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India could expect its first 7-Eleven store this year

Global convenience retailer enters India with Future Group; the store would be open 24x7

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A key feature of the 67,000-odd 7-Eleven convenience stores across 17 countries globally is that a majority of them are open 24x7. India will see its first 7-Eleven store this year, however, the convenience store will not be able to keep its outlets open round-the-clock as regulations (barring in a couple of states) do not permit the same.

Speaking to DNA Money, Kishore Biyani, founder and group chief executive officer, Future Group, said, wherever the company will be allowed it will open 24x7 stores under the 7-Eleven banner. "Markets like Mumbai and Delhi allow retail stores to be operational 24x7. So wherever the regulations are favourable, we will have some stores that will be open round-the-clock," said Biyani.

On Thursday a subsidiary of Biyani's Future Retail Ltd (FRL) entered into a master franchise agreement with the largest global convenience retailer to develop and operate 7-Eleven stores in India. The expansion also marked 7-Eleven Inc's foray into the Indian organised retailing industry.

On the policy front, the Maharashtra Government in December 2017, had notified the amended Maharashtra Shops and Establishments (Regulation of Employment and Service Condition) Act, 2017, that covered hotels, malls and restaurants. The amendment allowed all shops to remain open for 24 hours throughout the week.

According to the law, keeping retail stores open round-the-clock will have to be done in three shifts and it will be mandatory for the shop owner to a give one-day weekly leave to their employees. There haven't been many takers for 24x7 open retail stores except for pharmacy retailers who were anyway operating such stores in the country.

Keeping Maharashtra's retail stores-friendly regulations in mind, Biyani is opening the first 7-Eleven store in Mumbai, this calendar year ie, 2019. Not disclosing if it will be an always open outlet, Biyani said, "The first store will open in Mumbai, that's all I can say for now."

Elaborating on the format that will be adopted for the India market, Biyani said there will two. "Stores under 1,000 sq ft and those over 1,000 sq ft of retail space. Any store that has over 1,200 sq ft or 1,400 sq ft area will also have a café in it. We will have stores of both formats for our 7-Eleven outlets in the country," he said.

While there will be brand new stores, Biyani will also use the conversion strategy wherein some of Future Retail's existing outlets will be refurbished and re-launched as 7-Eleven stores. "There are many locations in our portfolio. We will take the conversion route wherever we feel it is suitable for a 7-Eleven outlet," he said.

Typically, 7-Eleven stores sell globally popular products, beverages, snacks and ready-to-eat food products. Additionally, recipes developed for local tastes are also part of the offerings at these stores.

On what kind of assortments will the India stores have, Biyani said, "A lot of fresh products in the sipping, munching, confectionery, tobacco categories... many Future Consumer portfolio products to add. A lot of our partner firms will enjoy presence in these stores. For instance, our dairy business with Fonterra will start around June-July this year. Similarly, the chips from our snacking business will start coming in the market as all the factories are up and operational now."

Abneesh Roy, senior vice president, institutional equities- research, Edelweiss Securities Ltd, said, 7-Eleven is globally a huge brand in the convenience space and understands how it works. "Until now, many players have tried convenience stores in India but have failed to scale up profitably. Also Future Retail understands Indian consumer, private labels and Indian retail market in terms of locations, rentals etc. Future's scale-up of Easy Day has been below expectations. Hence, this tie-up will be a win-win to both. 7-Eleven is quite strong in convenience meals, liquor, cigarettes, snacks and beverages. We expect to see a good response for 7-Eleven especially in metros, Tier-I and Tier-II where the initial leg of expansion will happen. This gives Future Retail an additional revenue basket and should also be beneficial for Future Consumer since its products will have larger and wider touch points," he said.

According to a recent report by Deloitte and Retailers Association of India (RAI), the share of the organised retail market is expected to increase from 12% in 2017 to about 22-25% by 2021. The report also said that the overall retail market in the country is expected to grow from $795 billion in 2017 to $1.2 trillion by 2021.

ANYTIME SHOPPING

  • $1.2 tn – Expected size of the retail market in India in 2021
     
  • $725 bn – Size of the Indian retail market in 2017
     
  • While new stores will be opened, Future Group’s existing Future Retail outlets will be converted to 7eleven stores  
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