Why convenience store chain 7-Eleven is indispensable part of life in Japan

By Kiuko Notoya and River Akira Davis

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, 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.Today, there are more than 21,000 7-Eleven stores in Japan and operates in 20 countries and territories. In the United States, Seven & i has been exploring ways to replicate the much-coveted Japanese convenience store experience. One possibility: Introduce ramen noodles.

In contrast to Japanese konbini stores, North American convenience stores are often seen as places for packaged snacks, drinks and, in many cases, gasoline.

Convenience-store hot foods typically evoke images of a solitary hot dog spinning for hours on end in an induction oven.Couche-Tard, based in Quebec, operates many of these convenience stores in the United States under its Circle K brand.

Japan has long been a part of Couche-Tard’s global ambitions. Should Couche-Tard’s acquisition succeed, it would not only represent the largest foreign-led acquisition of a Japanese company but also create one of the world’s largest retail groups.

After news of Couche-Tard’s preliminary takeover bid, Seven & i announced that it had established an independent special committee to review the offer.Analysts point to significant obstacles that would probably make the buyout of Seven & i a long shot.

The holding company’s reach opens the acquisition to more intense scrutiny from the Japanese government.

There are also big differences in the way Couche-Tard and Seven & i operate convenience stores.apanese konbini operators are known for their swift development of new products — such as themed goods available only during the fleeting cherry-blossom season.

Japanese konbini operators are known for their swift development of new products — such as themed goods available only during the fleeting cherry-blossom season. A typical convenience store in Japan offers about 3,000 products, 70 percent of which are replaced annually, according to Mr. Watanabe, the analyst.

A large portion of Seven & i’s operating profit comes from its Japanese convenience stores, and Couche-Tard would need to present a compelling proposal showing how it could improve that core business, he said.

Mr. Watanabe once made a two-week drive across the United States, studying convenience stores along the way — and was unimpressed. Any takeover proposal for 7-Eleven would be challenging because Japanese convenience stores are “completely different and unique,” he said.

The first 7-Eleven store in Japan opened in 1974 in a quiet bayside neighborhood in eastern Tokyo. On Friday morning, it was bustling with office workers, students and parents with young children in tow.

Sakura Kobayashi, 23, who works in the neighborhood, stopped in to buy a salad and an onigiri rice ball — a specialty in Japanese convenience stores. The foods at 7-Eleven have a taste that feels “familiar” to her and her colleagues, she said.

Outside a 7-Eleven in central Tokyo, Yuta Matsumura, a 26-year-old office worker, ate a cream-filled pancake dessert he had just bought. He said he typically stopped in a 7-Eleven at least three times a week, sometimes to buy lunch items like beef rice bowls.

But it is really the sweets that lure Mr. Matsumura in. “They’re not too sweet, like we Japanese like,” he said. “7-Eleven desserts are the best.”

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