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Japanese displeased with Canadian firm's proposal to buy out 7-Eleven

19 Comments
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"As opposed to 7-Eleven's strong desire to develop the convenience store culture in Japan, the (other party's) proposal was based solely on the principle of 'profit above all.' I don't think that this anxiety will be dispelled in future negotiations."

This remark, attributed to an unnamed individual described as a 7-Eleven insider, appears in a four-page article in Shukan Shincho of Sept 19.

The key word here is "culture." Is 50 years long enough for a foreign transplant to become acculturated to Japan? After all, isn't the American convenience store brand 7-Eleven -- whose first outlet opened for business in Toyosu, Tokyo in May 1974 -- itself proof of successful acculturation?

Fifty years on, Japan's kombini have inarguably developed their own unique retailing culture. Which is why the potential buyout offer of 7-Eleven by Canadian conglomerate Alimentation Couche-Tard (henceforth ACT), a 44-year-old corporation based in the Montreal suburb of Laval, Quebec, clearly has some Japanese worried.

Shukan Shincho's headline echoed such negative sentiments in no uncertain terms: Nihonjin wa dare mo kangei shinai Kanada kigyo no sebun erebun no baishu kikaku (the Canadian company buyout plan of 7-Eleven that no Japanese welcomes).

Japanese are inclined to believe that because convenience stores in their country and those overseas differ so considerably, foreign management might fail to appreciate how closely tied they are to Japanese lifestyles.

In many countries, for instance, convenience stores operate in conjunction with gasoline stands, and sales of petroleum products account for perhaps three-fourths of their revenues.

In the 2022 business year, more than two-thirds of sales at Japan's kombini were food and beverage items. Daily average sales at FamilyMart and Lawson franchises averaged ¥530,00 and ¥520,000, respectively, while 7-Eleven outlets averaged ¥670,000.

Its status as top dog allows 7-Eleven to stock items that don't necessarily contribute much to its bottom line. While FamilyMart and Lawson chains have both announced that from next year they're planning significant cutbacks in the number of stores selling books and magazines, 7-Eleven in contrast intends to keep things the same.

"We are proud of the fact that 7-Eleven has become an important 'supply center,' for reading material, especially in rural parts of the country where the number of bookstores has greatly diminished," the aforementioned company insider told the magazine.

"As a major retailer, 7-Eleven doesn't only support the lifestyles of consumers through foods, it has also become part of the domestic infrastructure," said Taiki Kato, editor of the distribution magazine "Gekiryu." "For instance, its ATM terminals not only function as a bank, but can issue public documents. Its outlets constitute a 'local lifeline,' that in particular serve to support the nation's declining birth rate and aging population."

Convenience store authority Hiroaki Watanabe described the important economic role the chain's outlets play in Japan.

"New products go on sale in Japan's convenience stores at the rate of over 100 per week, or 5,000 per year," said Watanabe. "Over the course of a year about 70% of the merchandise gets replaced with new items. So this alone demonstrates their outstanding contribution to new product development. Japan's kombini truly stand at the world's summit in terms of having achieved high-level retail operations."

Watanabe voiced concern that "The quality of onigiri (a snack item consisting of rice balls wrapped in dried laver) might decline, or, to reduce the discarding of unsold merchandise, more merchandise will be sold frozen. If that were to happen, I suppose they'd lose much of their customer support."

Hideko Yoshioka, a journalist who covers convenience store business, notes that Japan's kombini have made arrangements with local governments to provide assistance in the event of destructive earthquakes or other natural catastrophes.

"What's more, the elephant sticker displayed on the entrances to the stores indicates their status as 'safety stations,'" said Yoshioka. "The stores will report to the authorities any emergencies, or discourage acts of fraud by swindlers, or assist lost children or seniors with dementia who wander in.

"So they go beyond mere retailing in that they contribute to public safety. I'm skeptical that a foreign-owned entity would be inclined to maintain these activities."

The magazine then approached Japan's "father of kombini," Toshifumi Suzuki, who at age 91 who still serves on the board of Seven and i Holdings as an advisor emeritus, and asked him what he thought about ACT's proposal.

"I've avoided interfering (in the buyout offer), because if I say this or that, it will just confuse the people who are still working for the organization," Suzuki told the magazine. "Still, I have no choice but to keep my eye on the company because they've been carrying on with what we worked to create up to now."

In early September, Seven and i Holdings turned down ACT's initial proposal, on the grounds it was "opportunistically timed and grossly undervalues our standalone path and the additional actionable avenues we see to realize and unlock shareholder value in the near- to medium-term."

Is that supposed to be an unambiguous "no," one wonders, or is it businessspeak for "Okay, now let's see some real money on the table"?

© Japan Today

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19 Comments
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Change is always scary, but in the grand scheme, having Canadian owners is still pretty great. If the Japanese owners can't continue operations or think they can make more money investing somewhere else, let it go.

BTW, while 7-Eleven in the US is usually also a gas station too, it depends on the location. Inner cities have convenient stores just like in Japan - no fuels at all - just foods, snacks, hose, tissues, magazines, umbrellas and phone adapters. I have a different feeling at convenience stores - know they are going to be expensive compared to other places. Also, drug stores in the US/Canada can be mostly convenience stores that happen to have a pharmacy in the back to get prescriptions filled.

I seriously doubt that operations of each store will change very much. Some vendor placement will change for new vendors, but that happens anyway.

3 ( +7 / -4 )

Aren´t there enough competing combini chains here? This looks like a non-issue to me, even if the Canadian owners make changes. If if the customers do not like the changes, the issue solves itself anyway.

0 ( +5 / -5 )

I don't like it either. But, I'm not Japanese, so I guess my opinion doesn't matter.

4 ( +6 / -2 )

as a former Japan resident/ frequent visitor who loves Japanese kombini -- if this buyout means there's any chance of changing 7-11s in North America to be like the ones in Japan (you know, with actual pretty decent food) -- then omg i hope the buyout happens!

-2 ( +3 / -5 )

Yes, if it is not broken, (if it ain’t broke), do not fix it. Their aims to maximize profits will bring its own demise.

3 ( +5 / -2 )

It would be tragic if a Canadian company bought it. Just look at convenience stores in Canada - the food (what they have) is expensive garbage. Fresh? Don't make me laugh. (Only in N America would anyone say "fresh frozen" with a straight face.)

Everything in Canada, as in the US, is about maximizing profits in the mid to short term. The Canadian company would milk 7/11 for all it's worth and eventually run it out of business, or maybe sell the shell of what is left to another company.

2 ( +5 / -3 )

Everything in Canada, as in the US, is about maximizing profits in the mid to short term.

That's what MBA candidates are taught at North American business schools. Keeping the shareholders happy with big dividends, and announce immediate layoffs when revenues dip. The incentives for executives being perks like private jets, obscenely high salaries and a fat retirement package or "golden parachute."

5 ( +6 / -1 )

I have a feeling the buyout would have meant installing of more self checkout machines and reducing the workforce, which is already ridiculously underpaied.

I do think still that Konbinis are overpriced, compared to the local supermarkets.

0 ( +1 / -1 )

As other commentators said, the convenience stores in North America usually sell garbage food. You visit them only if all other shops are closed.

On top of it, Couche Tard is not even Canadian. It is Quebecois. Everything is way worse in Quebec regarding quality and customer service. Icing on the cake is their in-your-face French language fundamentalisms.

We warned you enough Japan. If you still chose todo so, that is on you.

0 ( +4 / -4 )

Couche Tard is not even Canadian. It is Quebecois

Then it's Canadian.

Haven't busted out a map recently, have you.

1 ( +6 / -5 )

Displeased, but no problems with buying out US Steel?

-3 ( +2 / -5 )

I don't know about this takeover but it is ludicrous to compare a few dozen magazines in a 7-Eleven with a real bookstore. Only people who don't go to bookstores, even just an inaka-level Tsutaya, would do this.

0 ( +2 / -2 )

First thing to go would be sexy mags (porn?) probably. Not actually sure if all kombinis have them

-2 ( +0 / -2 )

callbsoutSep. 20  10:15 pm JST

As other commentators said, the convenience stores in North America usually sell garbage food. You visit them only if all other shops are closed.

On top of it, Couche Tard is not even Canadian. It is Quebecois. Everything is way worse in Quebec regarding quality and customer service. Icing on the cake is their in-your-face French language fundamentalisms.

We warned you enough Japan. If you still chose todo so, that is on you.

Canada as a whole has pretty bad service and I've been all over Canada. It's more about the kinds of places you frequent. Stop going to crappy fast food, cheap cafes, and dive bars and try more upscale places and you'll get better service even in Quebec. And yet Quebec is still one of the most popular Canadian vacation destinations for Canadians and foreigners. If it's as bad as your whiny rant, nobody would go. You sound racist against French Canadians as well.

-1 ( +0 / -1 )

Japan buying out a North American company and reworking it to be more like Japan would get the result that you want. This is the opposite of that. A Canadian company buying out Japanese convenience stores will mean that the North American stores don’t change, while the services and goods at Japanese stores get pared down in variety and quality.

This is how modern financialization works—buy a property, mine bits and pieces for value that can be sold off, slash whatever cannot be sold and does not produce profit, and then finally dump the plundered shell of a property.

as a former Japan resident/ frequent visitor who loves Japanese kombini -- if this buyout means there's any chance of changing 7-11s in North America to be like the ones in Japan (you know, with actual pretty decent food) -- then omg i hope the buyout happens!

1 ( +1 / -0 )

In many parts of inaka, it’s a 30-minute or 40-minute drive to a “nearby” Tsutaya. It’s a special weekend shopping destination, not a place that one can just casually stop by. Convenience stores don’t have a lot of range, but they do fill a gap in some areas.

Only people who don't go to bookstores, even just an inaka-level Tsutaya, would do this.

2 ( +2 / -0 )

And how do they feel about the sale of US Steel?

1 ( +1 / -0 )

I've been involved in Canadian conglomerates buying foreign companies. It hasn't gone well in my experience. They just don't understand the local markets, and generally think they are a lot smarter than the local staff.

0 ( +1 / -1 )

Displeased, but no problems with buying out US Steel?

good point

0 ( +0 / -0 )

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