Convenience stores 7-Eleven will close 444 poorly-performing outlets in the USA and Canada. The decision, part of an overarching strategy to respond to evolving economic conditions faced by the chain, includes increased inflation, declined customer flow, and dramatic changes in consumer purchasing behavior.
This move by 7-Eleven, Inc. represents the closure of about 3% of its total number of stores, which number in excess of 13,000 locations across North America. It really exemplifies the vagaries of today’s market and how even big-box players like 7-Eleven have to toe the line to the same market realities that exist.
Reasons for the Closures
Inflation has particularly hit the retail sector in industries such as food and fuel, two of the major cornerstones on which convenience stores base their operations. With prices on the rise, many of these convenience buys are being cut, with consumers either reducing their buying of these items or trading down to less-expensive alternatives.
The net result is that many 7-Eleven locations are experiencing reduced traffic. At the same time, cigarette sales, previously one of the mainstays behind convenience store revenues, have consistently faced headwinds, both from health trends and from regulatory pressures, further crimping profitability at many locations.
A 7-Eleven representative had said, “We continuously review our store portfolio to ensure that we operate our business as efficiently and serve our customers to the best of our ability. And when stores are underperforming or no longer meet demand within a market, we are making difficult decisions to close those locations.”
These shop closures will, no doubt, affect the communities where they are located, but they also point to a bigger trend in retail. 7-Eleven is by no means the first retailer to face ongoing inflation, supply chain impingements, and shifts in consumer behavior. More broadly, companies in the sector are being compelled to reassess their operations and adapt to a marketplace that has become far more price-conscious and selective in where people choose to spend their money.
For 7-Eleven, considered a one-stop shop for snacks, beverages, and light food, the challenge remains in managing its volume-low margin business model against the dynamics of economic realities. This is an indicator that some locations are just not profitable anymore in today’s environment.
Because of this, analysts in the industry feel that, in the long term, 7-Eleven will actually be strengthened due to these store closures. This allows the chain to focus on those outlets bringing in more money and invest in areas where demand is still impressive, hence positioning the business for further growth.
Focus on Innovation and Expansion
Yet, even with shutdowns, 7-Eleven is still not lagging behind in terms of planning expansion and innovation. It had been heavily investing in digital channels: mobile apps, online delivery, and loyalty programs. In turn, these digital tools helped 7-Eleven capture a much younger and tech-savvy audience that increasingly favors the convenience of ordering items via their smartphones for delivery or curbside pickup.
In fact, the chain has implemented various new programs aimed at further easing life for customers. The 7NOW delivery app experiences increased growth; through this, customers are able to place orders directly from their local 7-Eleven store for delivery in just a few short minutes. This move toward digital platforms may be vital in competing during times when online shopping is one of the strongest forces in retail.
The company continues to expand its territories into new markets or the opening of new stores in areas where demand is stronger. “While we are closing some stores, we are also opening new ones in areas where customer demand is growing, ensuring that we remain accessible to our loyal customers,” emphasized the company’s spokesperson.
Impact on Workers
The shutdown of the 444 locations will impact some thousands of employees in the United States and Canada. While 7-Eleven couldn’t provide the figure as yet, thousands of workers are presumed to be impacted. However, the company did declare its endeavor to move as many employees as possible to nearby locations that it will retain. This is very thoughtful on the part of the company to reduce lost employment during this unfortunate event.
“We certainly understand it is a difficult time for our employees, and we continue to do all we can to support them during this transition,” 7-Eleven said in the statement. “When possible, we are working with impacted employees to relocate them to other stores and assist with new opportunities within the company.”
Moving Forward
Meanwhile, the closure of several 7-Eleven stores mirrors the evolution that retailers are into. With increasing economic pressures and constantly changing consumer behaviors, even well-established enterprises will be compelled to alter their ways. 7-Eleven is thus buckling up for a future slammed convenience shopping scene by cleaning its books, doubling down on digital platforms, and forging ahead with the opening of new stores where demand remains robust.
But while the chain will still be a big player in convenience retail, that means some communities will no longer have their local 7-Eleven store. This company has already committed to its evolution and finding new ways to satisfy customers’ needs amidst the challenges it would be facing.
