Convenience store chain 7-Eleven is shutting down over 400 outlets.
Seven & I Holdings, the corporation overseeing 7-Eleven's operations in Japan, announced in a financial report issued on Thursday that 444 of its outlets in the U.S., Canada, and Mexico will be closing due to a mix of factors such as decreased sales, reduced customer traffic, inflationary pressures, and a decrease in cigarette sales.
The specific stores closing were not initially disclosed. With over 13,000 locations, this closure represents approximately 3% of their total portfolio.
In the report, Seven & I commented that while the North American economy remains largely healthy, they have witnessed a more cautious spending pattern among middle- and low-income earners due to inflation, high-interest rates, and an unfavorable job market.
This cautious spending led to a 7.3% drop in customer traffic in August, marking the sixth consecutive month of decline.
The corporation also pointed out a significant decrease (26%) in cigarette sales since 2019. Despite a shift in consumer preferences towards alternative nicotine products such as Zyn, the decline in cigarette sales has not been sufficiently offset.
These 444 closures are referred to as a "deliberate trimming" of the chain to maintain efficiency and profitability, according to Neil Saunders, a retail analyst and managing director at GlobalData Retail.
"The stores being closed have likely experienced a disproportionate decrease in foot traffic and customer count, as consumers grapple with rising food prices and adjusted their purchasing habits accordingly," Saunders explained to CNN. "In certain areas, increased competition from online and discount retailers has also had an impact as consumers search for lower prices."
While 7-Eleven plans to continue its investment in food offerings in the U.S., given that it has now become the highest-generating sales category and a major draw for customers, competitors like Wawa and Sheetz have been reported to have higher customer satisfaction rates for their overall offerings, with 7-Eleven scoring significantly lower, as per recent surveys.
In addition, 7-Eleven presented its latest financial results amidst a takeover proposal from Couche-Tard, the owner of Circle-K, which boosted its bid to acquire the company by $8 billion to $47.2 billion this week.
The business decision to close 444 stores is aimed at maintaining efficiency and profitability, as these outlets have experienced a significant decrease in foot traffic and customer count. The cautious spending pattern among middle- and low-income earners, caused by inflation, high-interest rates, and an unfavorable job market, has negatively impacted 7-Eleven's sales and customer traffic.
