Anyone see a 7-Eleven around?

I’m here in Bangkok for my annual supervision of the Global Consulting Project.

And again, I have been struck by the ubiquity of 7-Elevens in this city.  On the relatively quiet street of our hotel there are four branches of said store within a stretch of about 250 metres, including two pretty much directly across the (narrow) road from each other.  Just 400m in the other direction there are another three stores in a 60m stretch.

This obviously generates lots of discussion. One student said he’d seen similar density in Taiwan.  That got me searching for some data to check out which locations in the world have the most of these stores per person.

And here’s what I found.  In terms of population per 7-Eleven store (i.e. national population/number of stores), Thailand is in the top five globally (with ‘top’ meaning not many folks per store, or, put differently, the most stores per person):

I included Australia, simply for illustrative purposes.  We’re a fair way down the ranks (see here for the lengthier store count list – the US (c6,500 is missing)). The table identifies what appears to be the ‘natural home’ of the convenience store – densely populated urban centres around Asia.

For those who have missed the back story, 7-Eleven originated from the US, but was bought out globally by the firm’s Japanese master franchisee almost 25 years ago.

Japan had a pretty big head start on Thailand (opening in 1974, versus 1989 for Thailand), but Thailand is catching up fast.  I saw an estimate that there are over 3,000 stores in Bangkok, which equates to about one store for every 4,000 residents in this megacity (and comfortably defeating city state Singapore).

The Thai franchisee is doing something right, with profits reportedly up fivefold in three years. No wonder there’s talk said firm is chasing the franchise rights for Laos, Cambodia, Vietnam, Myanmar (and also some regions of China!).

I do start to wonder how far such expansion within a given city can go.  Could we eventually see a Bangkok headline like this one (mocking Starbucks’ rapid growth)?

These two stores are within 50 metres of each other in Silom, Bangkok

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So where the bloody hell are the global retailers?

In 2006, Australia ran an ill-fated tourism campaign with the tag line “So where the bloody hell are you?”

The latest list of the 250 largest retailers in the world has just come out from Deloitte, and we could be asking the same question of international retailers with respect to the Australian market.

Back in a 2007 chapter (for a book called The Internationalisation Strategies of Small-Country Firms: The Australian Experience of Globalisation), I highlighted the limited presence of retail’s big international players in the Aussie market. The list back then was 13 foreign-owned firms from the Deloitte’s 2006 Top 250, plus 3 Australian firms who were big enough to make the list.

Looking at the 2009 list, there has been a slight decline in this international presence in the intervening three years. There are now only 14 firms from the list operating bricks and mortar stores in Australia. They are (with global ranking, and new arrivals in green):

10. German discount supermarket giant Aldi who operate in 15 countries
22. Aussie behemoth Woolworths (3 countries)
29. Wesfarmers, owner of the Coles, Target, K-Mart and Bunnings brands in Australia (2 countries)
32. Swedish furniture kings Ikea (36 countries)
42. French conglomerate PPR (Gucci, Puma etc) who have a very minor retail presence down under (48 countries)
59. Toys “R” Us from US (36 countries)
68. French luxury goods firm LVMH (15 countries)
113. Gamestop from US, who poerate as EB Games in Australia (16 countries)
129. South African supermarket chain, Pick’n’Pay, who own Franklins (6 countries)
146. Blockbuster video stores from US (22 countries)
150. Sports chain Footlocker from US (20 countries)
174. Italian spectacles seller Luxottica (OPSM, Sunglass Hut) (20 countries)
214. French firm Lagardére (formerly Hachette) who operate Newslink, Relay, Bijioux Terner and various other shops in airports and train stations (30 countries)

The 2009 list also included book retailer Borders who have recently exited Australia. Also gone since 2006 are Gus/Burberry (UK) due to a de-merger and Metcash (South Africa) via an Australian management buyout. (I, like Deloitte, also had erroneously included 7-Eleven which it turns out is run by a licensee in Australia). The Wesfarmers acquisition of Coles shrunk the Aussie-owned presence (as Bunnings will thus leave the list now). The most substantial new kid on the block is EB Games with almost 200 stores in Australia.

So, why the reluctance to head down under? I have argued this about the impact of Australia’s history and location:

As the nation was geographically distant and disconnected, and local suppliers were protected by high tariff walls, domestic retailers quickly built considerable location-bound advantages over any potential inward FDI. Entrepreneurial locals and later powerful incumbents were able to ‘cherry pick’ concepts from overseas and introduce them to Australian consumers confident of their likely success.

Most of the international firms who have broken through have typically had very strong firm-specific advantages (usually in specialist retail formats), and have been pretty aggressive in their internationalisation. It is worth noting that the average firm in the Top 250 operates in 6.8 countries. All but one of the international players in Australia exceeds that average substantially (while the Aussie pair are underperformers).

Is it the case that only experienced internationalisers can make the leap to Australia? Or do they only bother once they’ve exhausted more rewarding locales?

One of the big boys is heading our way – #9 Costco is building in Melbourne right now. Can we really expect too many more from the list on Australian shores in the near future?