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With 7-Eleven on buyout menu, Japanese owner Seven & i reaches crossroads
Couche-Tard targets food business, U.S. market; regulatory, antitrust issues weigh
TOKYO -- In May this year, Japan's Seven & i Holdings celebrated 50 years of flagship 7-Eleven stores in its domestic market, with thoughts turning to how it might develop the world's biggest convenience retail chain over the next five decades.
Just three months on, management at the retailer with a market value of $38 billion is already at a crossroads: Accept an ambitious, preliminary takeover approach from Canadian peer Alimentation Couche-Tard; encourage the Japanese government to block it on economic-security grounds; or walk away and risk the ire of already-restless activist investors and even a hostile bid.
Seven & i takeover bid signals opening for corporate bargain hunters
Seven & i potential buyer couche-tard is skilled m&a tactician, 7-eleven group atms coming to malaysia in latest southeast asian expansion, japanese retail investors rally around activism, japan's convenience store chains chase elixir of growth across asia, sony installs ai cameras in 500 japan 7-elevens for consumer analysis, latest on business spotlight, indian billionaires adani and birla wage 'cement war', nvidia vs. the startups: ai chip challengers chase efficiency, rockets and rocks: australia's mining tech finds its way to space, sponsored content, about sponsored content this content was commissioned by nikkei's global business bureau..
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7-Eleven’s Japanese owner wants to be considered as important as chipmakers as Circle K’s operator mounts a takeover bid
The owner of the 7-Eleven convenience store chain, Seven & i Holdings, hopes the Japanese government can give it leverage against a takeover by Canada’s Alimentation Couche-Tard.
Seven & i Holdings is seeking to have its status upgraded to a “core” rating under Japan’s Foreign Exchange and Foreign Trade Act (FEFTA), noted Bloomberg and the Financial Times , citing unnamed sources.
FEFTA requires foreign investors to notify the Japanese government if they want to acquire a stake in a Japanese firm considered part of a “core” business sector. Previously, the government has granted this status to companies in the semiconductor and nuclear industries, in order to address the risk of commercial technologies being used for military purposes.
Just two weeks ago, Japan expanded its list and gave chip-equipment makers a “core” rating. Governments are increasingly focusing on chipmaking tools as a key part of the semiconductor supply chain.
Seven & i Holdings made the application after it was approached by Alimentation Couche-Tard with a preliminary proposal for a full takeover, according to Bloomberg. Seven & i Holdings has a market capitalization of $38 billion, and if Alimentation Couche-Tard’s takeover is successful, it would be the largest takeover of a Japanese company.
If Seven & i’s status is upgraded, any potential foreign buyer would be subject to vetting by Japan’s finance ministry. (Normally, a foreign takeover of a company not designated as “core” only needs government approval after a deal is agreed to.) Japan has not formally blocked any transaction since FEFTA was amended in 2020, according to the law firm Mori Hamada & Matsumoto.
Shares in Seven & i Holdings dropped around 1% in Japan trading Wednesday following news of the company’s request for protection.
Seven & i Holdings declined to comment when approached by Fortune . Japan’s Ministry of Finance did not immediately respond to a request for comment.
7-Eleven: A vital part of Japan?
While perhaps not as flashy as a semiconductor company, 7-Eleven stores play a key role in Japan’s convenience store sector and are a part of everyday life. Beyond offering food and drink, a 7-Eleven in Japan also provides 24-hour access to services like ATM cash withdrawals, printing and scanning, bill payments, municipal services, and package delivery.
7-Eleven, originally a U.S. brand, first came to Japan in 1974, after Ito-Yokado opened the first outlet in Tokyo. The Japanese retail company bought a 70% stake in 7-Eleven in 1991.
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Why 7-Eleven Is a National Treasure in Japan
Convenience stores are a part of the country’s culture, meaning that the foreign buyout bid for 7-Eleven, the largest chain, could be a hard sell in Japan.
By Kiuko Notoya and River Akira Davis
Reporting from 7-Eleven stores in Japan, including the original one in east Tokyo
In Japan, convenience stores are celebrated. Clean and bright, they are stocked with fresh and affordable lunchboxes, steamed buns and stews in the winter. The celebrity chef Anthony Bourdain once called them “the one vice” he couldn’t give up.
For many residents, the more than 55,000 cheerful, jingle-filled stores, known as konbini, are an indispensable part of daily life. Millions flock to the stores daily to pick up food, send packages and pay bills.
Japan’s largest konbini chain, 7-Eleven, is also its most famous. It is understandable that a rival company wants in on the action.
This week, Seven & i Holdings , the Japanese company that operates 7-Eleven, said it had received an unsolicited takeover proposal from Alimentation Couche-Tard, a convenience store giant in Canada.
The status of 7-Eleven stores as a cornerstone of Japanese society also means Japan probably will not be willing to part with them, despite increasing pressure on the nation’s corporations to demonstrate openness to foreign-led acquisitions.
7-Eleven is “one of the best brick-and-mortar retail businesses in the world,” said Hiroaki Watanabe, an independent retail analyst. Selling 7-Eleven to Couche-Tard would be, for Japan, “equivalent to Toyota becoming a foreign company,” he said.
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Japan warms to audacious Canadian bid for 7-Eleven operator
The counterintuitive takeover bid for the Japanese operator of 7-Eleven might just make sense and work if the Canadian acquirer lets the legendary convenience store chain get on with it and continue to develop and expand globally, analysts said.
“Foreign businesses, international management, they can be just capitalists. They can just be shareholders. They can give KPIs to the local management, and let them run the businesses,” he said, using the abbreviation for key performance indicators.
In a time of both misinformation and too much information, quality journalism is more crucial than ever. By subscribing, you can help us get the story right.
Have you seen the magic of 7-Elevens in Asia? We can have that in Canada, too
At 7-Eleven convenience stores in Japan, shoppers can get high-quality food items and an assortment of alcohol while paying their bills, sending a package or printing documents. RICHARD A. BROOKS/AFP/Getty Images
Stephen Nagy is a professor of politics and international studies at Japan’s International Christian University.
The Canadian convenience store chain Alimentation Couche-Tard Inc.’s bid to acquire Japan’s Seven & i Holdings (hereafter 7-Eleven), which operates more than 85,000 stores worldwide, should be seen as an opportunity to inculcate badly needed quality into the North American convenience-store ecosystem and a new perspective on what a convenience store can and should be in a community.
The sad reality is that Canadian convenience stores just don’t compare in terms of quality, price and services offered, let alone customer service.
To illustrate, visiting 7-Eleven stores in Asia , you are instantly surprised by how local the products are. In Japan, you can get relatively high-quality sushi rolls, bento boxes and an assortment of alcohol while paying your bills, sending a package by express mail or printing your résumé. You can even buy socks, underwear, bandages or batteries at 7-Eleven stores.
Similarly, in 7-Elevens in South Korea, Thailand, Vietnam and the Philippines, you can do most of the same while you purchase Korean barbecue chicken, lychee Slurpees, pho or steamed buns stuffed with pork sisig.
As opposed to aisles being lined with fructose-based cola and energy drinks, chocolate bars and bags of potato chips, 7-Elevens in Asia offer fresh, high-quality food and non-sugar-based drinks at reasonable prices for customers.
They are also actually convenient. You can pay by a variety of means including Neanderthaloid credit cards and cash still common in North America or a plethora of digital payment systems linked to your smartphone.
The standards that customers have of 7-Elevens and other convenience stores in Asia are sky high. They want fresh food and seasonal treats that not only are delicious but look good, too. They want a continuum of choices and products to meet their everyday needs, and they want a one-stop store they can rely on 365 days a year, which is clean, safe and inexpensive.
On my last visit back to Calgary, I had to go to a Circle K convenience store to buy batteries and then a neighbouring store to post mail. Neither had healthy food choices so I had to go to yet another store to purchase food that was fresh and not processed or prepackaged. The experience included finding parking each time, traffic and staff that growled more than they spoke.
Canadians deserve better.
Andrew Willis: Couche-Tard’s 7-Eleven deal gives big pensions a chance to be Canadian champions
Japan’s love for convenience stores key to Couche-Tard’s 7-Eleven quest
Alimentation Couche-Tard’s bid to purchase Japan’s 7-Eleven is an opportunity to reshape the convenience-store landscape in North America by applying 7-Eleven Japan’s key performance indicators (KPIs) to the North American convenience-store market.
What does that mean for Canadians?
That means working with local businesses to feature local products and combining the services of many businesses into one, such as postal, bill payment and other customer needs. It could also mean offering healthier choices to customers through the establishment of new supply chains that feature local produce including eggs, vegetables and fruits.
In B.C., that could mean local 7-Elevens would offer seasonal fruit from the Okanagan. In the Prairie provinces, that could mean seasonal products with an assortment of berries that are found throughout the region. In Ontario and Quebec, one could imagine maple syrup-related and other agricultural products distinctive to each province.
It means we waste less time on the road going from different shop to different shop to get the things we need. This is good for our sanity but also for the environment and our communities. It concentrates services into one shop that meets a variety of consumer needs.
Adopting some of 7-Eleven Japan’s KPIs will also introduce innovation and localization by franchise owners, allowing them to compete through the personalization of their convenience stores based on local community needs and networks. Canadians in the Atlantic provinces or in the Yukon want products in their stores that meet their regional needs, not some cookie-cutter approach to franchises common in North America.
If the acquisition is successful, it is Alimentation Couche-Tard’s opportunity to seize or squander. By thoughtfully blending the best parts of both 7-Eleven Japan and Alimentation Couche-Tard, we could see a convenience-store revolution that benefits Canadians and the local economy.
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Supply Chain Management of Seven-Eleven Japan
Features of convenience stores.
As mentioned earlier, convenience stores are small grocery stores characterized by long hours of operation. This section provides a more detailed explanation of the characteristics and systems of convenience stores.
High-Mix, Low-Volume Inventory
While food supermarkets cater to household demands in daily life, convenience stores are characterized by their product lineups that cater to urgent individual demands. In order to achieve this under the constraint of a small store, a new type of product assortment was established that was not seen in the conventional retailing format of high-mix, low-volume inventory.
A standard convenience store has 3,000 items on a sales floor of about 100 square meters, which is more than three times the number of items displayed per sales floor area than the processed food section of a standard general supermarket (Yahagi, 1994).
The backyard area is also small in addition to the small sales floor, making it difficult for a convenience store to hold a large amount of inventory with many different products. As a result, convenience stores need to reduce the amount of inventory, but this increases the risk of product shortages. An empty shelf leads to missed sales opportunity, which accumulates to a huge loss for the store. In order to solve this problem, the following systems were developed.
Key Terms in this Chapter
Voluntary Chain : A voluntary association of independent retailers working together to achieve economies of scale in buying, advertising, etc.
Supplier Power : In Porter's Five Forces, suppliers have the power to influence resource availability and prices. Suppliers exert the most power when a company is dependent on a supplier and cannot switch to another supplier because of high costs or lack of alternative sources of supply.
Opportunity Loss : Loss of sales caused by the absence of products that should have been sold.
Just-in-Time : A system of production activities that thoroughly reduces inventory by supplying each process with only the necessary items when they are needed, well known as the production system introduced by Kiichiro Toyota of Toyota Motor Corporation.
Oden : Japanese fish cake stew. At convenience stores, consumers purchase it over the counter choosing the ingredients.
Fixed Cost : Fixed amount of costs that are incurred regardless of sales amount, even if no manufacturing, sales, or other operations are conducted, including labor costs, ground rent, utilities, leases, advertising, depreciation, etc.
Book Return System : Under the Japanese bookstore distribution system, retailers can return books that have not sold for a certain period of time to the publishers through wholesalers.
Taspo Card : An adult identification card required to purchase cigarettes from vending machines in Japan, introduced to prevent underage smoking.
Complete Chapter List
The marketplace for case solutions.
Seven-Eleven Japan Co. – Case Solution
This case study deals with the organizational structure and business processes of Seven-Eleven Japan Co. to provide its customers with their necessities.
Sunil Chopra Harvard Business Review ( KEL026-PDF-ENG ) January 01, 2005
Case questions answered:
- A convenience store chain attempts to be responsive and provide customers with what they need, when they need it, and where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case? How does Seven-Eleven Japan Co. achieve the responsive strategy?
- What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?
- Seven-Eleven does not allow direct store delivery in Japan, with all products flowing through its distribution center. What benefit does Seven-Eleven derive from this policy? When is direct store delivery more appropriate?
- Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan and the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that stores are also replenished by wholesalers and DSD by manufacturers.
- What do you think about Seven-Eleven coming to India? What would be the best strategy to operate in India? How should they start the initial phase of operation? Can Seven-Eleven replicate its success in India by following the strategy used in Japan?
- What is your expectation about the competition of Seven-Eleven in India?
- What do you recommend for Seven-Eleven in the COVID-19 era?
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Seven-Eleven Japan Co. Case Answers
1. a convenience store chain attempts to be responsive and provide customers with what they need, when they need it, and where they need it. what are some different ways that a convenience store supply chain can be responsive what are some risks in each case how does seven-eleven japan co. achieve the responsive strategy.
There are various ways in which a convenience store like Seven-Eleven Japan Co. could be more responsive.
Responsiveness can be broken down into three broad categories.
- Knowing what the customers need.
- Making sure they get it when they need it.
- Making sure it is available where they need it.
These can be achieved in the following ways:
Combining one or more of the above measures could mitigate most of the issues in a supply chain and make it more responsive.
Seven-Eleven Japan Co. achieves responsiveness by attempting to micro-match supply and demand using rapid replenishment. This assumes that the demand pattern would be relatively constant on a day-to-day basis.
Some risks associated with this method are:
- Risk of Delay in transportation since all units flow through their warehouses.
- Higher cost of transportation.
- Risk of no stock – This will happen when a group of customers come into the store and buy all the inventory of products that are generally in high demand.
- Risk of system failure – Seven-Eleven Japan Co. depends highly on technology to micro-match supply and demand using rapid replenishment. Therefore, if there were to be a Network failure / Server breakdown, it would put their whole system into the high-risk territory.
2. What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?
Seven-Eleven’s supply chain strategy is essential to closely monitor demand on a daily basis and try to tweak their supply to fulfill that demand in a short span of time. To support such a strategy, the following systems and capabilities have been put into place:
Facility Location:
- Seven-Eleven Japan Co. has a
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Structure of the Seven-Eleven Japan Supply Chain Case Study
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Different Ways and Risks of a Convenience Store Supply Chain
In order to become responsive, a supply chain for convenience stores can be organized using three main models: the dependence on distribution centers, the direct provision of goods, and the local production of fresh foods. A supply chain that includes distribution centers is effective when it is necessary to provide many stores with a certain amount of products regularly.
As a result, a convenience store is responsive because it guarantees the provision of many facilities with the necessary amount of goods in the most efficient manner. Seven-Eleven Japan uses this system (Chopra 7). Still, risks are in changes in demand.
If demand decreases unexpectedly, there are many products in a distribution center that should be sold. Direct store delivery is another approach that is used in small local convenience stores that do not belong to chains, and risks are in delays and inability to address demand. The third approach to developing a responsive system is the local production of goods. However, this system is not appropriate for stores where the flow of consumers is extremely high because of the limited capacity related to producing fresh and cooked foods.
Seven-Eleven Japan: Choice of Facility Location, Inventory Management, Transportation, and Information Infrastructure
Facility locations of Seven-Eleven Japan are selected with reference to the principle of market dominance. More new stores appear in those areas where there is a cluster of Seven-Eleven Japan stores to guarantee the effective distribution and rapid provision of products. Inventory management and transportation are based on the work of distribution centers and the provision of many goods. In this context, regional merchandising guarantees a focus on customers’ needs.
The company works to decrease the number of used vehicles, but the increase in productivity is observed (Chopra 7). Organization of the work of stores, suppliers, manufacturers, and distribution centers, and transportation are based on the implemented Total Information System. This network allows for ordering and communicating between store managers and distribution centers.
Distribution Centers and Direct Store Delivery
While using distribution centers in order to control the delivery of products, Seven-Eleven Japan guarantees that all stores will be provided with goods on time, the delivery will be properly scheduled, and customers’ needs will be addressed. It is important to use distribution centers for chains that include many convenience stores because of the necessity to organize deliveries several times a day (Chopra 6-7). Direct store delivery can be selected when a store needs certain products to be provided only a few times a week or when small stores choose to cooperate with local suppliers. In this case, it is almost impossible to address the problem of delays and increasing demands.
Seven-Eleven Supply Chain Structure with the Introduction of Cdcs
The benefits of using combined distribution centers are in possibility to control the whole supply chain and organize it according to the store’s needs, to monitor the amount and quality of goods, and to increase the productivity related to the workload and transportation. Furthermore, combined distribution centers allow for focusing on the particular needs of customers because of the ability to regulate the amount of proposed fresh products, cooked products, or manufactured goods.
However, the disadvantage of such an approach are in the necessity to adapt the distribution system applied in Japan to the requirements of the US market (Chopra 8). It is possible to state that combined distribution centers are more difficult to manage in comparison to centers organized in Japan. Furthermore, combined distribution centers in the context of the US market can be discussed as less appropriate than the direct store delivery system.
Works Cited
Chopra, Sunil. Seven-Eleven Japan Co . Battle Creek: Kellogg School of Management, 2005. Print.
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Discusses the structure of the Seven-Eleven Japan supply chain in terms of its facilities network, inventory management, distribution, and information.
To discuss how Seven-Eleven has made consistent supply chain choices to support its business strategy of providing convenience to customers. Points to how Seven-Eleven has used information and aggregation in transportation to improve supply chain responsiveness at a relatively low cost.
- Supply Chain Management
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Chopra, S. (2017), "Seven-Eleven Japan Co.", . https://doi.org/10.1108/case.kellogg.2016.000298
Kellogg School of Management
Copyright © 2003, The Kellogg School of Management at Northwestern University
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Innovating innovation:The case of Seven-Eleven Japan
- Published: 28 November 2007
- Volume 7 , pages 104–114, ( 2007 )
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Seven-Eleven Japan is admired globally for its supply chain management. Now it’s rewriting the rules of innovation with a collaborative approach that integrates product, supply chain and sales process development.
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Takeda Y, Matsuo H (2002) ECR: a “Fresh” Look from Japan. ECR Journal 2(2):17–27
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Lee HL (2004) The Triple-A Supply Chain. Harvard Business Review , October, 102–112
Takeda, Matsuo (2002) ibid
Susumu Ogawa (1998) Does sticky information affect the locus of innovation?: Evidence from the Japanese Convenience-store Industry. Research Policy 26:777–790
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Matsuo, H., Ogawa, S. Innovating innovation:The case of Seven-Eleven Japan. International Commerce Review 7 , 104–114 (2007). https://doi.org/10.1007/s12146-007-0014-0
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Published : 28 November 2007
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DOI : https://doi.org/10.1007/s12146-007-0014-0
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Seven-Eleven Japan: Reinventing the Retail Business Model
An in-depth description of a firm’s approach to an IT management issue (intended for MBA and executive education)
This case study describes how Seven-Eleven Japan (SEJ) has successfully established an innovative business model that is changing the retail industry in Japan. The case describes the information-based strategies that have helped SEJ become a top performing retailer in Japan, selling high quality products through an industry-wide supply chain network. With its strong capability to analyze customer requirements, SEJ pursues an integrated strategy, supported by innovative use of information and IT, to control the marketing, merchandising and manufacturing of original products. The case also describes SEJ's development of an integrated retailing information strategy and associated systems. The company's policy of outsourcing most IT capabilities to partners and pursuing advanced IT initiatives has provided SEJ with substantial advantages over competitors. Strategic IT, human and information assets such as store councilors, item-by-item real-time control, industry-wide IT network, and a sophisticated analysis syst...
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This case was written by Kei Nagayama, Management of Technology Program Class of 2003 at MIT Sloan School of Management, working with Dr. Peter Weill, the Director of the Center for Information Systems Research at the MIT Sloan School of Management. This case is for the purpose of management education, rather than illustrating or endorsing any particular management practice. The authors would like to gratefully acknowledge Mr. Toshifumi Suzuki, CEO, Mr. Makoto Usui, Managing Director, and Ms. Yuka Ozaki, Mr. Usui’s assistant, at Seven-Eleven Japan, Co., Ltd., in completing and publishing this case. This case may be reproduced free of charge for educational purposes provided the copyright statement appears.
© 2004 MIT Sloan Center for Information Systems Research. All rights reserved to the authors.
About the Authors
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Get instant access to this case solution with a simple, one-time payment ($24.90). You'll be redirected to the full case solution. You will receive an access link to the solution via email. This case study deals with the organizational structure and business processes of Seven-Eleven Japan Co. Read our case solution now!
Get a custom case study on Structure of the Seven-Eleven Japan Supply Chain. As a result, a convenience store is responsive because it guarantees the provision of many facilities with the necessary amount of goods in the most efficient manner. Seven-Eleven Japan uses this system (Chopra 7). Still, risks are in changes in demand.
Abstract. The goal of this case is to illustrate how a firm can be successful by structuring its supply chain to support its supply chain strategy. Once Seven-Eleven Japan decided to provide responsiveness by rapid replenishment, it then structured its facilities, inventory, information, and distribution to support this choice.
Discusses the structure of the Seven-Eleven Japan supply chain in terms of its facilities network, inventory management, distribution, and information. To discuss how Seven-Eleven has made consistent supply chain choices to support its business strategy of providing convenience to customers. Points to how Seven-Eleven has used information and ...
Seven-Eleven Japan Co. By: Sunil Chopra. Discusses the structure of the Seven-Eleven Japan supply chain in terms of its facilities network, inventory management, distribution, and information. Length: 14 page (s) Publication Date: Jan 1, 2005. Discipline: Operations Management.
📝 Facility locations of Seven-Eleven Japan are selected concerning the principle of market dominance. More new stores appear in those areas where there is a...
International Commerce Review. Hirofumi Matsuo &. Susumu Ogawa. 543 Accesses. 5 Citations. Explore all metrics. Seven-Eleven Japan is admired globally for its supply chain management. Now it's rewriting the rules of innovation with a collaborative approach that integrates product, supply chain and sales process development.
Sunil Chopra. Kellogg School of Management, 2003 - Business. The goal of this case is to illustrate how a firm can be successful by structuring its supply chain to support its supply chain strategy. Once Seven-Eleven Japan decided to provide responsiveness by rapid replenishment, it then structured its facilities, inventory, information, and ...
This case study describes how Seven-Eleven Japan (SEJ) has successfully established an innovative business model that is changing the retail industry in Japan. The case describes the information-based strategies that have helped SEJ become a top performing retailer in Japan, selling high quality products through an industry-wide supply chain network. With its strong capability to analyze ...
The redesign of Seven-Eleven Japan's (SEJ) distribution system led to several changes in supply chain costs and performance. It implemented a centralized distribution network using Combined Distribution Centers (CDCs) that consolidated shipments and optimized delivery routes, reducing transportation and inventory costs. Facilities costs also likely decreased from improved efficiency. While ...
In this chapter, the supply chain management of Seven-Eleven Japan, the most successful convenience store in Japan, will be taken as a case study. First, the establishment and development of the ...
This document discusses Seven-Eleven's highly responsive supply chain strategy in Japan. Some key aspects include: 1) Seven-Eleven has many locations that allow for rapid replenishment from distribution centers to minimize stockouts. However, this approach risks high costs if demand patterns change. 2) Micro-matching supply and demand assumes consistent daily demand, but events like tour buses ...
In this chapter, the supply chain management of Seven-Eleven Japan, the most successful convenience store in Japan, will be taken as a case study. First, the establishment and development of the convenience store industry in Japan (which has always been led by Seven-Eleven) will be described.
Seven-Eleven Japan Co. was established in 1973 and has grown significantly, increasing its number of stores from 15 in 1974 to over 10,000 in 2003. It is Japan's largest retailer in terms of operating income and number of stores. Seven-Eleven Japan uses a supply chain strategy of clustering 50-60 stores around distribution centers to allow for frequent replenishment and matching of supply and ...
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