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7-Eleven in the Big Apple

NEW YORK -- New York City is a tough town for c-store retailers, as Dallas-based 7-Eleven Inc. learned a long time ago. The company left the Manhattan market in 1982 and abandoned plans for a Times Square location in 2002. But this time, after testing an urban format in Boston, Philadelphia and Chicago, president and CEO Jim Keyes thinks they have it right.

“7-Eleven is dramatically different from the kind of operation that
we ran in 1982,” Keyes told Convenience Store News. “The challenge of the past was having the natural difficulties of distribution and replenishment of product in an urban environment. Today, our daily distribution system, our shift toward fresh foods and higher-velocity daily items now make it a much better economic proposition to go into urban markets.”

That theory will be put to the test with 7-Eleven's new store at 23rd St. and Park Avenue in Manhattan, which is holding its grand opening today. Consumers who expect a duplicate of the company's suburban stores will be surprised: With a focus on fresh foods, this 7-Eleven will have a very different product mix than the traditional store -- and will look very different than it did the last time it operated in New York.

“It is a high-quality, upscale environment targeted at the convenient sale of fresh foods,” Keyes said. “When you walked in a 7-Eleven, even in New York City, in 1982, you were likely to see motor oil or health and beauty aids. That was our planogram. That's what we did. Today, we have so much more capability to customize the product assortment to the unique needs of that neighborhood. We've talked about it for the last 20 years, but now we actually can do it with the data and technology that we have.”

The company has also learned that “neighborhood” means something very different in the cities than in the suburbs, encompassing a much smaller area. “The inspiration for what we're calling our urban store actually comes from our success in Asia. Store density in Taipei, for example, gave us confidence that there is a very different model,” Keyes said. “In the United States, in our traditional suburban location, we might locate stores a half-mile or a mile apart. But we're able to operate stores in a city like Taipei that could be on every other block, and they serve very different demographics because of the residential and business density of those areas. Manhattan is comparable in that you literally have a different demographic target block by block by block.”

Does that mean Manhattanites can expect a city saturated with 7-Eleven locations? Not quite. At this point, the new location is the only one in operation; there is another store under construction on 82nd St. and several other stores in negotiation. But the company has, as public relations director Margaret Chabris puts it, an “aggressive expansion plan” for the next several years.

Focus on Food
Improved distribution systems mean that 7-Eleven's fresh food offerings are set to compete with even New York's world-famous delis. The store will get daily fresh food deliveries from 7-Eleven's commissary on Long Island, as well as daily delivery of fresh bakery products from a Long Island bakery.

“The No. 1 need for convenience in the urban environment is portable, high-quality fast foods,” according to Keyes, and it's clear from the store's design that the company wants consumers to see how much thought has gone into the foodservice offering. The 1,495-square-foot store has a four-tier fresh food display in the center of the store, as well as two bakery case wall units, a long wall of self-serve beverages and a recessed counter holding roller grills for Big Bite hot dogs and Go Go Taquitos.

The food itself is also different from the traditional 7-Eleven lineup. The store has a panini grill for roasted eggplant, turkey and American cheese, cheesesteak and Italian panini sandwiches, which are currently only offered in Texas; the store also offers sushi, which hasn't made it into all of 7-Eleven's markets.

But the main draw, Keyes says, is the selection of Big Eats sandwiches, including smoked turkey and Jack cheese with Southwest mayo, a grilled chicken Caesar wrap, a turkey and cappicola club wrap, brown sugar turkey with light chipotle spread and the turkey and American sub. The sandwiches retail for $1.99 to $3.89.

In terms of dispensed beverages, the store will offer cappuccino, teas and flavored syrups and toppings; the store is testing iced coffee and plans to test self-serve espresso machines by the end of 2005. There is a six-barrel Slurpee machine offering flavors including Coca-Cola, Minute Maid Cherry, Crystal Light Strawberry Banana, Gullywasher, Hawaiian Punch Green Berry Rush and Mountain Dew.

The store's 1,497 SKUs (not including magazines) also include fresh and fresh packaged bakery items, fresh fruit, chips and snacks, nutritional bars, ice cream novelties and beef jerky.

Will 7-Eleven do as well in the Big Apple as it has in urban markets like Boston, where it currently has 15 urban stores, and Chicago, with 26 stores? Time will tell. But like the song says -- if they can make it there, they'll make it anywhere.
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