Seven & i Holdings, the company behind Japan’s iconic 7-Eleven stores, is exploring a potential acquisition by Canada’s Alimentation Couche-Tard, the owner of Circle-K convenience stores. This move comes as Seven & i seeks to expand its popular Japanese food offerings into the U.S. market.
The companies have confirmed discussions about a possible acquisition, although the details of any potential deal remain undisclosed. Analysts suggest that Couche-Tard is drawn to synergies in North America, where Seven & i operates over 15,000 convenience stores and gas stations. However, these stores are less profitable compared to the Japanese locations, which number around 21,000.
Jeremy Jacobowitz, a New York-based food influencer with over 500,000 Instagram followers, expressed concerns about the impact of a takeover on the high food quality of Japanese 7-Eleven stores. He fears that a buyout could disrupt what he describes as “perfection” in the store’s offerings.
Seven & i’s Japanese stores are renowned for their high-quality food, with a 27% operating profit margin, compared to just 3.5% in its international locations. To address this disparity, Seven & i plans to introduce over 200 new food items to its U.S. stores this year, including some distinctly Japanese products. These items will be produced in Texas and Virginia, leveraging plants operated by Warabeya Nichiyo Holdings, where a Seven & i unit holds a significant stake.
The company’s strategy includes offering “onigiri” rice balls, “Lone Star Sliders,” Japanese-style sandwiches, and chicken curry rice bowls in the U.S. This food-centric approach is part of a broader effort to enhance the appeal of their stores in a competitive market.
Seven & i has long been a dominant force in Japan’s retail sector, with its convenience stores becoming central to daily life. They offer a wide range of products, from sandwiches and pre-cooked meals to fresh fruit and pastries, with multiple daily deliveries ensuring freshness.
Michael Causton, co-founder of retail research firm JapanConsuming, notes that Seven & i’s logistical prowess has been key to its success, maintaining its position as Japan’s highest-selling retailer for 24 years. Despite this, the company faces stiff competition from rivals like Lawson and FamilyMart.
Couche-Tard’s interest in Seven & i also raises questions about its potential to effectively manage Japanese convenience stores, a market known for its unique challenges. Analysts are sceptical about Couche-Tard’s ability to navigate this complex market, suggesting that the primary appeal of Seven & i may be its U.S. gas station business.
Founded in 1927 by Masatoshi Ito, Seven & i has grown from its origins as Ito-Yokado to become a global retail giant. The company acquired the 7-Eleven franchise in Japan in 1973 and now controls over 80,000 7-Eleven stores worldwide. It has also diversified into supermarkets, “superstores,” and restaurants, and has been under pressure from activist shareholders for inefficiencies.
Following the death of founder Ito last year, Seven & i has begun restructuring, including exiting its apparel business and closing several Ito-Yokado outlets. Couche-Tard’s potential acquisition could allow Seven & i’s Japanese operations to continue independently, focusing on its core strengths while exploring new growth opportunities.
