7 Eleven Inc and Kishore Biyani’s Future Group have recently signed a deal to bring the mammoth convenience store chain to India. Future Group has signed a comprehensive master franchise deal in order to open small stores all over India. The first store will be launched within this year itself.
7-Eleven is a Japanese owned brand that is based in the US. It has more than 64,000 stores globally. Its main reason for coming into the Indian market now, as opposed to before, is the formalization of the economy due to GST. Furthermore, it does not hurt that India is a huge market and the average Indian consumers want to experiment with brands and products. Additionally, India’s retail market is on a massive growth spurt at the moment and is estimated to grow from 672 billion in 2016 to $1.1 trillion by 2020. It is only natural that other brands want to grab some of this huge market share.
In a statement regarding this news, Kishore Biyani said “7-Eleven, Inc. is among the most iconic global brands in the food retail landscape,”
Ken Wakabayashi, the senior VP of 7-Eleven, also commented on this by saying “This strategic relationship offers an excellent opportunity to bring 7-Eleven’s brand of convenience and its iconic products to the Indian consumer,”
Future Retail is planning to become the leading convenience store in India. Already, it boasts of huge yearly sales worth 18,748 Crore INR. 85% of its main revenue is generated by what is
considered large format stores such as Big Bazaar while the rest of it comes from its smaller outlets. Future Retail owns close to 1050 smaller retail stores such as WH Smith, Heritage, and EasyDay.
Why will 7 Eleven’s business model work in India?
7-Eleven’s main format is that it is opened 24×7, which is a kind of format that is gaining a lot of popularity in India. With growing incomes and consumptions, as well as more chaotic work hours for professionals, the 24×7 format works very well for young shoppers who cannot take out time easily to buy items. In fact, Alpana Parida, the managing director of DY Works commented on this change in consumer behavior and talked about how the average consumer will pay more in order to receive deliveries at night. “7-Eleven will solve the problem of customers’ immediate need, which even online grocers don’t solve as it takes at least an hour or two even to deliver goods to your doorstep.”
Grant Thornton’s retail partner, Dhanraj Bhagat, also commented on this new development. He said “Convenience stores already exist in the country and are open 24×7 but these [7-Eleven] stores will offer customers the convenience of even paying either by debit or credit card,”
Furthermore, experts like Harish Bijoor, the owner of Harish Bijoor Consultants, believe that 7-Eleven will find it quite easy to penetrate the Indian market. Being backed by the logistics and know-how that come with Future Group should make their transition into India quite smooth. He said “Fundamentally, stores in tier 2 cities are nifty economically, because a small-format outlet has got high footfalls and it becomes a common grocer outlet in the neighborhood,” He also thinks that these stores will penetrate well in tier 2 cities as they will be located at short distances like 1-2 kilometers away from each other. This should make deliveries quite quick.