Our Business In 2017 And Beyond

No doubt about it, 2016 was a busy year for 7-Eleven. But all the hard work we put in last year to implement new programs, systems and procedures in our stores have placed us in a better position to compete and grow sales in 2017 and beyond. Looking back at 2016, I would say there are three efforts in particular that have laid the foundation for our future prosperity: growing the food and beverage category, implementing Expand the Assortment (ETA) and building our private brands.

Let’s begin with growing our food and beverage business. The big emphasis in 2016 was driving fresh food sales. Fresh foods are our future, especially given that many of our customers are constantly on-the-go and no longer have the time they used to for a leisurely breakfast or lunch, so the emphasis is on fresh, quick and availability. Our hard work in this category is paying off, as 7-Eleven is now among the top 30 fresh food retailers in the United States, coming in at #26. Furthermore, our hot beverage category is forecasted to exceed $600 million in U.S. sales for the first time ever, and our cold beverage team was recently recognized by Convenience Store News for outstanding product innovation and best in class promotions. So we’re growing our food and beverage category, and doing well. Our continued support of this category will serve us well in 2017 and the years to come, in the form of increased sales and being able to stay ahead of the competition.

Second, in 2016 SEI put a big emphasis on ETA. We knew this was coming, as our franchisor talked a lot about it. It is currently installed in 5,800 stores, giving each one the ability to customize the assortment of products they carry to better serve their customers. ETA also offers a good opportunity for franchisees to start utilizing their 15 percent and allows for more consideration of local and regional items. Although the ETA program may involve a little more labor, and more SKUs to choose from, and adds more to your inventory, it also allows you to better select the products that you think will grow your business. According to SEI, with ETA the active selling SKUs continue to grow at an average of 333 SKUs over the previous year, the average store is now selling over 2,500 items, and the top 1,200 ETA stores are seeing a $111 APSD sales increase.

Last, the work we have been putting into growing our private brands is generating pleasant results, with YTD sales up 28.3 percent over the prior year. Also, our private brands have continued to win industry awards for taste, flavor and value (Store Brands Award, PLMA Award, Vertex Award, etc.). SEI launched 230 new private brand items and improved an additional 89 with positive results, so this is clearly a category worth continued investment.

I believe we need to continue building on these three key areas in 2017 in order to ensure future prosperity. They will allow us to be more in control of our business on a day-to-day basis, and will help keep the competition at bay.

Moving on to the 2019 agreement, I can report that the New Contract Committee has been meeting on a monthly basis and so far things are progressing well. We should have more information coming out soon and we will update you all in due time. SEI has really accepted us as a coalition during these meetings, which is positive. Half of the franchisee representation on this committee consists of NCASEF members and officers, which shows that our relationship with 7-Eleven has improved.