7-Eleven is testing a bigger convenience store with more stuff on shelves

AFTER refining the convenience-store concept and expanding across Japan, Seven & i Holdings wants to find out whether there’s consumer appetite for a bigger version of its 7-Eleven outlets carrying a broader range of choices.

The retailer unveiled a new store in Chiba prefecture, a suburb of Tokyo, that will have more than twice the number of products and is almost double the size of regular 7-Elevens. Seven & i says that for the project to be successful, it needs to see figures exceeding the 700,000 yen (S$6,283) average daily sales that a typical outlet makes, given the increase in operational and other costs.

Convenience stores, also called conbini in colloquial Japanese, are ubiquitous and essential to daily life in Japan. Unlike their US counterparts, 7-Elevens in Japan offer everything from fresh food to concert tickets to delivery packages in one place. Still, the retailer is betting that it can draw in a wider range of consumers by adding more food choices and household goods.

“Our stores are currently not as popular with women, families and younger people,” Keisuke Yamaguchi, an executive officer of Seven & i, said. “How to balance that is our biggest concern when choosing what items to have in the store.”

The new trial 7-Eleven carries easy-to-prepare groceries, baby products, trendy makeup and other items that are not usually carried at 21,500 outlets across Japan. 7-Eleven is partnering with Seven & i unit Ito-Yokado to bring new items to the bigger convenience stores.

At the Chiba store, the usual acrylic signboard was replaced with a simpler, stylish version using less electricity. On display are about 2,000 additional products that are not usually carried in 7-Elevens, including fresh fruit, diapers and hair-care products. There will be a larger cafe menu, as well as freshly baked breads and pizza.

The declining population in Seven & i’s home market has pushed the retailer to seek new consumers both at home and abroad. The partnership with Ito-Yokado, which often carries popular lifestyle stores such as Daiso or Loft in its buildings, will be able to bring in more diverse consumers, according to the company.

Ito-Yokado, the original retail chain and prior name for the company, has largely been overshadowed by the convenience store business. The new 7-Eleven trial store, however, may reflect a renewed push by the company to boost the retailer and use its strengths, according to Taku Sugawara, an analyst at Iwai Cosmo Securities.

“They’re expecting an improvement for Ito-Yokado,” Sugawara said. “By using Ito-Yokado’s products, they are also trying to succeed as a group and raise the company’s profits as a whole.”

Seven & i is also not stopping at just one of these larger stores; the retailer plans to watch what products do well over the next six months, and open a second one within the next year.

That might mean competition for Japanese supermarket chains such as Aeon’s My Basket, a small supermarket that’s already well-established across the country, according to Sugawara. “It’s a similar type of concept, so if Seven & i successfully expands these stores, there will likely be some competition there,” he said. BLOOMBERG