Maybe we can buy a 7/11 franchise and get out of tech and spend the rest of our lives together.
<<DALLAS — From the window of his 40th-floor office, James Keyes can see the spot where 7-Eleven stabled the mules used to deliver ice.
The barn was knocked down and paved over long ago, as 7-Eleven adapted to changes in technology and tastes to become a fixture on American street corners.
This week, the convenience-store giant celebrates its 75th birthday with a bash in New York and free Slurpees. Total sales approach $10 billion a year, with 5,800 7-Elevens in the United States and Canada, and more than 23,000 worldwide.
When the streamers come down, however, the company will still face stiff competition from other retailers for sales of key products, from sandwiches to gasoline. At the same time, it is coming under pressure from minority shareholders to increase earnings and lift a stock price that has fallen more than 35 percent this year.
Keyes, who became chief executive in 2000, is tinkering again with the stores' formula, adding new fresh food and financial services.
That means changing people's attitudes about 7-Eleven, where perishable foods now account for only about 5 percent of sales.
7-Eleven facts
· The company's first convenience outlets were known as Tote'm stores since customers "toted" away their purchases. Some stores even had Alaskan totem poles in front.
· The name 7-Eleven originated in 1946 when the stores were open from 7 a.m. until 11 p.m.
· The company opened its first store outside Texas in 1954 in Florida.
· It was the first convenience store to operate 24 hours a day and sell coffee in to-go cups and first to have a self-serve soda fountain.
· The company was also the first convenience store to run television ads; it had an animated commercial featuring a singing owl and rooster that debuted in 1949. The "Oh Thank Heaven for 7-Eleven" campaign was introduced in 1969.
· In a four-week period, customers visit a 7-Eleven store an average of 17 times — 80 percent of their total trips to any convenience store.
· Nearly one-third of the 6 million people who stop by a 7-Eleven store each day purchase food to eat immediately.
· A typical 7-Eleven store is 2,400 to 3,000 square feet and carries about 2,500 different items.
· Who buys the most 7-Eleven stuff? Customers in Detroit buy the most Slurpees; in Washington, D.C., it's hot dogs. Long Islanders buy the most coffee; Coloradoans win the nachos contest; and Las Vegas and Utah buy the most Big Gulp drinks.
· California has more 7-Eleven stores than any other state — close to 1,200.
· Of all its proprietary products, 7-Eleven sells more coffee than anything else — more than 1 million cups each day.
· 7-Eleven uses 365,000 pounds of glaze each month on its doughnuts, fritters and other pastries.
Compiled by The Dallas Morning News with information from 7-Eleven
Keyes believes 7-Eleven can lift sales with new offerings, such as Big Eats Deli sandwiches made at central kitchens and trucked to area stores.
The company is also about to roll out in-store kiosks called Vcoms, which offer ATM and check-cashing services. Cyphermint, a Marlborough, Mass., company that is providing the payment technology for the machines, has plans to offer limited e-shopping options such as movie tickets, flower orders and state fishing licenses beginning this fall.
"We've done a lot of demographic research on 7-Eleven customers," Cyphermint chief executive Pat Lally said. "They earn $53,000 a year. They like fishing. They buy cars. They go to a lot of movies. This will be immediate gratification."
Tests in two states
About 100 of the machines have been tested at stores in Texas and Florida, and 7-Eleven will soon announce plans to place them in 1,000 stores in the next six months and 5,800 by the end of 2004.
Lally said 7-Eleven processed 110 million ATM transactions last year, and the Vcoms will be a big hit if only 10 percent of those customers use the new machines, which will charge transaction fees and raise money from on-screen advertising.
But Mark Husson, an analyst with Merrill Lynch, sees the Vcoms as a fanciful expenditure in technology that might not help 7-Eleven's bottom line soon.
He said the company made the same mistake by pouring money a few years ago into a computerized inventory and ordering system that hasn't yet paid dividends.
The Japanese company that owns 73 percent of 7-Eleven, Ito-Yokado Co., "isn't asking them to deliver earnings on a quarterly basis the way Wall Street would," Husson said. "They figure they'll get it right in the long haul, and until then, what's the worst that could happen? There's not much urgency."
Gasoline is 7-Eleven's biggest item, with 27 percent of sales.
The company traces its roots to June 1927, when Claude Dawley and associates formed the Southland Ice Co. to supply ice for storing and shipping food during the hot Texas summers.
Birth of a brand
On a trip to San Antonio, Dawley noticed customers buying milk and bread at an ice-delivery affiliate, and he saw the potential for a year-round business selling convenience items at nights and on Sundays, when grocery stores were closed by blue laws.
The 7-Eleven name was introduced in 1945 to highlight the long hours, from 7 a.m. to 11 p.m. The stores opened around the clock in 1963. In 1988, the company went private in a leveraged buyout that left a legacy of debt, which led to bankruptcy in 1990 after Southland defaulted on $1.8 billion in bonds.
The company emerged from bankruptcy five months later with fewer stores and a foreign majority owner, Ito-Yokado, the chain's Japan licensee. Sales declined for several years but have climbed steadily since 1994 to $9.78 billion last year.
The stores still sell ice, and they use plenty in the trademark Slurpee, which debuted in 1966. The company sells 11.6 million of them each month. On the company's adopted birthday tomorrow — July 11, or 7-11 — the first 1,000 customers at each store will get a free Slurpee. << |
