Seven & i Holdings of Japan recently emphasised that fuel sales will continue to play a pivotal role in its Australian convenience store operations. However, the company foresees a greater growth potential in merchandising as it plans to expand its Australian store network more rapidly than in other countries, including the USA. Australia’s relatively fast population growth influences this decision.
The conglomerate’s executives shared their vision for Australia’s largest convenience store network after acquiring 751 stores in Australia for $1.71 billion. Ken Wakabayashi and Shinji Abe, Co-CEOs of 7-Eleven International, highlighted Australia’s convenience store market’s significant growth potential due to its fast-growing population.
Besides fuel, the company aims to boost its merchandise offerings, primarily focusing on ready-to-eat fresh food products. This strategic shift comes amidst declining fuel sales and the increasing popularity of electric vehicles.
The Japanese firm’s expansion in Australia is ambitious, considering the current store-to-population ratio in Japan, the US, and Australia. Seven & i Holdings acquired the Australian 7-Eleven business, defeating competitors like Ampol and Platinum Equity, with a forecasted $220 million EBITDA for the 2023 financial year.
The company, known for its extensive global network of 7-Eleven stores and other retail ventures, pursued this acquisition despite internal pressures and external challenges, including a proposition from ValueAct Capital to spin off the 7-Eleven business.
Despite initial reluctance, Seven & i Holdings eventually decided to expand into the Australian market, underlining the resilience of convenience stores in tough economic times. They remain optimistic about fuel sales as part of their diverse business model in Australia.
The Australian 7-Eleven will integrate into 7-Eleven International, a joint venture including Seven-Eleven Japan. This marks a deviation from the company’s usual licensing model, indicating a strategic shift in its global approach.
Finally, the company acknowledges the distinct market dynamics between Japan and Australia, suggesting that the Australian stores might offer different products than those in Japan. The completion of the sale is expected in 2024, adding to a series of Japanese investments in Australia.
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