7-11 is still the main force of profit, but its parent company, Seven & i Holdings, is seeking a strategic transformation.
According to the Asahi Shimbun news, Seven&i Holdings, the 7-11 parent company of Japan’s largest convenience store, announced the group’s structural reform measures on October 10, including its convenience store 7-11 closing or relocating about 1,000 stores. By the end of the 2020 fiscal year, its department store Super Ito-Yakado laid off 1,700 people, and Sogo and Seibu laid off 1,300 people.
In addition, 33 Ito Yokado supermarkets, 5 Sogo and Seibu department stores are also included in the store.
This day, Isaka Ryuichi, CEO of Seven&i Holdings, also announced its interim results for FY 2019, with a net income of 110.6 billion yen, a record high. Among them, convenience store 7-11 is the main driving force. In the past ten years, 7-11 relied on the “direct + join” model to expand the annual expansion of more than 800 stores, currently there are about 21,000 stores, if the population and consumption remain Growth, 7-11 will also run at such a high speed, but the reality is not optimistic.
The first is the weakening of consumer desires.From October 1 this year, Japan’s consumption tax rose from 8% to 10%, and the rise in consumption tax brought about commodity prices. Rising, these costs will ultimately be borne by consumers, and this consumption tax hike is also rising again since 2014. What follows is a higher cost of living. This is tantamount to adding a “catch-up” to the desire of ordinary people to consume. 7-11, as a retail giant, will also be directly affected.
But the most fundamental reason is still the decline in the demographic dividend. According to the Nihon Keizai Shimbun, the number of births in January-July this year has decreased by 5.9% year-on-year, the biggest drop in 30 years. This year, the Japanese new population is likely to fall below. 900,000. The Asahi Shimbun also mentioned that the pressure of competition in the industry and the sluggish sales caused by the long rainy season are also one of the reasons.
The population shortage has been around for a long time. The high labor costs caused by the shortage of the population have attracted the call of the Japanese convenience store industry to abolish the 24-hour business in March this year. Since March of this year, 7-11 has made the first attempt to shorten business hours in ten direct stores in Japan. According to a survey conducted by NHK, 34% of Japanese people believe that 24-hour operation is completely unnecessary. In the population over 60 years old, 45% think it is “completely unnecessary” compared to other age groups. Up nearly 20%.
As for the pressure of peer competition, it is worth mentioning that the self-operated mobile payment “7pay” launched in 7-11 failed, with a loss of about 386.1 million yen. The crisis of trust triggered by stolen brushing has caused some consumers to turn to their competitors.
In addition, according to Asahi Shimbun, 7-11 will reduce the cost of franchise (FC) member stores, and the 1,000 stores that will be closed or relocated are among the lower-profit stores. 7-11 Will work to improve the profitability of other stores.
However, 7-11 parent company Seven&i Holdings does not intend to lower its operating profit forecast and will remain at 420 billion yen. In April next year, the company will release a new medium-term plan.