7-Eleven Named One of 2014's Leading Retailers

DALLAS -- 7-Eleven Inc. has one of the most recognizable names, logos and awnings of any retailer in the United States and its presence will continue to grow as the country's largest convenience store chain stands on the brink of major expansion and a fundamental shift in its identity.

7-Eleven's unique look at fresh food recently brought the Dallas-based retailer recognition as one of Retail Leader's 2014 Leading Retailers. Retail Leader is a sister publication of Convenience Store News.

Under the guidance of Japanese parent Seven & I Holdings Co., 7-Eleven added almost 1,000 convenience stores in the United States and Canada in the past year and plans to present a new face to the public.

The chairman of Seven & I Holdings told Bloomberg in May that the company may eventually have as many as 30,000 North American outlets, up from its current total of roughly 8,000. Over the short term, the company plans to increase its North American total to 10,000 as early as 2014.

But the chain is not just growing for the sake of growth. It's trying to locate new stores strategically, in ways that will give it a consistent national footprint.

Steven Johnson, whose firm Foodservice Solutions offers consulting services to the grocery/restaurant (in his word, "grocerant") industry, said 7-Eleven has been trying to get into locations, like areas of the East Coast or northern Florida, where competing convenience store chains have dominated.

Executing a fresh program with produce, sandwiches, salads and other on-the-go fresh foods is something the retailer sees as the key to its future. For many years, 7-Eleven has been trying to rid itself of the stereotype of the convenience store as a repository for stale, unappealing and overpriced food and other merchandise -- the "roller grill" image. It's now pushing back hard against that notion, in part by experimenting with a revamp of its stores. The idea is to present a cleaner, more appealing image and place a greater emphasis than ever on fresh, healthy food.

According to Johnson, 7-Eleven has been telling its franchisees for years to offer more fresh food. It has been a relatively slow process, mostly due to the size and nature of the company.

"Because they're so large and their brand is so solid, they have taken incremental steps," Johnson said. "And some of these steps, to the consumer, may not have been noticeable."

There was, and is, a certain amount of pushback from the franchisees, Johnson added.

Part of the problem is that prepared foods are a more reliable profit center, with higher margins and less waste. "But as they started bringing [fresh food] in, the customers and the frequency increased, because customers like fresh food," Johnson said. "Not everybody wants something off that roller grill."

Bonnie Herzog, managing director of beverage, tobacco and convenience store research for Wells Fargo Securities LLC, agrees that fresh food, attractively presented, is a customer draw.

"If you're offering [fresh food] and your store is clean and well lit, you're hopefully bringing in the soccer mom with her children, and if you didn't have that, she would have driven right by you," Herzog said.

When it comes to fresh food, American 7-Elevens lag behind their Japanese counterparts, some of which get food deliveries three times a day, Johnson said. Getting fresh food out to the stores reliably and profitably requires building the right kind of supply chain. That means stores have to be located close enough to a centralized commissary, where sandwiches, salads and other fresh food can be prepared and delivered in enough time to ensure adequate shelf life. So, not only will new U.S. stores tend to be in urban areas, but they'll be clustered in a way that will allow this kind of delivery network.

The increase in stores, and the changing nature of the merchandise, are part of a fundamental reimagining of the convenience store industry, more along the lines of what it's like in Japan and, to a lesser extent, in Europe, Joh2nson added.

"People want small footprints. They want to get in and out," Johnson said. This is especially true for younger, single people, who are more likely to make frequent, smaller food purchases, and older consumers, who are less willing or able to cook and are good customers for meal components.

To read the full story in Retail Leader, click here.