One of the great strengths of the 7-Eleven system is the ability of franchisees to select the products that are sold in our stores. The only required products are those listed in Exhibit G, which can be changed by 7-Eleven, Inc. (SEI) with 30 days’ written notice. Weekly, SEI’s Merchandising Department produces a host of new items for franchisees to add to the product selection of their stores. Some are great new items, others are not so exciting to embrace. Ultimately, the decision to carry a new item is entirely the responsibility of the franchisee.
Often, among the list of new products are items to pre-book for a future delivery—generally more than a month ahead. Again, as with any other item, it is the sole responsibility of the franchisee to decide whether to accept this pre-book or not. Sometimes this is the only opportunity to order seasonal items. Unfortunately, this is all too often a “one-size fits all” approach. The sheer quantity can overwhelm a lower volume store. Also, the proximity to certain competitors can be a deterrent to making the purchase decision. However, if the product is guaranteed by the supplier it will encourage a franchisee to order the pre-book, since the only risk is damaged or stolen merchandise.
In theory the pre-book system should run smoothly, but lately it has been breaking down as many stores are receiving shipments of pre-booked items they did not order. For years there has been pressure on field consultants to meet quotas or goals by getting stores to order these pre-booked items. Sometimes this is just a cookie cutter mentality that every store should carry the same product assortment. Other times it may be an economic consideration to achieve a critical mass to obtain preferred pricing. Some field consultants will admit to this pressure being applied, but no one will ever admit to actually ordering product for a store. Yet, the pre-book products continue to arrive.
Once a store receives these products, the franchisee has two options: 1) attempt to sell through the product, or 2) try to return the product to the vendor, which is a daunting task at best. Some franchisees have successfully returned product to the supplier, only to be later presented with an exorbitant shipping charge via SEI’s one-sided accounting system. Other times, SEI merchandisers have admitted the error and arranged for the product to be returned to the vendor. This too turns out to be an empty promise, despite numerous attempts by stores to get the promise fulfilled.
What is the answer? Let’s start with the pre-book itself. It needs to be tailored for every type of store. A 7-Eleven near a dollar store or a Wal-Mart will not have the success of a 7-Eleven in a more isolated market. A rural store cannot sell the same product mix as an urban store with customers with greater disposable income.
Most importantly, SEI needs to make a strong business case as to why a store should order the product. Franchisees are too intelligent to just throw something against the wall and wait to see if it will stick. Not to beat an old drum, but SEI needs to better communicate what a 7-Eleven store offers by using something other than the tired old window and storefront banners. Our customers are not participating in the “if you build it they will come” business model.