Mumbai-based Future Group-owned Future Retail said on Thursday it has signed a master franchise agreement through its subsidiary, SHME Food Brands, with 7-Eleven Inc. to develop and operate 7-Eleven stores in Asia’s third-largest economy.
“7-Eleven stores could open over the next few months, starting with Mumbai," said Kishore Biyani, founder and group chief executive officer, Future Group.
This will make India the company’s 18th market.
Biyani declined to give details on number of stores, but added that the company is targeting revenues of $1 billion over the next 7-8 years.
Under the agreement, 7-Eleven will support Future Retail in implementing and localizing the unique 7-Eleven business model, the two companies said in a stock exchange filing. Future Group will add new stores and even convert some of its existing ones to 7-Elevens, they said.
Future Retail will be allowed to do sub-franchising as part of the agreement.
Japanese-owned and US-headquartered 7-Eleven has a network of over 67,000 stores the world over. The chain runs small-format convenience stores that stock an assortment of fresh and packaged foods, beverages and items of daily use, and has a presence in markets such as Thailand, the US, and Japan.
The stores in India will focus on fresh and packaged food tailored to Indian tastes, Biyani said. “It will be more food-driven and a very urban- centric format. We will be open 24 hours wherever we can," he said. “I think the urban markets are ready for a format where customers can get their lunch, breakfast, dinner, a lot of food and convenience items."
For now, the chain will focus only on urban areas, he said. “The aim is to go deeper in big cities. We will target busy areas. We have identified corporate parks, educational institutes, bus stops, colleges, and airports."
Future Group is among the largest retailers in India with a presence across supermarkets, grocery stores, electronics, apparel, and other formats. It operates 1,440 stores in more than 400 cities across its Big Bazaar, Easy Day, Nilgiri’s, Fashion at Big Bazaar, and Central formats, among others.
India’s $795 billion retail trade is still dominated by mom-and-pop stores. The share of modern retail trade here was pegged at 9% of the overall retail trade as of 2017. By 2021, the share of modern trade is expected to go up to 18%, driven by a consumer shift towards convenience formats, according to estimates from a February report by Deloitte.
The country has a handful local players such as Modi Enterprises-owned Twenty Four Seven, RJ Corp-owned J-Mart, and In&Out, which operate in the modern convenience store format.
“The organised convenience store format has seen no large, national players," said Ankur Bisen, vice president, retail and consumer products, at consulting firm Technopak. “However, the format can see demand from select urban pockets given the supply of quality real-estate," said Bisen.
“In our view, cracking the convenience store format will be difficult and may include long gestation period in a sharp expansion phase. 7-Eleven, however, will have a higher chance of success given offerings of beverages and food and hence acting as quasi QSR player," financial services firm Jefferies said in a note on Thursday.