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The headline should be reversed. It's Japan's Elderly who have become 7-Elevens' Lifeline. Competition in the industry is fierce. Chains are consolidating. Fam

The headline should be reversed. It's Japan's Elderly who have become 7-Elevens' Lifeline. Competition in the industry is fierce. Chains are consolidating. Family Mart alone has bought AM/PM (2009), Cocostore (2015), and Circle-K (2016) over the last few years. Margins are becoming thin as traditional high margin items like the bento boxes and hot food items are under assault by Super market chains that (1) have begun offering these same items at bargain prices and (2) are staying open until later to cater to the long hours of corporate workers. Convenience stores traditionally catered to the youth and "salary men", but with shifting demographics and shifting consumption patters of these traditional target segments, they have been eyeing the elderly as a "growth segment" since at least 2009 when I lived there as a "salary man".

level3 10y ago
Your comment seems to imply that 7-Eleven is in trouble, but it's still the biggest of the convenience store chains, which is why the other chains are consolidating. I don't know about their profits, but revenue is growing year after year, and their number of stores is also increasing. If anything, it would be the other chains who might need to rely on the elderly more. [1] http://mainichi.jp/premier/business/articles/20150707/biz/00m/010/015000c http://mainichi.jp/premier/business/articles/20150707/biz/00... [2] http://www.sej.co.jp/company/suii.html http://www.sej.co.jp/company/suii.html
- hkmurakami 10y ago
  Astute observation -- I wasn't aware of their competitive advantage, though I did understand them to be doing well (other than having the best jingle in their commercials). But there are two passages that stand out to me from the mainichi article > ２位以下のコンビニチェーンの顧客がセブン−イレブンに流れていることがわかります。 > 今後、国内の個人消費支出の大きな伸びは期待できないでしょう。「このチェーン店の、この商品が好き！」と消費者から思われ、選ばれ続けることが、コンビニ各社が成長するために不可欠の条件となりそうです。 7-11 has done excellently against its competitors, stealing their customers away. But the industry as a whole has matured and has become a zero sum game. I would still contend that targeting the elderly as a growth segment that traditionally has not frequented convenience stores is an industry-wide growth bet that includes 7-11 as well.
  - level3 10y ago
    I don't doubt that targeting the elderly as a growth segment would be a good idea for the entire industry. It's just that your original comment suggested 7-Eleven in particular was in danger, which didn't jive with my personal experience, so I looked up the numbers.
    - hkmurakami 10y ago
      So much for sacrificing precision for sensationalism and a nice sounding headline. ;) Chalk that one up to amateur copywriting.
- kazinator 10y ago
  7-Eleven Japan also owns 7-Eleven US, and I think elsewhere. When 7-Eleven in North America was in trouble in the early 1990's, the Japanese franchise bought and bailed them out.
- deleted 10y ago
  [deleted]
patio11 10y ago
Huh, I wouldn't have guessed the bento boxes were particularly high margin. (I am not expressing doubt, just surprise. I'd have assumed they get their best margins on drinks and, depending on how you calculate things, financial services.) By visual inspection, though, I think you're likely right with regards to the changing customer mix. Another not-historically-core customer: working women, who might grab a few essentials (and possibly, a dinner) rather than making a full trip to the grocery store.
- hkmurakami 10y ago
  One caveat about the Bento and other hot food items that I should explain. These are high margin on their own (particularly Oden, believe it or not, which have a gross margin of 50% [1]), and were a boon to the industry in its expansion years. But with increased competition from a higher density of convenience stores, as well as other competing sectors (super markets, fast food, etc.), the inventory turnover rate has dropped from its peak years, and since these food items are perishable, it's now a point of risk for convenience stores who are expected to carry the items but have uncertainty over how they'll be able to clear inventory. (by the way you're also spot on about the soft drinks. Also, copies have 70% margin) [1] fascinating article about the finances of Oden operations and how scale is the make or break factor. http://thutmose.blog.jp/archives/18955371.html http://thutmose.blog.jp/archives/18955371.html
  - patio11 10y ago
    If you are ever wondering "Hmm, this is in Japanese; I wonder if it is appropriate for HN" about links like that please err on the side of posting more of them. That is one of the most interesting things I've read about business in the last several months. (Summary: a deep dive by a convenience store operator on the microeconomics of offering a particular seasonal dish in Japan, in particular vis the logistical difficulties, cost structure of the offering, and knock-on effect it has on the conveniences store's other business.)
    - hkmurakami 10y ago
      Will do :) Appreciate the encouragement.

level3 10y ago

Your comment seems to imply that 7-Eleven is in trouble, but it's still the biggest of the convenience store chains, which is why the other chains are consolidating. I don't know about their profits, but revenue is growing year after year, and their number of stores is also increasing. If anything, it would be the other chains who might need to rely on the elderly more. [1] http://mainichi.jp/premier/business/articles/20150707/biz/00m/010/015000c http://mainichi.jp/premier/business/articles/20150707/biz/00... [2] http://www.sej.co.jp/company/suii.html http://www.sej.co.jp/company/suii.html

hkmurakami 10y ago
Astute observation -- I wasn't aware of their competitive advantage, though I did understand them to be doing well (other than having the best jingle in their commercials). But there are two passages that stand out to me from the mainichi article > ２位以下のコンビニチェーンの顧客がセブン−イレブンに流れていることがわかります。 > 今後、国内の個人消費支出の大きな伸びは期待できないでしょう。「このチェーン店の、この商品が好き！」と消費者から思われ、選ばれ続けることが、コンビニ各社が成長するために不可欠の条件となりそうです。 7-11 has done excellently against its competitors, stealing their customers away. But the industry as a whole has matured and has become a zero sum game. I would still contend that targeting the elderly as a growth segment that traditionally has not frequented convenience stores is an industry-wide growth bet that includes 7-11 as well.
- level3 10y ago
  I don't doubt that targeting the elderly as a growth segment would be a good idea for the entire industry. It's just that your original comment suggested 7-Eleven in particular was in danger, which didn't jive with my personal experience, so I looked up the numbers.
  - hkmurakami 10y ago
    So much for sacrificing precision for sensationalism and a nice sounding headline. ;) Chalk that one up to amateur copywriting.
kazinator 10y ago
7-Eleven Japan also owns 7-Eleven US, and I think elsewhere. When 7-Eleven in North America was in trouble in the early 1990's, the Japanese franchise bought and bailed them out.
deleted 10y ago
[deleted]

patio11 10y ago

Huh, I wouldn't have guessed the bento boxes were particularly high margin. (I am not expressing doubt, just surprise. I'd have assumed they get their best margins on drinks and, depending on how you calculate things, financial services.) By visual inspection, though, I think you're likely right with regards to the changing customer mix. Another not-historically-core customer: working women, who might grab a few essentials (and possibly, a dinner) rather than making a full trip to the grocery store.

hkmurakami 10y ago
One caveat about the Bento and other hot food items that I should explain. These are high margin on their own (particularly Oden, believe it or not, which have a gross margin of 50% [1]), and were a boon to the industry in its expansion years. But with increased competition from a higher density of convenience stores, as well as other competing sectors (super markets, fast food, etc.), the inventory turnover rate has dropped from its peak years, and since these food items are perishable, it's now a point of risk for convenience stores who are expected to carry the items but have uncertainty over how they'll be able to clear inventory. (by the way you're also spot on about the soft drinks. Also, copies have 70% margin) [1] fascinating article about the finances of Oden operations and how scale is the make or break factor. http://thutmose.blog.jp/archives/18955371.html http://thutmose.blog.jp/archives/18955371.html
- patio11 10y ago
  If you are ever wondering "Hmm, this is in Japanese; I wonder if it is appropriate for HN" about links like that please err on the side of posting more of them. That is one of the most interesting things I've read about business in the last several months. (Summary: a deep dive by a convenience store operator on the microeconomics of offering a particular seasonal dish in Japan, in particular vis the logistical difficulties, cost structure of the offering, and knock-on effect it has on the conveniences store's other business.)
  - hkmurakami 10y ago
    Will do :) Appreciate the encouragement.