Seven & I Holdings Co is a Japanese holding incorporated in 2005. It is based in Chiyoda City, Japan. The holding company operates diversified retail stores in East Asia (7andi, 2020). It has over 50 subsidiaries through it operates its business. The Domestic Convenience Store segment operates directly managed and franchised stores under the name of 7-Eleven in Japan It has a business outlet in over 17 countries worldwide. The other brand of Seven & I is Sogo, Seibu, Ito-Yokado, and Gottsuobin (7andi, 2020). It is one of the retailers in the world. It also owns a bank in Japan, Seven Bank. Which deals with credit card, lease, and other financial businesses. Porter’s five forces model is used to identify threats and business opportunities face by Seven & I Holdings in the retail and banking industry in the world.
Competitive Rivalry in the Market
The retail industry is growing rapidly in East Asia. The main factor of growth is the rapid expansion in the middle class in the region. The competition is growing is rapidly in the region.
Its major rivals are regional retail giants JD.com, Inc., and AEON CO. JD is the Chinese based retailer which generated annual revenue of around $83,487.78M (Nikkei Asian, 2019). It is technology-driven e-commerce retail. AEON is the Japanese holding company that operates through its supermarkets and shopping centers. It generated a revenue of around $ 78,930.55M (Nikkei Asian, 2020). Whereas Seven & I posted the gross profit of $ 20,093.79M with a revenue of $60,951.91M (Nikkei Asian, 2020). The economic growth in Asia is a driving force behind this competition. It should expand its business to compete with its rivals and to keep its clientele.
Threat of substitutes
There is a high level of threat of substitution of organized physical stores in the years. It because of e-commerce. The retailers are building online stores and it saves them the cost of running a store. They just ship the product directly to the client from their warehouse. The other threat to Seven & I is the growth of Chinese retail stores in the region. It is disrupting its supply chain and business in East Asia. It is affecting its export in the region (Deloitte, 2019). The Chinese stores are snatching their business in the region, they need to expand their business in the region and in-country. They should also look for a revenue-generating option other than fully depending on convenience. They need to ramp up their effort to stay ahead of their competitors.
Threat of New Entrants
The new entrant can bring new different products and resources in retail marker. It can do it with a better price which can result in reduced market share of the existing retailer. If the new entrant is a market leader in some other industry they can decrease the prices and can be bought the loyalty of long term customers. It usually requires a large sum of capital investment to compete with the existing retailers. Which makes it a little bit difficult for the startups to compete. E-retailers are a real threat to them. They should ramp up their e-commerce and venture into other retailing options to keep their market share intact.
Bargaining power of buyers
In retail business buyer’s demands are higher. They want the best product by paying the minimum for it. It is because due to saturation in the market and availability of alternative products in the market. The individual customer can’t exert its power so well. It can just switch it to some other brand. The real problem is the bulk purchaser they can exert their power and can bring the price down a little bit. Overall if the product quality is maintained well and new products are rolling in after a few intervals, buyers can’t exert power against retail giants. The bargaining power of buyers is relatively low against Seven & I holding. It is because of their diversified product lines and brand identity.
Bargaining Power of Suppliers
The suppliers in retail chains are usually the manufacturer and distributor of the product. Their product retailer can sell directly to the customer. The bargaining power of suppliers is low against the big retail giants such as Seven & I Holdings. It is because of the tough competition between the supplier and the availability of a large number of suppliers in the market. The suppliers want to keep hold of its contract with a big retail giant for financial security. They intend to grab as much space as they can in a retail store for their products. Individual suppliers have minimum impact on retailers. Which doesn’t affect the strategic growth of the Seven & I Holdings. The overall bargaining power of the supplier is low against Seven & I holdings.
References
Deloitte. (2019). Global Powers of Retailing 2019. Available at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/cons-global-powers-retailing-2019.pdf
Nikkei Asian Review. (2019). Finance. Companies – JD.com, Inc. Available https://asia.nikkei.com/Companies/JD.com-Inc2
Nikkei Asian Review. (2020). Finance. Companies – AEON Co, Ltd. Available https://asia.nikkei.com/Companies/AEON-Co.-Ltd
Nikkei Asian Review. (2020). Finance. Companies – Seven I Holdings Co, Ltd. Available https://asia.nikkei.com/Companies/Seven-I-Holdings-Co.-Ltd
7andi. (2020). The company, Summary. Available at: https://www.7andi.com/en/company/summary.html
7andi. (2020). Company, Group. Available at: https://www.7andi.com/en/company/group.html