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Convenience Store Market Research, 7-Eleven, and Beyoncé

Posted by TrendSource on 5/10/18 9:38 AM

Let’s talk about 7-Eleven. A trip to any urban branch of the convenience store will reveal an odd assortment of products ranging from diet-friendly to splurge-tastic, from so-cheap-you-think-you-are-in-a-dollar-store all the way to stare-hard--and-it-looks-like-Whole-Foods. Despite its diminutive size—the average 7-Eleven is 1,000-2,500 sq/ft—they manage to be an everything store for everybody, which also explains their place in popular culture.

The Slurpee, introduced in the 60s, is nothing short of iconic at this point, and the store itself is such a cultural touchstone its name has come to indicate something that is always open, as with Patriots wide receiver Chris Hogan, and has also been the basis of innumerable your-mama jokes.

Yet with Amazon offering customers an experience so convenient they need not checkout at all, and delivery services like GrubHub fulfilling cravings and filling in grocery list gaps, the challenges of today and tomorrow have traditional stores like 7-Eleven contemplating the future.

So, with a little help from Beyoncé, follow us on a convenient trip through some convenience store market research, as we unpack how 7-Eleven has and will continue to face down the challenges of technology and the changing face of the convenience store consumer.

“Wave Your Hands Side To Side, Put it In the Air”…or Drawing Attention (and Foot Traffic)

CEO Joe DePinto understands that new times call for new differentiators: “The landscape is changing so fast. Yes, there’s Amazon and GrubHub…it’s all about the immediate consumption. We have to be prepared and ready in ways that our customers want.” He believes they are indeed prepared to meet the challenge, pointing out, “The last four or five years, we’ve had our heads down, grinding it out. And we’re doing a lot of things right.”

To ward off encroaching delivery services, the Japanese-owned chain (which is 90% franchised) has been quietly testing drone delivery, though it remains unclear how far this has flown or if it remains a corporate priority. Hedging their delivery bets, however, they have also partnered with Postmates in 27 markets already, and are looking to expand the partnership. Of course, as our recent Convenience Store Industry Report revealed, consumers aren’t all that excited about C-store delivery in the first place.

It’s not as if we are all retreating into our own private Idaho of digital self-containment. As one researcher noted, “As long as we don’t all become hermits there will always be a need to get out, get gas and grab something to go.” And 7-Eleven wants to ensure that the trip to grab something to go is a memorable one.  The chain’s recent Deadpool promotional campaign, timed for the blockbuster’s impending (depending on when you read this) release aims to make trips to 7-Eleven not just a chore but an experience and, in an omnichannel world, experiences are key.

“I know you Thinkin’ bout that Alcohol, I know I’m Thinkin’ bout that Alcohol”…or Private Label Beverages

Getting goods to customers and customers to goods is all fine and good so long as your goods are…well…good. Though known for sometimes questionable hot food boxes full of hot dogs, wings, and strange fried concoctions, they are branching into classier private label healthy and even fresh (“fresher than you”) food.

They began their private label brands somewhat modestly, starting with paper goods and batteries, but have steadily expanded their offerings, with notable additions such as snack chips (with absurdly social-media-friendly flavors like cappuccino and hotdog) and, more recently, beverages.

In the beverage case alone, for example, one can find 7-Eleven branded premium sodas, coconut water, fruit juice (with organic and cold-pressed options), water, a variety of teas, and since 2009, wine sold under the Yosemite Road brand. Yup, 7-Eleven has its own private wine label.

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It sells for $4.99/bottle and though it has not gained the same cultural currency as Charles “Two-Buck-Chuck” Shaw, it is nonetheless a viable option when looking for a quick, convenient, and cost-effective bottle in a pinch.

They also offer an array of “late night” (7-Eleven after dark?) options, a thinly veiled offering for stoners and midnight munchers complete with taquitos, pizzas, hot dogs, ice cream, wings, pockets, and of course Slurpees. But a self-described dandy (such as this humble blogger) would also point out they have some really great (dare we say elevated?) food. Indeed, as one manufacturer noted, “7-Eleven is buying Willams-Sonoma level gourmet products from us. The caramel on those grahams is made with real butter and cream all sourced from the Northwest.”

Like we said, everything store for everybody. They also offer pre-made lunches and dinners that generally fall into Italian- or Mexican-inspired, but also extend into Asian and even breakfast cuisine.

Sushi, caesar salad wraps, and enchiladas all coexisting beside donuts, cigarettes, and Olde English 40s. It’s like 7-Eleven is the great exemplar of American democracy, where a stoner can buy a whole pizza and cover it in nacho cheese sauce while a manbun wearing gym bunny gets his protein shake and a local professor inspects the ingredient list on the organic chocolate covered fruit. And that, right there, is a big part of their success—serving up what their customers want (everything) when they want it (now!).

“Man this feel like Rollin’ Dice, 7-11, 7-11, Seven Twice”…Or 7-Eleven on a Hot Streak

Thus, they have been on quite the run. Under the leadership of CEO Joe DiPinto—whose 13-year tenure is unheard of in publicly traded companies and more akin to the Queen of England or a Supreme Court Justice—the company is looking to, by 2020,  drive $5,000 per day in individual unit sales, and also expanding to 10,000 US locations.

They have already more than doubled their store count in the last thirty years, and they are expanding into densely populated urban areas that can support foot traffic and delivery alike.

While some retailers have failed to appropriately appeal to younger generations, it seems like 7-Eleven has also kept up with the Jonases: over 50% of their shoppers are millennials—consumers who grew up on Slurpees and now are of age to purchase higher margin vice items.

And they’re not only helping sales—they are driving a new perception of 7-Eleven: “This generation grew up with a different convenience store. Young people see the convenience store as a place where they can pick up a good sandwich. Older generations think of the bathroom key attached to an old hubcap or a block of wood. That’s not as appealing.”

 “Man I’m Tryna Kick it with You”…or the Importance of Knowing your Neighborhood

To quickly pivot to capricious millennial-driven tastes, the company allows franchised owners to tailor their store to the neighborhood in which they operate; they have over 800 unique private label products, but they leave it up to their franchisees to pick and choose from these products as they deem appropriate for their neighborhood and clientele. This means that up to 15% of items vary on a store-to-store level, and that their private brand sales have steadily increased, up 30% in both 2015 and 2016.

c-store market research

As we pointed out in this month’s Convenience Store Industry Report, familiarity with both neighborhood and neighbors can be a key differentiator for brick-and-mortar stores in an age of digital convenience and its attendant alienation.

Though they vary from distribution center to distribution center, Amazon’s offerings are roughly the same wherever you go, and encounters with delivery contractors are as brief as they are rare. Though it is only anecdotal, it does feel like every 7-Eleven is a little different, doesn’t it? Like you never know exactly what to expect, unless it is your local store and then you know exactly what to expect. Yeah, that’s by design.

Sure they have expanded their rewards program and they are focusing on omnichannel as much as any self-respecting retailer would, but more importantly they have found ways to make their stores feel like part of the community in which they operate and this goes a long way towards ensuring future relevance.

Want more convenience store insights? Click here to download our 2018 Convenience Store Industry Report.

2018 Convenience Store Industry Report

Topics: Technology, Retail, Delivery, Alcohol, C-Store, Beyoncé

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