Taking Innovation To The Next Level
We all know that the convenience store industry is constantly evolving. Changes and innovations are introduced almost daily in the form of new products, higher-tech equipment, more effective store layouts, etc. C-stores that do not adapt to these changes quickly fall to the wayside and are soon forgotten. 7-Eleven has always been at the forefront of c-store innovations, and it looks like SEI is willing to work with franchisees to evolve our system beyond the current state of the industry.
I recently participated in a National Business Leadership Council meeting in Dallas as a member of the Franchise Systems Committee. Besides franchisees, in attendance at the two-day meeting were members of SEI’s executive team and top management, and what they had to say about fresh foods and new store innovation was very encouraging.
Kelly Buckley, who is SEI’s new vice president for fresh food innovation, gave a presentation on fresh foods. Kelly comes to the company with good experience in foodservice, having worked around food and foodservice innovation her entire career. After listening to her, I think Kelly is really focused, not just on the execution at the store, but on how we can come up with better products, better packaging, and a better message to the consumer.
Kelly said fresh foods should be 20 percent of our total sales—that is the goal. Currently, we are right about 8 or 9 percent, the higher Zone being at 13 percent. After the presentation, we were tasked with coming up with suggestions to make this happen. Moving forward, I believe it’s important that both sides—franchisees and SEI—take care of their obligations to make us fresh food-ready.
The discussion on this topic was wide-ranging. For its part, SEI has to update the stores to make them attractive fresh food destinations, which means moving the Consolidated Market Rollout (CMR) program to all Zones and Markets. Every Zone that has experienced a CMR has experienced a growth in sales. If you look at the data, the Liberty Zone—which has undergone a complete CMR and fresh foods introduction—ranks at the top for sales. SEI said it can’t just do CMRs just for the sake of doing them—they must be done right. For this reason, CMRs are currently on hold in several areas until adjustments are made to the program. Hopefully, the new version of CMR will enhance the store’s image even more.
SEI also needs to supply us with better tools for ordering, better tools for managing our write-offs, better tools for understanding gross profit, better products, better assortments, and better value.
From the franchisee side, we need to educate and train our employees on fresh foods, and make sure they know how to order and to sell. We need to create a positive fresh-foods-friendly environment in our stores, utilizing plus selling and bundling opportunities. SEI can support us in these efforts by making sure our equipment is up and running, and repairs are made in a timely fashion. Moving on to distribution, we need to avoid out-of-stocks, have better on-time deliveries, and increase order fill rates. Advertising is also key. During the NBLC meeting, suggestions were made about a 7-Eleven logo on the bags leaving the store, and maybe we could write something on our cups about freshness.
New store innovation is the other topic discussed at the meeting. We were informed a group of SEI folks has been charged with developing the 7-Eleven store of the future. The team has been handpicked and consists of experts in different fields, and has been given a lot of flexibility and liberty to think openly. The team is traveling nationally, as well as internationally, to pick up ideas. They are looking at our competition nationally and globally to see what is working for other stores that could move us toward becoming a fresh food destination, whether it’s changing the footprint of the store or changing the coffee bar. The team is also factoring in how we will utilize digital media to engage and attract the new generation.
Beyond this, I was pleased to hear during the meeting that SEI will be more careful with its expansion plans so as not to negatively affect existing stores. SEI said it has changed how it compensates the real estate people who determine where the new stores will be. Previously compensation was based on the number of stores developed, and now compensation is based on the performance of the new stores. SEI senior management also shared with us that even though it seems a lot of the newly opened stores are not performing well, their performance has actually improved. In the past, roughly 25-30 percent of new stores did not meet their projected sales. Now that number has gone down to 13-15 percent. That’s good news, but given that 7-Eleven is now opening 700-800 stores per year, 15 percent is a big number, so we need to continuously work on that.
7-Eleven is the largest and most successful c-store chain in the country and in the world, and a known innovator in the industry. As long as the company continues to work with franchisees and value our input, there is no doubt it will continue to dominate the c-store landscape.