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Billionaire Biyani's Future Group set to open 7-Eleven franchise in India

Company aims to open 1,000 outlets in Mumbai starting next year

MUMBAI (NewsRise) -- Indian billionaire Kishore Biyani-backed Future Group plans to launch its first 7-Eleven brand convenience store in the country before March, betting that consumer demand will pick up in the coming months amid proliferation of supermarkets and hypermarkets.

In February, Future Retail, one of India's top retailers, signed a master franchise agreement with 7-Eleven to develop and operate the stores in the country. Owned by Japan's Seven & i Holdings, 7-Eleven convenience stores sell fresh foods, snacks, packaged goods, and beverages and remain open round the clock.

Biyani, the founder of Future Group, said he is aiming to open 1,000 such small format stores in the country's financial hub of Mumbai. The focus of the 7-Eleven operations will be on Mumbai at least for the next two years to three years.

The Japanese-American store brand's proposed entry comes at a time when India's $365 billion retail market is witnessing increased competition from online companies. The industry is also contending with an economic slowdown: India's gross domestic product expanded at the slowest pace in six years during July-September. Seven-Eleven stores offer new competition to the neighborhood mom-and-pop stores that are already facing the onslaught of global corporations such as Amazon and Walmart, say analysts.

U.S. online retailer Amazon.com, which entered India ins 2013, is tying up with a bunch of departmental store operators and retail outlets in a bid to outpace rival Walmart, which, last year, bought a majority stake in Flipkart Internet in a $16 billion deal.

In August, Amazon said it would buy a 49% stake in Future Retail's payments solution business, Future Coupons, and gain a 3.6% stake in the retailer that operates more than 1,500 supermarket stores across 400 cities in India. It has also bought a 5% stake in departmental store chain Shoppers Stop, as well as in grocery chain More, owned by billionaire Kumar Mangalam Birla's Aditya Birla Group.

Seven-Eleven is likely to be largely an urban phenomenon in India considering the income levels and the population in big cities, said Dhanraj Bhagat, a partner at Grant Thornton India.

They offer "a wider range of products, compared with the neighborhood shops, and maintain a better ambience," while catering to the immediate needs of the consumer, Bhagat said.

However, it remains to be seen how this format can be replicated across India given the varying regulations in different parts of the country on store closure timing. Most Indian shops are required to close by 10.30 pm Indian standard time, though some states have given permission to keep shops open 24 hours.

Even as its India entry remains imminent, the store chain is contending with troubles in Japan, where the local labor watchdog has raised concerns about it underpaying part-time workers at the store franchises. The company plans to pay 490 million yen to reimburse affected employees since March 2012, the Nikkei Asian Review reported earlier this week.

-- Dhanya Ann Thoppil

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