Japan-based convenience store giant Seven & I Holdings, which operates the 7-Eleven group, plans to close approximately 1,000 stores from the second half of next year, as part of a restructuring process.
The business has also announced plans to optimise its head office personnel, as well as develop new store layouts that are more profitable.
Saturation Point?
The move comes amid a slowdown in growth in the industry, as the convenience store market in Japan becomes increasingly saturated – along with 7-Eleven, rivals such as Family Mart and Lawson occupy any available convenience space in major cities such as Tokyo and Osaka.
The group said that it is making the changes to 'realise improvements to corporate value and sustainable growth in the medium to long term'.
It plans to reduce monthly fees for its franchisees, as well as offer greater support mechanisms for those operating around the clock.
Monthly payments will be reduced by ¥200,000 for franchisees with monthly gross profits of ¥5.5 million or less, and by ¥35,000 for those making more than ¥5.5 million, from March of next year.
Store Count
The number of convenience stores operated by the business in Japan stood at 20,993 as of September 2019, the first time that the group's store count has fallen on a month-to-month basis for more than five years.
Changes are also afoot in the group's other retail operations; its Ito-Yokado general merchandise store chain will see the closure of 33 stores, as well as job losses of around 1,700 by the end of 2023, the group said.
Elsewhere, its Sogo & Seibu Co. department store operation will also see store consolidation, as well as the reduction of around 1,300 jobs by the end of 2023.
Impact Of Measure
Commenting on the changes, Seven & I Holdings said that the 'impact of this structural reform on the company's consolidated financial results for FY2020 is currently being examined. Going forward, the company will promptly make an announcement should there be any impact on financial results'.
Speaking to the Japan Times, JP Morgan analyst Dairo Murata said that while the group's announcement came as a surprise, it could bear fruit in the long term.
“They’ll have their new midterm plan announcement next April, so this structural reform is probably an effort to be able to grow earnings for that period,” he told the paper.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
