7-Eleven, home of the 64 ounce double gulp and the pina colada Slurpee has helped revolutionize the way we
shop at convenience stores.
In March 2019, the 90 year old brand that generations of consumers have turned to for gas, Cokes and
smokes launched its first evolution store.
The redesigned venue features a growler station with craft beer a taqueriaand scan and pay technology
that allows customers to bypass the checkout line.
Traditionally, 83 percent of products sold at convenience stores are consumed within the hour.
But 7-Eleven is betting that its new store concept and services aided by technology will help redefine the
future of convenience.
And with consumers stocking up on goods in a bid to avoid crowded lines at the grocery store and staying closer to home due to
covid-19 restrictions, the convenience store industry could be on the verge of a profound change.
It's been an exciting year, I think, for organizations like convenience.
Shoppers see it as a quick fill destination where they're not
standing in line to pick up your milk, your eggs, your bread, your your cheese, your quick fillings
and convenience has been in a good location to go and get those quick trips.
The pandemic had a significant impact on all retail, but particularly convenience,
because first off, the pandemic redefined what convenience was.
Convenience stores in the U.S.
make up about a third of brick and mortar retail stores and about half the population, 165 million
consumers, visits a C store each day.
So what changes can 7-Eleven shoppers expect in the future?
And will the world's largest convenience brand be able to maintain its momentum?
7-Eleven got its start in Dallas, Texas, in 1927, 'Uncle Johnny' Jefferson Green, who
ran the local Southland Ice Company, came up with the idea that in addition to selling frozen blocks of ice, he
would offer customer staples like milk, eggs and cigarettes.
The first ever convenience store opened.
In 1937 Southland expanded to include some of its other properties and named the new shops Totem S
tores. A decade later to reflect the store's extended hours, the shops were renamed
7-Eleven. In the 1950s, 7-Eleven expanded beyond Texas to Florida, Virginia,
and Pennsylvania and started selling fuel.
The biggest growth in the convenience store industry began in the late 50s, and that was the growth of the suburbs.
That's where you started having communities, where you drove to stores and the
convenience store was that convenient place to pick up fill in items.
And it was called the mini mart because it really acted like a small grocery store.
By 1963, the chain had 1000 locations and six years later, the brand ballooned to
3500 stores.
7-Eleven was innovating its product offerings too.
In 1965, the brand launched the world's first coffee to go and its iconic Slurpee drink.
By the 1970s, it introduced self-service gas at some locations and in 1980, 7-Eleven launched
the 32 ounce Big Gulp drink.
The brand was expanding overseas too, but with increased competition and almost five billion dollars in debt.
In 1990, 7-Eleven's parent company filed for bankruptcy protection.
Southland Corp.
sold controlling interest in its retail stores to its Japanese partners, Ito Yokado, Japan's
second largest supermarket chain and majority owner of 7-Eleven, Japan.
In 2005, 7-Eleven Incorporated was made a wholly owned subsidiary of 7-Eleven Japan.
By 2013, 7-Eleven stores around the world were generally sales of 84 billion dollars, and
consumers were flocking to the retailer.
In 2018, U.S.
convenience stores had their 16th straight year of record in-store sales.
It's escalated a lot in the last number of years is more to towards health and wellness
is becoming very important for consumers.
Local is becoming much more prominent among consumers.
It is grown so dramatically and has taken such hold in American life that the
cool kids of retail have joined.
Home Depots opened convenience stores experimented with the idea convenience stores.
About a decade and a half ago, Target's danced around the concept.
Wal-Mart's danced around the concept.
Amazon's integrated the concept.
So it's really intriguing how convenience stores, which were always the other channel,
has become the cool channel that everybody's looking at.
As of the end of 2020, 7-Eleven operated franchised or licensed over 71,000 stores
in 17 countries.
While, mom and pop shops make up about two thirds of convenience stores in the U.S., the industry is dominated by just a
few big players.
In 2020, the largest convenience store chains in the U.S.
by store count, where 7-Eleven with 9364 stores, Alimentation
Couche-Tard which includes Circle K with five 5933, Speedway, the retail arm
of Marathon Petroleum Corp.
with 3900 stores, and Casey's general stores with 2181 stores.
Everybody has a regional favorite on the East Coast.
There's companies like Sheetz and Wawa.
If you go down south, there's companies like Racetrack and some others.
If you go in the Midwest, there's a huge debate in Iowa about which convenience store
is the one for you and Iowa might be the most competitive of them all.
As of December 2020, there were a little more than 150000 convenience stores across the U.S.
a one point, six percent decrease from the year prior, due in part to the contraction in retail and a decline in
single store operators.
According to analysts, while some mom and pop stores have suffered, the overall industry trend is towards larger corporate
chains. In 2018.
7-Eleven completed its three point three billion dollar purchase of over a thousand stores from Sunoco, and in
August 2020, the company announced it entered into an agreement to acquire 3900 speedway stores from
Marathon Petroleum for 21 billion dollars.
Seven & I Holdings, the owner of 7-Eleven, said the deal would bring its store count in the U.S.
and Canada to about 14000.
According to analysts like their supermarket rivals C-stores operate on razor thin margins.
Shoppers often see higher prices at convenience stores due to higher distribution costs and fewer customers
buying in bulk. Prime locations also contribute to higher real estate fees.
You're in that coveted convenient location.
You're not on the outskirts of town that may have lower property taxes, but certainly may not be
convenient. So there are different elements that that go into.
How do you factor in prices?
You better be pretty close or on point with prices because people will go somewhere else.
The consumer is at the heart and center of everything that's evolving.
I believe that both retailers and manufacturers recognize that.
And how do you serve them, as I said, in a seamless and easy way and stay ahead
of you health and wellness trends and things that are important for them as times change.
In 2019, U.S.
convenience stores had sales of 640 billion dollars, down one percent from the year prior.
The sale of fuel made up 61 percent of revenue, and the remainder came from products sold in stores.
Cigarettes and other tobacco products accounted for thirty four point four percent of in-store sales in 2019.
Prepared food, including hot coffee, accounted for twenty five point four percent.
Packaged beverages like soda and energy drinks made up fourteen point eight percent.
Candy and salty snacks were 10 percent, beer was seven point four percent and things like laundry detergent
made up the remainder. At the start of the pandemic, 7-Eleven experienced a drop in pre work visits, with
fewer people purchasing coffee and breakfast for the office.
Instead, the retailer saw consumers buying items in bulk.
In an email to CNBC, 7-Eleven said this increase the average cart size as people were stocking up
and also purchasing things they may have typically bought at a grocery store from their local 7-Eleven.
We found that people were more comfortable shopping at 7-Eleven stores than some big, crowded, big box store or
shopping center. 7-Eleven Inc., which includes 12000 stores in North America, had revenue from
operations of twenty five billion dollars in fiscal year 2019, 67 percent more than 2015.
Since the mid 2000s, the convenience store industry has seen a variety of new entrants into the space.
In 2018, Amazon made its debut with a launch of its automated grocery store, Amazon Go.
The store incorporates the same technology used in self-driving cars and offers ready to eat meals as well as household
essentials. As of January 2021, there were more than two dozen Amazon GO locations across the
U.S. Big box stores like Wal-Mart and Home Depot have also tried to make inroads into the segment
with varying degrees of success.
While C-stores benefit from long hours and convenient locations, analysts say to attract a new generation of
customers, retailers like 7-Eleven are adding healthier food options and a restaurant experience to their
playbook. Prior to covid, we've seen a gradual increase over the years in food
service and prepared foods.
You've seen stories about gourmet gas stations across the country, so there's
definitely been a move for better prepared foods.
I've seen this with Wawa and Sheetz, 7-Eleven, where you can
get something to eat right there.
You could order from the gas pump and a mini cafe where you can sit down on the inside as well.
And if the state allows it, you can have a nice beer with your sandwich or your taco or
whatever it may be.
So they've really transformed themselves into more food offerings
rather than just like convenience of sort of just picking up milk and eggs and bread.
In September 2014, 7-Eleven partnered with celebrity fitness expert Tony Horton, creator of
Beachbody P90X to develop a line of healthy sandwiches, salads, wraps and cold pressed
juices. And in March 2019, the company opened its first evolution store concept in Dallas, Texas.
The new format features made to order smoothies, baked in-store croissants, and an alcove dedicated to wine and
craft beers. The store also incorporates a Laredo taco company taqueria.
7-Eleven bought the taqueria as part of the 1000 store acquisition from Sunoco in 2018.
7-Eleven also upgraded its delivery app, started in 2017, offering customers the option to have
food, grocery items, or wine delivered and paid for in advance.
As of January 2021, there were five evolution stores in Dallas, Washington, D.C., San
Diego, and Manhattan.
The company plans to add 10 additional venues in 2021.
And changing consumer behavior related to the pandemic has also had a big impact on the brand.
During a January 12, 2021, third quarter earnings call, Ryuichi Isaka, president of Seven & I
Holdings, said that while the coronavirus pandemic has caused a slowdown in foot traffic in 7-Eleven U.S.
stores, consumer spending was up at least 20 percent from the year prior.
Isaka said during the quarter, stores in the U.S.
had seen a spike in the sale of frozen foods, alcoholic beverages, family sized ice cream, and large
beverages. In the nine months ending September 30th, 2020, 7-Eleven Inc.
had operating income of 880 million dollars, a six percent increase from the year earlier.
When the pandemic's over, I don't think consumers are going to say curbside was great, delivery
was great. We're over it now.
It's going to continue.
So the good news is the value of convenience has never been higher.
The bad news is it keeps on getting more difficult to execute because it keeps
on advancing.
And every other retailer is looking at convenience because let's
face it, no one wants to be the inconvenient store.