2007 Year in Review

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2007 Year in Review

Healthy foods, Tesco's invasion, wholesaler pricing changes, rising credit-card transaction fees and BP's restructuring efforts are among the year's hot topics.

The convenience store industry's most visited online information resource, CSNews.com, brings breaking news, new product information, industry research and category management insights to more than 31,700 unique visitors each month. Listed here are the most popular news stories, based on the number of online views, for each month of 2007. Updated analysis and commentary is added in italics where appropriate.

7-Eleven's New Year's Resolution: Healthy Foods

With an estimated 60 percent of Americans tipping the scales as overweight, according to the Centers for Disease Control, and scores of people resolving to improve their health this year, 7-Eleven expands its offering of "better-for-you" foods at its 7,100 stores to include more fruits, vegetables, salads, sugar-free Slurpees and portion- and calorie-controlled foods.

The industry's efforts to expand healthy food offerings turned out to be one of the major themes of 2007.

Tesco Unveils "Green" Fresh & Easy U.S. Brand

Tesco's U.S. venture looks a little green -- literally and figuratively -- as it reveals a green theme for its Fresh & Easy logo and environmentally "green" plans for solar panels on the roof of its distribution center in Riverside, Calif.

The highly anticipated debut of Tesco's Fresh & Easy took place Nov. 8 in Southern California (see story on page 57).

7-Eleven Becomes a Foodie

Papaya-mango fruit cups with chili-lime spice and turkey capicolla wraps with basil spread. It's not the menu of a gourmet restaurant, but what might be showing up in 7-Eleven stores across the U.S.

These food items, along with others, are taste-tested by the company's employees and franchise owners this month at the University of 7-Eleven at the Dallas Convention Center.

The Dallas-based c-store chain conducted a series of all-day, taste-and-tell sessions around the country to raise employee enthusiasm and prove the convenience store industry has come a long way from its staples of gas, packaged snacks and beef jerky.

Wholesalers Proposing "Sea Change" in Packaged Beverage Distribution

Two of the leading wholesalers to the convenience store industry are planning to institute new "pricing models" for the fast-growing packaged beverages category in an effort to cover their burgeoning logistics costs for these relatively high-volume, bulky products. The result could be higher prices for bottled water, isotonics, energy drinks and carbonated beverages for retailers and consumers alike.

Although retailers initially railed against increases in costs for wholesaler-delivered packaged beverages, the eventual fallout was not as damaging as many feared (see Convenience Store News , Nov. 19 issue). CSNews research found that a few retailers, citing fierce competition in their markets, absorbed the increases. Others raised their retails on single purchases, but cut prices on special promotions -- making up for the margin loss with increased sales.

7-Eleven Plans to Remodel -- Simpsons Style

As a promotional effort around the upcoming "The Simpsons Movie," 7-Eleven announces plans to refit 11 stores across the U.S. to resemble the front of the Kwik-E-Mart, the convenience store that Homer and other characters frequent in the classic cartoon TV series.

The promotion was extremely successful and garnered the c-store retailer millions of dollars worth of free publicity.

MasterCard Introduces New Fee Structure

MasterCard Inc. follows Visa's lead by overhauling its merchant fee structure in an attempt to capitalize on the increasing number of credit cards offering rewards. Under the new program, the company establishes a new merchant pricing tier for its branded credit cards. The financial institutions that issue cards collect an estimated $25 billion in interchange fees each year.

Merchants have filed a string of lawsuits against Visa and MasterCard, accusing the two card companies of anticompetitive behavior in the way they set the fees. Those cases are pending.

BP Puts 104 Properties on the Block in Atlanta

BP puts 104 of its properties in the Atlanta area on the selling block, with the majority to be reimaged or developed as ampm franchise stores with BP-branded gasoline stations. The sale follows BP's plans to expand and grow the ampm brand to reach more consumers.

Retailers Stuck Between Tobacco Contracts

Divide and conquer seems to be the strategy that tobacco manufacturer R.J. Reynolds is implementing to gain ground on competitor Philip Morris' space on retailer shelves. Its Retail Partners merchandising program previously allowed retailers to sign merchandising contracts with both Philip Morris and Reynolds, while collecting incentives from Reynolds and still giving Philip Morris the dominant space on shelves. Now, retailers will not receive buy-downs from Reynolds unless they give the company prominent shelf space.

"It's impossible to have the best of both programs," a tobacco chain buyer commented. "You have to go with one program or the other."

Tesco Plans for 100 U.S. Stores by February

Tesco's U.S. division, which plans to open a chain of Fresh & Easy Neighborhood Markets on the West Coast later this year, reveals plans to have 100 locations up and running in the nation by February 2008.

C-store Exec Leaves Home Depot

Home Depot's senior vice president of growth initiatives, Jim Stoddart, leaves the company, sparking speculation about the future of many of the chain's retail concepts, including Home Depot Fuel, the company's chain of c-stores that are situated in the big-boxes' parking lots.

Stoddart oversaw several projects focused on looking outside the Atlanta-based company's big-box stores. At least two of those projects -- Landscape Supply and Home Depot Fuel -- appear to have stalled, as the new CEO, Frank Blake, refocuses all growth efforts on the core business.

Flying J Drops Visa

As of the end of this month, customers pumping diesel fuel at Flying J locations will not be able to pay for their purchase with Visa-branded cards.

A spokesman for the Ogden, Utah-based company said all Flying J locations in the nation will stop accepting Visa debit and credit cards at diesel pumps, but unleaded fuel and in-store purchases may still be made with Visa cards.

The Pantry Gets a Blockbuster Exec, ExxonMobil Loses One

High-level changes take place at two c-store industry companies. The Pantry, operator of more than 1,630 convenience stores in the Southeast, names Frank G. Paci to the position of chief financial officer. Meanwhile, ExxonMobil Corp.'s senior vice president, Dr. Stuart McGill, will leave the company after 38 years of service to enter retirement. Paci, 49, joins The Pantry from Blockbuster Inc., where he served as its executive vice president, and was responsible for finance and accounting, strategic planning and business development.

BP, Shell in Merger Talks

Published reports state that BP and Royal Dutch Shell are once again in merger talks that could create a 250 billion pound oil giant, or $504 billion U.S. Two British papers simultaneously report that Britain's two largest oil companies have engaged financial advisers to discuss terms for a so-called friendly merger that could result in 2.5 billion pounds, or $5.04 billion U.S., of cost savings for the combined group.

The rumors remain just that -- rumors -- at least for now.

7-Eleven Day Brings Free Slurpees

On July 11, 7-Eleven stores across the nation celebrate the chain's 80th birthday, also known as 7-Eleven Day, with free 7.11-ounce Slurpee drinks in special birthday cups while supplies last.

"We want to thank the 6 million customers who come through our doors each day in the USA by giving them a birthday gift synonymous with 7-Eleven -- a refreshing and free Slurpee beverage on July 11," said Joe DePinto, 7-Eleven president and CEO.

Wal-Mart to Launch New C-store Concept

Wal-Mart Stores has a team of executives in the San Francisco Bay area devising two new small-footprint stores, including a response to the November launch of Tesco's U.S. grocery stores.

CSNews sources say Wal-Mart's new c-store format will be 10,000 to 20,000 square feet, opening in California in 2008, with products appealing to higher-income shoppers, and is likely to sport a new banner as well.

Mac's Pulls Controversial Slush Video

After complaints from consumers and employees, Mac's Convenience Stores pulls nine videos from a collection of 19 short clips promoting a new slush-drink flavor aimed at 16-year-old boys.

In the video, two women in lingerie walk through a field and stop at a tree, touching each other suggestively before kissing. The tree starts talking and tries to seduce the women, and one yells, "Perv!" The women start chopping the tree with axes and an orange-colored liquid starts pouring out from the tree cracks.

The viral marketing campaign uses existing social networks -- such as YouTube and blogs -- to spread its message, and reportedly is very effective with its target audience.

Tesco U.S.: Locked and Loaded

The long-awaited arrival of British retailing giant Tesco's Fresh & Easy Neighborhood Markets is approaching, as the parent company puts the finishing touches on the launch of its U.S. chain, which is scheduled to open its first stores in November. CSNews Online previously reported that Tesco is planning to spend up to $2 billion annually on the chain.

Report: BP to Simplify Company Structure

BP's new chief executive Tony Hayward prepares employees for a far-reaching shakeup of the oil company, as he delivers a blunt warning that third-quarter revenues will be "dreadful."

Hayward tells a staff meeting in Houston that he will be announcing a streamlining of the company's organization next month. He said BP's financial performance is at its lowest since the crisis of 1992-1993.

CSNews later reported that BP will close its Chicago office and relocate to a smaller site downtown, putting more than 2,000 jobs at risk with redundancy or relocation.

The Pantry Details Layoff Plan

The Pantry, operator of more than 1,600 convenience stores, reveals details on its planned restructuring, including the release of 60 employees from the company.

The plan is an effort to trim costs by $6 million and offset lower gasoline margins. The employees, mostly district managers and regional vice presidents, are based outside of North Carolina. The Pantry employs more than 13,000 people throughout the Southeast.

Later, CSNews Online debunked reports by other industry media that The Pantry's financial difficulties made it a target for acquisition by Canada-based Alimentation Couche-Tard, after an exclusive interview with Couche-Tard CEO Alain Bouchard.

Shell to Transition All Stores to Wholesale/Joint Venture Supplied

CSNews Online learned that Shell is transitioning more of its markets from direct-supplied and company-operated to wholesale- or joint venture-supplied, as part of the company's strategy to grow the Shell brand in the U.S. and maintain a focus on wholesale -- a plan that was initiated in 2005.

During the next two years, Shell will transition its remaining 2,000 company-owned stations and 400 retail supply contracts left in its network.

Tesco Fools U.S. by Opening First Store Early

British retailer Tesco opens its first U.S. Fresh & Easy Neighborhood Market store one week ahead of its announced opening date, in Hemet, Calif., a city east of Los Angeles. The chain was not expected to open its stores until Nov. 8.