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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Big time vertical integration

Vertical integration is often a hard concept to get your head around. This article might help you understand the concept.

The world’s 4th largest steelmaker POSCO is bidding to purchase the world’s 3rd largest shipbuilding company Daewoo Shipping & Marine Engineering (DSME). While both firms are Korean, they are also multinationals (and therefore of interest to us). POSCO believes it can add considerable value to DSME by specifically tailoring its steel the specifications of the ships being built. Steel is a very significant input in ship building. As such, this can be seen as forward integration by POSCO into one of the activities where its major products are used.

The article also discusses the efforts by POSCO to buy iron-ore and coal mines in Australia. It has significant share-ownings in seven such Aussie firms. Both iron-ore and coal are major inputs in making steel, so this is backward integration. POSCO is looking at other mines in Africa, Siberia, Indonesia and Eastern Europe, and says it is looking to own 30% of its input supplies in the future.