SAN DIEGO -- 7-Eleven believes its ability to use sales data and knowledge of its consumers' buying habits "give us a cutting-edge opportunity to become the Wal-Mart of the convenience-store business or to make a run at being the best retailer in the world," Jim Keyes, president and chief executive officer, said here last week.
Speaking at the Reinventing CPG Summit 2004, a conference sponsored by Information Resources Inc., Chicago, Keyes said he bases his optimism on the Dallas-based company's ability to exploit its sales information on a store-by-store basis singly and in collaboration with its suppliers.
"We understand the value of information, and we think we can use it to make great decisions because it puts the power in our hands," he said.
"It enables us to change the old push model, in which CPG companies told us how much shelf space they needed, and gives us the responsibility to use technology as an enabler to optimize every square inch of the store.
"And if we also work upstream with suppliers and combine our bases of information, then we will have powerful information to help us better satisfy customers."
In the past, retailers like 7-Eleven had to rely on suppliers for information, Keyes noted, "but today we have better data, and we can move in tune with customers because we do 7 million transactions every day and we're close to our customers and we're able to harness the power of that information."
Keyes said 7-Eleven also leverages its strength the way Wal-Mart Stores does, "not by dropping prices, but by being the first, best and only on certain products -- the first to carry an item, the best in class and the only retailer with certain products."
That's been more true at 7-Eleven stores overseas, he noted, "but we hope it will become as true in the U.S. over time," he said.
Keyes said some members of 7-Eleven management recognized consumer interest in low-carb products two years ago, based on point-of-sale data on sales of beef jerky and pork rinds to women, "which were going through the roof," he explained. However, it took two years to convince other managers that the interest was mainstream enough to launch a promotion last January, he said.
The company did succeed in partnering with Met-Rx to make a low-carb nutrition bar exclusively for 7-Eleven, "and became the No. 1 seller in the nutrition bar segment," Keyes said -- an example of "thinking out ahead, not just using historical data," he added.
Looking ahead, Keyes said 7-Eleven will be working with IRI to facilitate partnerships with a variety of suppliers. "We believe collaborations between retailers and suppliers using technology as an enabler will be good for everyone," he said.
In a workshop session later the same day, Jim Hendrickson, manager of market research for 7-Eleven, discussed the chain's move toward industry collaboration. Called 7-Exchange, the company launched the effort last fall "to enable faster identification of business opportunities, to change consumer trends and to innovate new products, which will lead to improved sales and profits for us and for manufacturers," he explained.
One of the goals of 7-Exchange is to standardize the collaboration process "by agreeing on a shared set of metrics and processes, to utilize the same category and geographic definitions, and to conduct category reviews and scorecards on an ongoing basis," Hendrickson explained.
"In the process, we hope to spend less time discussing analytics and more time identifying business-building opportunities and focusing more time on understanding consumers."
While 7-Eleven is just beginning collaborative ventures, Procter & Gamble, Cincinnati, has been at it for years, including 15 years working closely with Wal-Mart, Bentonville, Ark., according to Mike Graen, director of information technology for P&G's Wal-Mart team.
"One of the things we've had to recognize in the process is that our customer is not Wal-Mart but the Wal-Mart customer, the one who makes the purchase decisions at the store," Graen told the workshop. "As a result, most of our discussions are not about each other but about satisfying the needs of that consumer."
As the Wal-Mart-P&G collaboration continues, the goal of both companies is to drive costs out of the system, Graen said.
In a speech to the conference's opening general session, Romesh Wadhwani, IRI, chairman and managing partner of its parent company, Symphony Technology Group, said CPG companies need to do more to collaborate with retailers.
"What's missing is the ability to take the insights gained by retailers concerning consumers, competition and neighborhoods, and combining that with internal information CPG companies have about marketing, sales and finances so they can explore new marketing opportunities together in a more formal rather than superficial way," Wadhwani said.
