7-Eleven announces closure of 444 stores

The holding company of 7-Eleven, Seven & I Holdings, announced in its financial report on October 11 that it will close 444 branches due to declining sales, lower customer footfall, inflationary pressures, and, notably, a decrease in tobacco sales.

In Vietnam, 7-Eleven entered the market in 2017 and currently operates nearly 120 stores nationwide.

Currently, 7-Eleven operates over 13,000 stores across the United States, Canada, and Mexico, making it the world's largest convenience store chain. The closures will only account for 3 per cent of the total number of branches.

However, this news has raised concerns in the market. In its financial report, Seven & I Holdings acknowledged that "While the US economy is recovering strongly, consumers are still cutting back on spending due to persistent inflation, high interest rates, and deteriorating job opportunities. These factors led to a 7.3 per cent drop in footfall at 7-Eleven in August, marking the sixth consecutive month of decline. Additionally, tobacco sales, traditionally one of the best-selling items for convenience stores, have fallen by 26 per cent since 2019."

This has made the strategy of expanding across gas stations in North America and infiltrating every corner of Asian markets less viable. Rising rental costs and reduced consumer spending have left 7-Eleven struggling to keep up with its competitors.

The world's largest convenience store chain is closing 444 stores

In response, 7-Eleven announced plans to shift its business model, moving away from its reliance on gas stations and tobacco sales to focus on food products, particularly fresh foods.

"We believe that we need to shift our business model from relying on gas stations and tobacco sales to a supermarket model where customers choose us based on other products. The key to this shift is fresh food," said Ryuichi Isaka, CEO of Seven & I Holdings.

The closure of some stores is also analysed by experts as a move to optimise business operations ahead of potential restructuring. Seven & I Holdings stated that it will continue to open new stores in areas with higher growth potential, in line with its long-term growth strategy.

This closure announcement comes as the parent company of Circle K, Alimentation Couche-Tard, is making efforts to acquire 7-Eleven. The Canadian company initially offered $38.7 billion in September, but the bid was rejected.

On October 9, Alimentation Couche-Tard raised its offer to $47 billion, a significant step to increase the chances of a successful acquisition. If completed, this would be the largest overseas acquisition of a Japanese company. However, negotiations between the two parties remain confidential at the buyer's request.

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