What will 7-Eleven do with all its new stores?

Discussion
Photo: Getty Images
Jan 26, 2018
Matthew Stern

7-Eleven is one of the most well-known U.S. convenience store chains and thanks to an acquisition, customers might be noticing a lot more of them.

The retailer has acquired 1,030 convenience stores owned by Sunoco spread across 17 states, the largest acquisition in 7-Eleven’s history, according to Convenience Store News. The acquisition bumps 7-Eleven’s total store count up to around 9,700 in the U.S. and Canada.

The acquisition comes at a time when many retailers across markets are reducing their footprints nationwide. The convenience store space, however, is one of the areas in which some analysts are reporting growth.

Convenience stores were among the fastest growing segments of retail trailing only off-price retail and dollar stores, according to a summer 2017 report by IHL Services.

At the same time, the demands placed on convenience stores have begun to change. Customer expectations for such features as prepared foods in recent years have caused some convenience stores to start playing with more upmarket concepts.

Hy-Vee, for instance, last year began experimenting with what it called a “c-store on steroids” concept, featuring prepared foods, a Starbucks and an in-store restaurant to resemble a hybrid between a traditional c-store and a supermarket.

And, of course, the convenience store industry faces disruption from checkout-free store concept Amazon Go, which finally got its public launch in Seattle earlier this week after 14 months of testing and troubleshooting.

7-Eleven has been pursuing its own technological upgrades. In December, the chain began testing a smartphone app that enables mobile ordering for in-store pickup or delivery. 

DISCUSSION QUESTIONS: Will 7-Eleven benefit from its newly increased footprint? What changes do you see coming ahead for convenience stores over the next several years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I think the convenience category in general is going through an interesting renaissance with plenty of potential."
"It seems wild and crazy, but I don’t think the industry really has thought through a lot of the trends that are in motion today."
"I would love to see 7-Eleven test new in-store layout changes as part of this acquisition."

Join the Discussion!

17 Comments on "What will 7-Eleven do with all its new stores?"


Sort by:   newest | oldest | most voted
Dick Seesel
BrainTrust

In the short term, it’s a good move for 7-Eleven because it provides significant economies of scale. Over the long haul, 7-Eleven faces many of the same challenges as the rest of the c-store industry: How to execute a true “omnichannel” model in a business based on a large footprint of physical stores, and how to take cutting-edge technology (like the cashier-less Amazon Go concept) to a huge number of locations. It’s an opportunity not only for national players like 7-Eleven but also for regional chains like Wawa and Kwik Trip.

David Livingston
Guest
10 months 19 days ago

I don’t know, Dick. Economies of scale might not be enough. The 1990s called and they want their convenience stores back. Wawa, Kwik Trip and a few others designed to put the local gas stations out of business. I’ve seen a lot of dumpy 7-Elevens. Wawa’s deli, Kwik Trip’s $1 off gas and 38 cent per pound produce, free coffee days, etc. really drive traffic. The one-of-a-kind Tom’s Thumb in Scottsdale, AZ with 100 octane gas, car detailing and signature sandwiches seem to be the future rather than the tired 7-Elevens.

Byron Kerr
BrainTrust
Byron Kerr
Head of Amazon, Tuft & Needle
10 months 19 days ago

I couldn’t agree more. I would love to see 7-Eleven test new in-store layout changes as part of this acquisition. During my short time in Virginia, Wawa was light years beyond any other convenience store concept including in the prepared food section. Convenience stores are re-inserting “convenience” back into their moniker.

Mark Ryski
BrainTrust

When it comes to convenience stores, size matters. Given that convenience stores are mini-geographic monopolies, by expanding their footprint, 7-Eleven will indeed generate incremental revenue without much worry about cannibalization of their existing stores. And with 7-Eleven’s well-refined supply chain and systems they should be able to generate interesting efficiencies by expanding through acquisition. Also, as noted, given that convenience store offerings are expanding and going up-scale, there is plenty of potential to grow revenue by higher average tickets. I think the convenience category in general is going through an interesting renaissance with plenty of potential.

Lee Peterson
BrainTrust

I think you’re right about that last sentence, Mark. What technology has done for convenience, applied to literally convenient physical space provides great opportunity. Just ask Starbucks. Side comment: no mention of the fact that 7-11 is Japanese-owned. Does it matter?

Shep Hyken
BrainTrust

What is 7-Eleven all about? Convenience! By adding more than 1,000 stores they will achieve deliver on more opportunities to be convenient for their customer. And the future of c-stores is a more convenient shopping experience, featuring the items customers want and enabling them to purchase the way they want to do it. Technology, such as cashless transactions that happen quicker and more efficiently, will develop.

Dave Bruno
BrainTrust

I agree, Shep — establishing more convenience “monopolies” as the future definition of convenience stores is just beginning to evolve feels like a very sound strategy. As Nikki Baird said in her comment, we can expect to see lots of changes in c-stores in the future, and 7-Eleven just enhanced their position to help drive the future. Also, I wonder if they are thinking they can adjust their assortments to pick off some of the ever-growing ranks of dollar store customers as well.

Art Suriano
BrainTrust

Convenience stores are still very much in use by all of us, so I can see 7-Eleven doing well with this acquisition. That of course will depend on where the stores are located and their condition. The problem that I see with 7-Eleven as a chain is that unlike some of their competitors, they don’t have any significant brand identity other than their name. With the number of locations they now have, 7-Eleven should invest in marketing themselves aside from their competitors. Most c-stores push their coffee and quick lunch items at low cost, but 7-Eleven should look to be the “different” c-store that can provide the customer with something their competitors do not. If they can do that successfully, 7-Eleven with their large footprint could become the customer’s first choice when looking for a convenience store.

Steve Montgomery
BrainTrust

The initial impact of the acquisition will be a reallocation/refocus of management in the integration of these stores into 7-Eleven’s system. My expectation is that they will run a separate business unit for a period of time, but 7-Eleven will have to rebrand in order to gain any benefit of its current brand recognition. This means not only re-imagining the stores, but all their back-of-the-house functions. Definitely not a small undertaking. The issue will be, can it accomplish all of the effort required without negatively impacting its current operation?

Nikki Baird
BrainTrust
Nikki Baird
VP of Retail Innovation, Aptos
10 months 19 days ago
Well, they are either brilliant or foolish. There have been a lot of trends pushing against convenience, whether it’s healthy foods, pay at the pump, etc. But I just saw Reebok’s concept for re-imagining the c-store as fitness and community centers. Reebok is building this concept off of the idea that the rise of electric cars will upend the c-store industry even more. First, we’ll need fewer of them because more people will be charging at home and at work. Second, if you do need a charge, it’ll no matter what take longer than filling up a tank of gas, thus driving people out of their cars and into “wait areas” where c-store operators will have the opportunity to sell people lots of stuff (and apparently, also gym memberships). It seems wild and crazy, but I don’t think the industry really has thought through a lot of the trends that are in motion today. It’s kind of like predicting the weather — there’s a lot in motion, but if one thing happens faster or slower… Read more »
Stuart Jackson
BrainTrust

The whole idea of a big weekly or monthly shop in a supermarket doesn’t appeal to quite as many people these days. It’s a hassle, inconvenient and time consuming, especially when we’re all working longer hours. It’s much easier, though not always cheaper, to pick up groceries on your way to or from work. That’s why, certainly in the U.K., the convenience store market is growing fast. In 2016 they took £37.5 billion out of £179 billion total grocery sales, according to research and it’s reckoned that this will grow by more than 11 percent over the next three years. Adding more stores makes sense for 7-Eleven — capitalize on these changing consumer habits, grow your footprint, explore pick and collect solutions and get deeper into your customers’ psyche with great local marketing.

Sky Rota
BrainTrust
10 months 19 days ago

It could be a good thing. They see how convenience store shopping is growing and if they add delivery to that it’s a home run. In Philly we have GoPuff delivery for snack and basically everything you could want delivered. 7-Elevens carry the same stuff and now with a ton more locations to deliver from I can’t see them doing badly. Plus they added PayNearMe which lets you pay your bills in cash and, believe it or not, lots of people don’t have checking accounts etc. and need a place to pay their bills, so that get lots more people in the stores. I don’t see Amazon’s insane checkout-free/shoplifting paradise option being a threat to any store that doesn’t have it. I’m positive that concept is never coming to Philadelphia. Just saying.

Larry Negrich
BrainTrust

Let’s say you are a retailer that wants convenient distribution options in suburban areas, what better than petro-convenience? Set aside the technology needed to link their demand/supply chains, and this could be a very good move to extend consumer offerings beyond “quick convenience” and offer pre-ordered essentials – available for pickup on the way home, while getting gas.

Peter Luff
BrainTrust

Shoppers’ needs are cyclical in nature. Back in the day, we had convenience stores and then saw the industrialization of food and the move to big-box outlets. Shoppers lives are once again changing; now they want to grocery shop a little and often, as it was back in the day. This is how we consume life, increasingly a little and often. Similar to how we look at news on our smartphones.

This therefore makes sense for 7-Eleven delivering more convenience, however — 7-Eleven now needs to focus on quality to go with the old convenience tag.

Michael La Kier
BrainTrust

Having a larger footprint helps 7-Eleven become a bigger player in the convenience retail business. They can double down on this move by combining their larger presence with deeper shopper engagement and technology that drives convenience. Technology will play an increasing role at retail and those who keep up with trends in fresh and convenience will win.

Craig Sundstrom
Guest

Since 7-Eleven is acquiring existing stores as opposed to building new ones, the question is really “are there economies of scale (particularly in going from ~9K>10K)?” I’m somewhat dubious … though I don’t doubt someone(s) at HQ will argue it justifies a big pay bump.

In the long run, I think the challenges will be more prosaic (than “disruption” from Amazon). Continued decline or at least stagnation in their traditional core categories of tobacco and alcohol, although abandonment of the former by other retailers may provide a temporary boost, and wage pressures.

Ricardo Belmar
BrainTrust
This is a pretty traditional growth move by 7-Eleven — adding more stores — than what we’re used to debating. I’m sure this will produce some incremental revenue in the short-term, but it doesn’t do anything to address what is happening in a market that they used to dominate. While they may still have the advantage in terms of the number of stores, other brands have and continue to redefine what a c-store is all about. It’s great that 7-Eleven is adding a mobile ordering app (I remember talking with innovation leaders at 7-Eleven a couple of years ago when they first started talking about this), but they have many other issues to address — modern store layouts and general look and feel is just one example. In many geographies, 7-Eleven has a reputation as the lowest end c-store compared to other brands, and that’s being generous. From an infrastructure point of view, they still need to address disparate systems throughout the store fleet (e.g. multiple flavors of POS, integration between pump payment systems and… Read more »
wpDiscuz
Braintrust
"I think the convenience category in general is going through an interesting renaissance with plenty of potential."
"It seems wild and crazy, but I don’t think the industry really has thought through a lot of the trends that are in motion today."
"I would love to see 7-Eleven test new in-store layout changes as part of this acquisition."

Take Our Instant Poll

How likely is 7-Eleven to benefit from an increased footprint in a time where much of retail is still considered overstored?

View Results

Loading ... Loading ...