Convenience store chain 7-Eleven to enter India through Future Group
7-Eleven has signed an agreement with Future Group that will open the eponymous brand stores in India.
Future Retail's subsidiary SHME Food Brands will open newer stores as well as convert existing locations to the 7-Eleven brand, starting this year. The retailer that has nearly 67,000 stores world over including 7-Eleven among other retail formats, said products mainly in beverages, snacks and fresh foods with local recipes will be part of the initial convenience offering.
“This strategic relationship offers an excellent opportunity to bring 7-Eleven’s brand of convenience and its iconic products to the Indian consumer,” 7-Eleven Inc. International Head Ken Wakabayashi, said. "7-Eleven will support Future Retail Ltd to implement and localize the unique 7-Eleven business model," he added in the statement.
ET was the first to break the news of the impending partnership in its Feb 14 edition.
The Japanese-owned, US-headquartered 7-Eleven generates nearly a third of its sales in the Asian country. The Future Group's latest move will be pitched against round-the-clock convenience store chain Twenty Four Seven, promoted by Modi Entreprises and In & Out, which is run by state-owned Bharat Petroleum Corp. Ltd.
“7-Eleven, Inc. is among the most iconic global brands in the food retail landscape. We are proud to bring this globally trusted convenience store to India and build new pathways together that will offer Indian customers greater convenience and choices, within their own neighbourhood,” said Kishore Biyani, founder of Future Group, which runs 1,444 stores in 409 cities, and generates most of its revenue from food and grocery retailing.
It already has three smaller store brands--Easy Day, Heritage Retail, and Nilgiri's--that have been acquired in the past few years and contribute 15% to sales. It plans to have 10,000 small stores in the next few years in the country where kiranas or local grocers with small format outlets still account for nearly 90% of the all consumer products sales.
Globally too, corner shops including 7-Eleven in Japan, Taiwan, Thailand and Singapore, Lawson in Japan and Oxxo in Mexico are among the largest retailers in their respective markets, reflecting the growing business of small outlets in several countries despite the presence of international supermarket and hypermarket chains. Since 2012, most of the large grocery retailers in the country have reduced store sizes by 13-35% to drive more profit through higher revenue per square feet.
A recent report by Antique Broking expects Future Group's small-store business to breakeven at an ebidta (earnings before interest, taxes, depreciation, and amortisation) level by the end of FY19. A year ago, Trent Hypermarket, a joint venture between the Tata Group and Tesco exited its small store business that operated under the Star Daily brand.
Future Consumer, also sells its own brands of snacks, cookies and other packaged foods, can piggyback on global chain to push its wares beyond Big Bazaar stores. The FMCG arm already gets about a quarter of its sales from about 120,000 general stores.