Why the closure of Japan’s 7-Eleven stores in India doesn’t signal an exit

Japanese convenience store chain 7-Eleven’s second attempt to break into the Indian retail market through the franchise model may have failed, but the company has no plans to give up on its ambitions to build a presence in one of the world’s most populous countries.

In late September, Reliance Retail, the master franchise operator of 7-Eleven stores, closed all 31 stores in India, a spokesperson for the Japanese company told CNBC in an email. Reliance Retail is owned by Indian billionaire Mukesh Ambani Reliance Industries.

A 7-Eleven representative said the company is still interested in serving customers in India and “looks forward to exploring several options to improve our presence in the market in the long term.”

The spokesperson declined to comment further on Reliance’s business decisions and the status of the agreement between the Japanese and Indian companies.

Reliance Retail did not immediately respond to CNBC’s email request for comment.

The two companies announced their partnership in 2021, after the Japanese company’s agreement with another Indian company, Future Retail, was terminated. At that time, Future Retail, in the regulatory disclosure, has said that the termination is simultaneous because it is “not possible to meet the target of opening stores and paying franchisee fees.”

Analysts told CNBC that 7-Eleven’s store closures indicate a reset of its operations in India, not an exit, especially as Japanese rival Lawsons also plans to enter India.

The closure does not mean “7-Eleven is giving up on India,” Sohrab Bararia, a partner at consulting firm Grant Thornton Bharat, told CNBC. “It seems more like a rethink of the current franchise arrangement, especially given the losses in the existing model,” he added.

7-India Convenience Retail, a subsidiary of Reliance Retail that has all the master franchise agreements with 7-Eleven in 2021, reported a net loss of nearly 900 million rupees ($9.3 million) in the year ended March 2026 with a profit of about 920 million rupees. The company’s losses continued to widen from 52 million rupees in the financial year ending March 2022, according to data from Tracxn.

Creating a compelling reason to visit a store is a big challenge for small format stores in India, say experts. While larger stores offer low prices and a shopping experience with a wide variety of products, smaller stores with limited inventory struggle to compete.

Meanwhile, 10-minute grocery delivery apps are growing in popularity because they have more options and offer convenience, which customers in big cities like, experts say.

“Small format stores, meanwhile, pay high rents and full staffing costs but generate relatively low sales per outlet,” Bharat Birla, chief executive officer of Anand Rathi Investment Banking, told CNBC.

However, analysts say that even though India’s grocery market is crowded with 10-minute delivery apps and small mom-and-pop shops, the Japanese company can still find a niche that differs from the “traditional wholesaler-led model.”

Lawson plans to create a “local subsidiary and operate directly managed stores from 2027,” Birla said, adding that 7-Eleven may also consider this route.

Earlier this year, several Japanese media reports said that the convenience store chain plans to open its first five stores in Mumbai by 2027 and plans to have a total of 100 stores in India by 2030. The stores will be owned and managed through a local subsidiary that Lawson will set up in India before February 2027, the report said.

The shift away from the franchise model that has failed twice will provide 7-Eleven with room for “strategic engagement” while allowing for localization and a broader path to scale in India, Bararia said.