Econometer: Can 7-Eleven change its US image and become more like the stores in Japan?

SAN DIEGO — A food-focused shift for 7-Eleven is coming to the U.S., mimicking its success in Japan, and items are already showing up in Southern California.

The convenience store in Japan is known for its high-quality food items that are often delivered fresh daily. It is popular with tourists, but also Japanese shoppers, who can get a quick dinner after a long day.

Amid reduced U.S. revenue from tobacco products and gasoline, Japanese-owned 7-Eleven owners are aiming to change some of its American stores to be more like Japan: Creating a multi-million dollar distribution system for fresh food across many of its locations.

Several items found in Japan stores have shown up in Orange County, including its fluffy egg sandwich. There is excitement among Americans who have traveled to Japan. A hoax onigiri (rice ball), which tricked San Franciscans that it was for sale at their 7-Elevens, caused a pandemonium.

Still, Japan fans are much different than convincing the American population that 7-Eleven is more than Slurpees and hot dogs.

Q: Can 7-Eleven change its U.S. image and become more like the stores in Japan?

ECONOMISTS

Caroline Freund, UC San Diego School of Global Policy and Strategy

YES: 7-Eleven can and should rebrand. In Japan it is possible to get a healthy and delicious lunch for under $5, with options such as amazingly fluffy egg salad sandwiches and flavorful teriyaki rice balls. The trick will be to expand the U.S. customer base without alienating Slurpee/hotdog fans. A model may be the world’s largest snack-food company, PepsiCo, which has pursued a dual strategy of adding healthy options while improving its core products.

Kelly Cunningham, San Diego Institute for Economic Research

YES: The great thing about the free market or “capitalist” economy is businesses innovate and adapt to whatever consumers demand or desire. Successful businesses sell their wares or services at prices consumers are willing to pay. Businesses fail if proceeds do not recompense all expenses used in producing and delivering their products. Japan’s innovative system to monitor a wider and more diverse array of products selling in reinvigorated 7-Eleven stores may work well for American consumers.

James Hamilton, UC San Diego

YES: Americans today are more health-conscious than they used to be. Just because you need to pick up food quickly doesn’t mean it has to be bad for you. Particularly in inner cities, it can be hard to find healthy fresh food. I think it’s great that a major corporation is looking at steps to change that. Let’s offer people an alternative to pizza and chips and see if they take it.

Norm Miller, University of San Diego

NO: Americans are slow to experiment once a solid stereotype is set in place. Our current image is a place where you get a supersized sugary Slurpee sufficient to kill most diabetics and a hotdog made from mysterious animal parts. In Japan the 7-Eleven’s are larger, sell everything from concert tickets to letting you pay utility bills, and they constantly change up fresh food menus. Maybe if they change the name to “Convenience Oasis” and buy some refrigerated delivery trucks?

David Ely, San Diego State University

YES: Convenience stores are under pressure to find new revenue sources to replace declining sales of tobacco products and gasoline so 7-Eleven needs to change. Given their positive experience in Japan, expanding food options is a logical path for domestic 7-Elevens to take. The shift will be aided by the growing application of data analytics that now allows the company to make decisions on what products to stock at the outlet level to maximize sales.

Ray Major, economist

YES: The convenience store model has aged and profitability is shrinking as consumers take advantage of online shopping and delivery services. Declining gasoline sales are also taking a toll on net revenues. Competition from many other look alike businesses like AM/PM further reduces profit potential and has created a saturated market leaving little room for growth through expansion. Reinventing 7-Eleven through product differentiation and including new and interesting food items can breathe new life into an otherwise stale business model.

Alan Gin, University of San Diego

YES: It may take some time, but there is space in the quick eating market for that. People continue to lead hectic lives and sometimes want speed and convenience when eating. The 7-Elevens would give people another option to fast food and fast casual restaurants, both in terms of locations and type of food served. In Japan, the food can be very good and there are many options, but it could take some education to get U.S. consumers to give it a try.

EXECUTIVES

Phil Blair, Manpower

YES: 7-Eleven will have to develop a very sophisticated marketing plan to completely change its image. It is now known for fast, cheap food that is often stale looking and being from a mini grocery store. It wants to become a Whole Foods type operation known for fast, quality food that workers can bring home to their families. 7-Eleven is also currently dependent on two dying products, cigarettes and gasoline. They need to transition themselves from what is now a blue collar clientele into more white collar clientele. Their store locations, staff and image will also need to be updated

Gary London, London Moeder Advisors

NO: I didn’t even realize that the sushifying of American convenience stores was a thing. A few years back, the English Fresh and Easy chain attempted a beachhead into the U.S. Turned out to be an abject failure: it was neither fresh nor easy. It’s best not to mix up passing fads with long-term trends.

Bob Rauch, R.A. Rauch & Associates

YES: Like stores and restaurants in the U.S. that added healthy options to their menus, 7-Eleven can enhance its offerings and expand its customer base. It has plenty of locations to promote a new set of food and beverage options. They must use food and beverages as tobacco and gasoline sales are headed south. They already have a loyal customer base —people like convenience — but 7-Eleven needs broader appeal.

Austin Neudecker, Weave Growth

NO: Shifting the perception of a long-standing brand is expensive and difficult. In Japan, 7-Eleven is known for urban locations, cleanliness and decent fresh meals. In the U.S., the store is often associated with gas stations, convenience, and affordability, but unhealthy products and minimal service. To transform this, 7-Eleven would need to make substantial investments in equipment, product selection and staffing on top of a huge marketing push. Ad campaigns, initial promotions, and a loyalty program might shift opinion over time but doubtful before they hit financial bottom.

Chris Van Gorder, Scripps Health

YES: I think 7-Eleven can change its image If the Japanese offerings become popular to a larger U.S. population. That would be especially true if the food is fresh and unique, as they are at Japan 7-Elevens. It would probably best to test market the concept and of course it might not be well-received in every market. But I think the introduction of new food ideas is always worth trying.

Jamie Moraga, Franklin Revere

NO: It would take a significant amount of marketing and rebranding to change its image in the U.S. Offering items like the stores in Japan may appeal to a specific niche market or to social media influencers, but it would likely be short lived. The broader U.S. market traditionally thinks of 7-Eleven as a convenience store with Slurpees, candy and scratchers. It isn’t the place mainstream U.S. consumers would think of for high quality freshly prepared food.

Haney Hong, San Diego County Taxpayers Assoc.

YES: Right now, most of us probably think only grocery stores or casual delis can get us a nice sandwich for relatively cheap – though I think with California’s costs of doing business grocers and delis might still set you back $20 at lunch. If 7-Eleven has cracked the nut of providing fresh food at convenience store prices, then it absolutely can change its image and become more like stores in Japan.