In a strategic move that reflects the pressures facing retail today, 7-Eleven, a major player in convenience stores, is closing a notable number of locations across North America.
According to a recent announcement, 7-Eleven is set to shutter 444 underperforming stores throughout North America, a decision driven by shifts in consumer behavior and rising costs, as the Daily Mail reports.
Seven & I Holdings, the Japanese conglomerate that owns 7-Eleven, delivered the news of these closures last Thursday. This reduction will affect approximately 3% of the company’s vast store network spread across the United States, Canada, and Mexico. The underperforming outlets are being removed from the chain's portfolio as part of a broader effort to focus on the most profitable locations while pursuing long-term growth.
The financial challenges prompting these closures are significant. According to Seven & I’s latest earnings report, inflation has taken a toll on business operations, leading to a 25% increase in expenses such as rent, utilities, groceries, and fuel since 2019. These rising costs have directly impacted consumer spending habits as high-income households continue to spend while middle- and low-income consumers adjust their expenditures.
The 2024 figures underscore a notable decline in consumer visits to 7-Eleven stores across North America, with a decrease of 7.3% in August alone, marking a downward trend over six months. This decline aligns with a tangible shift in consumer preferences, where a sizeable 69% of individuals express a preference for higher quality products, while 60% aim to maximize value for money.
Cigarette sales within 7-Eleven have experienced a steep decline, falling by 26% since 2019, with customers purchasing 2,700 million fewer packs in 2024 compared to five years prior. The transition to alternative nicotine products has not compensated for this decline, showing only a modest 18% shift in consumer behavior.
The goal of the store closures is to streamline operations, as shared by a 7-Eleven spokesperson with the Daily Mail, emphasizing the alignment of store locations and company strategy for efficient growth. Despite the retrenchment, 7-Eleven continues to explore expansion in areas demonstrating higher customer demand for convenience, thus enhancing its overall footprint where it matters most.
This year, the chain anticipates a financial benefit from these efficiency measures, projecting a $30 million operating income increase, with an added annualized boost of $110 million moving forward. Furthermore, in response to the evolving market landscape, Seven & I Holdings is preparing to separate into two distinct businesses, a tactic intended to fortify investor confidence and thwart potential takeover attempts.
The closure announcement coincides with Seven & I Holdings adjusting its earnings forecast for the fiscal year, which concludes in February 2025. The company remains committed to reevaluating its asset portfolio continually to better align with its revised long-term strategy.
While these closures reflect the current retail challenges, they signal 7-Eleven’s adaptive strategy amid changing economic conditions and consumer patterns. The company’s ongoing efforts to refine its operations underscore its resilience and commitment to delivering value where customers need it most.
According to Seven & I Holdings, “The North American economy remained robust overall” due to consumer activity among higher-income groups, whilst a broader “more prudent approach to consumption" prevails among others. The adjustments underscore the delicate balance of meeting customer expectations while navigating inflation-induced economic shifts.
As 7-Eleven proceeds with its strategic realignment, focusing on more viable locations offers an opportunity for sustained growth even amid challenging times. The closures, a fractional part of the overall network, highlight the importance of adapting to market flux for future prosperity.
Looking to the future, 7-Eleven’s commitment to channeling its resources toward more profitable areas while maintaining customer-centric values illustrates its readiness to evolve with the times. The focus lies on navigating through the current economic climate efficiently, ensuring readiness for continued service to consumers across the globe.
