Dive Brief:
- 7-Eleven Inc. is rolling out a new store refresh program which includes improvements to store exteriors as well as employee training and merchandise resets, CEO Joe DePinto said during parent company Seven & i’s fourth quarter earnings call on April 10.
- The new program had a successful pilot in the Louisville, Kentucky, area in April 2023, and now the company hopes to apply what it learned to 4,000 stores by the end of 2024.
- This initiative is being rolled out while 7-Eleven continues expanding its food and beverage modernization program, which includes updating its coffee programs and baked goods, roller grill and grab-and-go areas.
Dive Insight:
The last few years have been difficult for North American consumers, with inflation driving prices higher and forcing shoppers to be more conservative. 7-Eleven expects that to continue for the rest of this year, guiding for a reduction in revenue in fiscal year 2024.
Despite that headwind, the massive convenience retailer is not skimping on investments aimed at growing and improving its store network.
“We expect to see a challenging start to 2024,” said DePinto, referencing continued pain from inflation. “However, we have aggressive plans in place, and we will accelerate our investments expanding our food and beverage modernization platforms in our stores, refreshing our stores exteriors and interiors and enhancing overall operational execution.”
The site refresh program in Louisville included an exterior refresh, as well as additional training for workers, a merchandise reset and a greater focus on including local items. 7-Eleven did not share additional details on these refreshes by press time.
7-Eleven said the program has driven an increase in both foot traffic and merchandise sales at those stores. Both metrics had been shrinking before the conversion, and by December had turned decidedly positive. DePinto also said the program drove a 17% increase in fresh food sales and a 9% increase in proprietary beverage sales.
Regarding the food and beverage modernization, the retailer expects to bring the entire updated package to 854 stores and parts of the program to another 1,700. With the help of these updates, 7-Eleven is targeting a 17.5% increase in fresh food sales and a 7.7% gain in proprietary beverage sales this year as compared to 2022, DePinto said.
In addition to augmenting its offering and sprucing up the stores and merchandising, the company also increased its footprint as it closed its acquisition of the more than 200 remaining Stripes c-stores from Sunoco. The deal was originally announced in January.
The retailer is also targeting several moves that could help it continue to weather the turbulent economic climate. First, it’s accelerating the growth of its private label lines, aiming to introduce nearly twice as many new items in 2024 as in 2023. These private label goods boast a more than 50% margin, the company reported, compared to name brand merchandise, which has an average margin of 32%.
Additionally, the company is seeking to save $350 million in costs through initiatives like vendor negotiations, leveraging the company’s scale and optimizing labor.
Finally, 7-Eleven expects to appeal to price-conscious consumers by increasing promotional activity by about 30% this year, according to the earnings presentation.
Irving, Texas-based 7-Eleven has 83,000 stores across 19 countries and regions, including over 13,000 in the U.S.
