7-Eleven is about to make its huge mark in India? When can we expect the brand near us?

7-Eleven:The long, large tale between Future Retail ltd and Reliance India has settled, finally, and we are hearing some big news that’s making rounds post the event. Jut two days after Future retail and 7-Eleven Inc terminated their over two-year old contract, well, looks like Reliance jumped the slot. It has been announced that Reliance Retail has undertaken a tie-up with the Irving, Texas-based retail chain, and starting this Saturday, the 7-Eleven convenience stores in India would begin their launch.

Why did the contract between Future Retail and 7-Eleven get terminated?

Future Retail has expressed in a statement release that the termination of the master franchise contract, which they entered into in 2019 with 7 Eleven, was terminated in lieu of the inability to meet the target of opening store and the payment of franchise fees. As a result, it has been declared that the termination was mutual, and the inability of upkeep of the terms of contract have been expressed on the part of both entities.

Future7-India Convenience Ltd was the wholly-owned subsidiary of Future Retail that entered into the agreement with 7-Eleven. The Future Group had last year agreed to sell its retail assets to Reliance Retail but the deal was challenged by e-commerce giant Amazon and is currently caught up in a legal tussle.

When can we announce the 7-eleven stores to open? Where would the first store opening be seen?

Looks like Reliance Retail has made room for all the information that Indians are looking to know about the seal. As per the announcement made, the company has entered into a master agreement with 7-Eleven for the launch of the first of a kind brand’s convenience stores in the country.

Reliance Retail Ventures Limited’s announcement of the master franchise agreement seeks rapid rollout of the convenience store in key neighborhoods and commercial areas, but the beginning of the spree would begin across the Greater Mumbai cluster.

As a result, on October 9, 2021, 7-eleven stores would be launched in Andheri West, the commercial cluster of Greater Mumbai.

But what is so special about the 7-Eleven stores? How are they different from the already existing convenience stores?

The picture above is a store almost all of us have witnessed during our Hollywood movie, series, or in our favorite book. But what, in fact, is so different about them? And why has Reliance Retail Ventures Limited make the deal, especially since it already has its own grocery stores under the Retail Reliance Fresh Banner, and that too in similar areas?

Well, the fact is, their operation model is such that the 7-Eleven convenience stores function round the clock. It’s not like India doesn’t already have this concept, for the 24 Seven chain stores functioning in the country already do have this system.

The 24 Seven chain stores are owned by Samir Modi, and is based in New Delhi, India. The first store was unveiled in 2005, and while it continues to be one of India’s most successful conglomerates, they are confined to a few states of Delhi, NCR and Chandigarh.

Therefore, 7-Eleven would step in the Indian market as one of the biggest competitors of 24 Seven in India. It has been revealed that the latter franchise registers a revenue of over USD 2.8 billion, and while they plan on expanding their franchise model to at least 500 stores across the country, moving across the states that they’re already present in, the plan would have to take a look around to the new nature of their operating market, now that 7 Eleven is entering.

7 Eleven branded chain currently operates, franchises, and/or licenses more than 77,000 stores in 18 countries and regions, including 16,000 in North America.

What does it mean to have a franchise store? How much does it usually cost?

Retail franchising is more like the famous brand name shops across your street, run by a local person of the neighborhood.

It is a method of opening a single store based on the name, branding, trademark, and products of an existing business. So, primarily, the sale of other entity’s physical and intellectual property, but contractually, with an agreement of both.

While there are different types of franchises, the model that round the clock convenience stores, like 24 Seven operate on, allows you to obtain the license to run the business under the brand name, with a licensing cost and store investment. It has been believed that the model would be similar for a 7 Eleven store as well.

As for the usual cost, well, it varies from franchise to franchise, and industry to industry. As for a usual round the clock convenience store, like 24 Seven in India, the estimated investment for store opening is around USD 257,000- USD 301,000, along with an initial franchise fee for the attainment of license to operate the business under the franchised name of 24 Seven, of around USD 230,000.

If data around the world is aggregated, the initial franchise fee for 7 Eleven would turn out be between USD 0 to USD 1,000,000. So, there’s a big margin of licensing cost for where India would be filled in, more information as to which would be revealed as we move ahead with the deal.

Well, based on the gross profits that franchises have made across the past few years, looks like we can’t complain.

The likely competitors of 7 Eleven?

We’ve discussed in great length about one of the biggest competitors there is for 7 Eleven, i.e., 24 Seven, but there’s more to this ecosystem than meets the eye.

Since the introduction of foreign funding in multi-brand retail is not allowed in India, the country hasn’t extensively witnessed the big box store concept, unlike some major economies of the world.

Therefore, as we go ahead with these 7 Eleven convenience stores, they would undeniably have some impact over some well known e-commerce platforms, as well as online grocery delivery platforms, that have recently made their mark in the country.

These include services like Dunzo, Swiggy, Grofers, etc, who have been investing in setting up late-night delivery infrastructure having their own warehouses and storage moving away from the hyperlocal model they operated till now.

Edited by Sanjana Simlai.