, and we are therefore revising the consolidated and SEJ full-year operating income forecast downward. However, we are beginning to see positive signs of recovery in SEJ’s gross profit in the second half.”
Dacus took time to speak about the market challenges ahead for the company in the coming years, and what it means for its strategic plans going out to 2030.
“As I mentioned in August, inflationary pressures and broader economic uncertainty have continued across the world, including in our key markets. This trend is not new, and consumers are continuing to tighten their spending and be cautious about what they purchase. This has led to a decline in shopping frequency generally, and our 7-Eleven stores in each market are no exception,” he continued. “In Japan, convenience stores are facing increasing challenges in responding to changing consumer needs. This is driven by ongoing shifts in consumption patterns resulting from a declining and aging population, inflation, and polarization in consumer behavior. Furthermore, competition in the ready-to-eat market is intensifying, particularly from supermarkets and drugstores.”
READ: Parent company of 7-Eleven plans 1,300 new stores for North America by 2031
“In the U.S. as well, the consumer environment remains challenging with inflation continuing to outrun wage growth. For consumers, we continue to see pressure on low-income households as the cost of living continues to climb. Overall convenience store traffic is under pressure, driven by online and delivery alternatives, reduced cigarette consumption, continued work from home, cuts to SNAP, and the gradual decline in demand for fuel.”
To turn things around, Dacus said Seven & i Holdings will focus on several key markets and customer-facing initiatives. These include focusing on enhancing fresh food offerings and rolling out just-made merchandise; executing a transformation program to strengthen its business and profit structure; to expand the rollout of SEVEN CAFÉ Bakery to approximately 8,000 stores; and improve customer traffic and sales through strategic promotions and product development.
“U.S. consumers continue to demand ever greater quality and value, in food-forward convenience stores with fresh grab-and-go options,” Dacus added. “They expect seamless digital and delivery choices, and they want larger, cleaner, more contemporary formats that match their lifestyle. Our strategy is to meet and exceed these expectations.”
“We are elevating food and beverage quality, expanding fresh offerings, and strengthening our private label portfolio to deliver more choice and value. In parallel, we are repositioning 7-Eleven as a food destination through advanced fresh programs, signature items, and investments in restaurant formats. On the digital front, we are scaling 7NOW delivery and enhancing our rewards program to make our products available whenever and however customers want them. We are also investing in the store base. Based on learnings from our Evolution stores, our New Standard Store reflects what customers are asking for, larger, food-forward, digital-first stores with enhanced fuel offers, setting the foundation for future growth,” he added.
Additionally, Seven & i Holdings will accelerate store expansion to meet changing customer needs and preferences, with some new store openings of between 125 to over 250 annually, adding 1,300 stores by 2030, and investing in New Standard Stores that will be larger, offer enhanced fuel and foodservice offerings to customers.
