7/11 shops too close to each other

[Asiantravel]

When someone invests in a 711 shop in Thailand, do you get an exclusive “ territory “ i.e. an understanding that the company will not open another 711 except based on a mutually agreed distance from your shop?

Isn’t it a bit daft to open too many of these convenience stores within very close proximity to each other? For example there has already been a 711 shop in Jomtien near the Centara Grand hotel but today I couldn’t believe it when I saw that when you go just around the corner to Phratamnak 6 Alley they are opening another one! And in between these two shops there is already a Tesco minimart and then there is already an existing family Mart next to the new 711.

I believe the franchise costs for a 711 are not insignificant and at the very least one would expect an exclusive territory so you at least have a reasonable chance of making a return on your investment. But when they open so many so close to each other it doesn’t seem fair or such a good deal for the franchisee to me?

[Langsuan Man]

7-11 exclusivity is not the same in Thailand as in other countries

There appears to be no protection for the franchisee from the company since the main 7-11 distributor appears to be able to compete directly wherever they want, exclusivity does not appear to be a requirement over here since it is obviously not enforced

[PattayaPhom]

But is it the same as the other one with 12 staff and three tills but only ever one working with a queue of 7 people waiting

[konying]

I think CP picks your location for you.but i could be wrong.

With all the 7-11 and family mart, 100 meters apart, its amazing that none close down and somehow all survive

[Pomthai]

This seems to be the bussiness model for alot of things here.

Someone decides to open a hardware store, make a bit of money. Others see it and open another one selling the same stuff, then another one then another one. Eventually, you end up with a row of stores selling similar shit all with their lights off because non of then are making and money.

Same happens with "Water tank shops" theres tens of em all over Phuket, how many does this island need? Pop into one and see if they have and PVC pipe elbows or some glue or perhaps a hose clamp? No. They sell tanks. Thats it. Amazing.

The only way this bussines crowd model works is with bars and sometimes restruants.

It doesn't work for plastic bucket and tat shops, printing shops, sewing shops, hardware or watertank stores yet its practiced nation wide.

Edited July 22, 2015 by Pomthai

[Happy Grumpy]

There are two at the front of my village that are so close that when I enter one, both of their doors open automatically.

[surangw]

reminds me of when I worked in Ankara, ( long time ago) I notices several people on the street selling lighters and small items, one guy brought a scale one day and changed small money to let someone weight themselves. in about 2 days ever other seller had a scale too.

[Torrens54]

Who cares, unless you want to open one?

[NeverSure]

7-11 exclusivity is not the same in Thailand as in other countries

There appears to be no protection for the franchisee from the company since the main 7-11 distributor appears to be able to compete directly wherever they want, exclusivity does not appear to be a requirement over here since it is obviously not enforced

I think you're right. In the US a franchisee buys a protected territory as he does with fast food, etc. On 7/11's US site there are disclaimers and asterisks making it clear that there aren't the same controls in other countries.

7/11 is very old and grew throughout the US. Now there are at least twice as many stores outside the US as there are in the US. I wouldn't be surprised to learn that 7/11 wishes it hadn't sold the rights it did and instead sold franchise rights to individuals to maintain control. If the investors in Thailand go belly up with some stores due to overcrowding, I guess that will be their problem and not that of the parent company.

Cheers.

Edited July 22, 2015 by NeverSure

[striderman]

the closest two 7/11's i can think of are diagonally opposite each other on soi buakoaw near the night market.

[NeverSure]

Who cares, unless you want to open one?

It's interesting to people whose minds are business oriented and are always learning something.

[tropo]

The main street in Cosy Beach has 3x 7Elevens and 3x Family Marts, plus one huge 7Eleven just down a side street, so 7 convenience stores in a very small area. The central 7Eleven and Family Mart stores share the same wall... which is very convenient if you're looking for something. Whenever there's a Family Mart and 7Eleven adjacent or opposite to each other, the 7Eleven always does far better trade. The international name helps with tourists.

This is one of my favourite things about Pattaya - a convenience store and ATM on nearly every corner.

7Elevens and Family Marts don't have the luxury of not opening a store on every block, because if they don't, the other one will.

[Brit_Doggie]

Are they empty ? never so the point wasn't valid.

[dotpoom]

7-11 exclusivity is not the same in Thailand as in other countries

There appears to be no protection for the franchisee from the company since the main 7-11 distributor appears to be able to compete directly wherever they want, exclusivity does not appear to be a requirement over here since it is obviously not enforced

I remember reading one time that when they grant a franchise to somebody they then wait and see how that business progresses, if it is doing exceptionally well they will then set up their own shop right next to it. Their reasoning was that if a shop is too busy 7 Eleven will start losing customers as people don't like waiting a long time to be served. In Bang Saray there are two 7 Eleven's directly across the road from each other (tiny narrow road). In Jomtien there are three 7 Eleven's (another a few hundred meters further up) just in the market area in a space of about 50 Mtrs.....in all instances the shops seem to be doing very well. So maybe, the 7 Eleven group have a good point. There would indeed be a long waiting time if there was only one in Bang Saray and definitely if only one in Jomtien market area.

Edited July 23, 2015 by dotpoom

[recycler]

Whoever pays, the customer, the franchisee or both, CP will make their profit!

[travelerjim]

A 7-11 franchise costs 1.5 million Thai baht. Requires 1 million in bank book to get appointment to discuss getting a store. Owner operator gets guaranteed 27,000 Thb monthly salary and some limited profit sharing. If after one year you wish to sell your store you get 1 million Thb back from company. They take over store and find new buyer. There is a 2nd option requiring 2.5 million Thb with percentage sharing of expenses and profits. Same guarantee if return of 1 million Thb after 1 year if you want to sell or leave the business. 7-11 picks this location. They control the other stores too. No exclusive area. Just some of my recollection of earlier discussions with 7-11 reps at a franchise trade fair in Bangkok two years ago.

[LukKrueng]

This seems to be the bussiness model for alot of things here.

Someone decides to open a hardware store, make a bit of money. Others see it and open another one selling the same stuff, then another one then another one. Eventually, you end up with a row of stores selling similar shit all with their lights off because non of then are making and money.

Same happens with "Water tank shops" theres tens of em all over Phuket, how many does this island need? Pop into one and see if they have and PVC pipe elbows or some glue or perhaps a hose clamp? No. They sell tanks. Thats it. Amazing.

The only way this bussines crowd model works is with bars and sometimes restruants.

It doesn't work for plastic bucket and tat shops, printing shops, sewing shops, hardware or watertank stores yet its practiced nation wide.

As it happens all over the country and has been so for so long, it obviously does work...............

[Ling Kae]

I don't know about territory but I can say that regardless how close one store may be to another doesn't seem to matter with regards to the amount of customers coming through. Just by going in they all seem to well.

On Soi Buakhow at the LK Royal Suite complex opposite the Relax Corner bar there is a new 7/11 going in. 50 Metres up the road is a Family Mart. I use this Family Mart because for me the hassle of crossing Pattaya Klang Road to get to my nearest 7/11 isn't worth it (heavey traffic and long waits). The sooner it opens the better, the Family Mart simply runs out of things on a regular basis. I wanted a half loaf of bread and it regularily runs out, when I asked why don't you order more I got an answer of this is very popular selling, (no answer to question). I welcome more 7/11's they are so handy and I agree with the previous poster, they seem to do better than opposition.

Google map link to new store going in now, Royal Drug store has moved and from what locals tell me a new 7/11 is going in here.: https://www.google.co.th/maps/@12.934482,100.88797,3a,75y,90h,90t/data=!3m6!1e1!3m4!1sXSLeRiCzT4tcG8qtGT9NtQ!2e0!7i13312!8i6656?hl=en

[Jeffrey346]

My friend had a 7-11 in the States. There is no protected territory anywhere with 7-11. In the States you get a 20 year contract. Here in Thailand you get a 10 year contract. At end of contract, you can renew for the current fee which is about 1.3M now or walk away.

[wvavin]

Well, the true winner is CP. Who cares you are near or far to each other?

[MockingJay]

Certainly this one outcompetes the rest...

[gyrosman]

You must be bored to worry about 7-11 being to close together.

[JacChang]

7-11 exclusivity is not the same in Thailand as in other countries

There appears to be no protection for the franchisee from the company since the main 7-11 distributor appears to be able to compete directly wherever they want, exclusivity does not appear to be a requirement over here since it is obviously not enforced

I remember reading one time that when they grant a franchise to somebody they then wait and see how that business progresses, if it is doing exceptionally well they will then set up their own shop right next to it. Their reasoning was that if a shop is too busy 7 Eleven will start losing customers as people don't like waiting a long time to be served. In Bang Saray there are two 7 Eleven's directly across the road from each other (tiny narrow road). In Jomtien there are three 7 Eleven's (another a few hundred meters further up) just in the market area in a space of about 50 Mtrs.....in all instances the shops seem to be doing very well. So maybe, the 7 Eleven group have a good point. There would indeed be a long waiting time if there was only one in Bang Saray and definitely if only one in Jomtien market area.

You are right, the only correct answer so far.

CP divides their business operation as corporate and franchise outlets. In the corporate section, they have their own analyst and real estate research crew with profit maximizing in mind as to where to open their new outlets. In the franchise section, they got interested potential partners who are willing to invest in shops. Franchises allow CP to dip their fingers into a new territory, to test the market, I forgot the exact numbers, but each store has a specific quota to reach, such as 1,000,000 in revenues per month, depending on the size of the franchise acquired. I believe there are 3 types, small, medium, and large (1.2 million, 1.5 million, etc.) Sometimes what happens is that a specific store outlet is doing better than expected and exceeding this quota. The franchise contract is also signed for a number of years, I've also heard sometimes a specific store is doing so well, CP wants to buy that store from the franchise, and when unable to, they just open a store in that specific area. Why? Because, it's still worth it. If that store is generating 3 million in revenue, opening another store just right next to it, would in theory put 1.5 million in revenue for each store, which is still above the desired quota of 1,000,000.

Customers frown at the 7-11 stores next to each, but hey... CPALL is happy making profits, corporate vs franchise. As long as there is profit, why not?

[Oziex1]

This seems to be the bussiness model for alot of things here.

Someone decides to open a hardware store, make a bit of money. Others see it and open another one selling the same stuff, then another one then another one. Eventually, you end up with a row of stores selling similar shit all with their lights off because non of then are making and money.

Same happens with "Water tank shops" theres tens of em all over Phuket, how many does this island need? Pop into one and see if they have and PVC pipe elbows or some glue or perhaps a hose clamp? No. They sell tanks. Thats it. Amazing.

The only way this bussines crowd model works is with bars and sometimes restruants.

It doesn't work for plastic bucket and tat shops, printing shops, sewing shops, hardware or watertank stores yet its practiced nation wide.

You didn't mention bars and massage joints, dozens next to each other with few or no customers.

[thailandforumaddict]

Don't you guess that of people still invest in 711 it means that it makes profit even 10 shops are in the same street ?

I am a rocket scientist <3

[little mary sunshine]

To close to each other.....no way. We need

At least 4 7-11's per block. How else can the

Soi dogs cool off, they need that AC at the

Entrance.

[toenail]

-what it boil downs to is that the though the fanchise in Thailand, (looked it up on Google), is owned by the CP All Public Company there is a portion which is not corporately owned/ controled; thus, as long as you have the big bucks and can buy a franchise-license from CP All Public Company Lmt it is up to you where you want to place the store...so, the ones a few stores down or across the street could be owned by a different owner that bought a franchise from CP. As long as CP has their money, they do not care where the place is built and if it goes out of business, the license will be sold to someone else. Here is the data: the company (CP All Public Company Limited) had a total of 6,822 7-Eleven stores nationwide. Of the total, 3,177 stores are in Bangkok and vicinity (47 percent) and 3,645 stores are in provincial areas (53 percent). According to type of store, there are 2,984 corporate stores (44 percent), 3,320 franchise stores (48 percent) and 518 sub-area license stores (8 percent). Presently, an average of 8.3 million customers visit 7-Eleven stores each day... and outside of the USA and Japan, Thailand ranks number 3 in having the most 7-Eleven stores.

It is a very similar business tactic of the Thai businessman who owns a building with shop spaces to rent. He first demands one year of rent so he does not care who moves next door to your business or if the profit you make monthly will not be enough to survive; for, you will leave before the one year is completed and some other sucker will move in paying another whole one years worth of rent.

I like having one or two Family Marts and 7-Eleven stores on every block so I can enter one every 15 minutes to cool off while walking somewhere.

[Bellacissa]

When I walk out in front of my complex, I can see two 7-Elevens, one family mart and one Mini-Big C. All within a one minute walk of my front door. There is also another 7-Eleven about a three minute walk away. All seem to be thriving and it's incredibly convenient for me. Mini-Big C out of the milk I like? No problem. Walk next door to Family Mart and get the same thing for the same price. I love it.

Granted, I'm on the dark side. So, convenience stores are what pass for grocery stores over here. Maybe that's why the market can support so many in one small area?

[MrBrad]

Another possibility is that, like with Subway franchises in the US, perhaps the franchisee of any 7-11 gets notified of the planned opening of other stores in the area. He or she has first dibs on buying that franchise as well, thus expanding his own business and at the same time eliminating competition. It gets contagious, for sure, and at some point doesn't make business sense, but in some cases this is a good model for expansion.

One would think that CP would be concerned about its own name and reputation, though. Seeing stores close or business deals going belly-up does not speak well of the parent company. But my cynical self realizes that "today" is the only force driving business matters here.

[stoli]

Who would we be to come here and question the business decision of one of the most successful franchises in history, that being 7-11 Thailand. I have seen many closed 7-11's in the states, none here. I think they are happy with their progress.