Case Study: 7- Eleven: Strategies for Success

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CASE STUDY: 7- Eleven: Strategies for Success
NEW YORK -- Jim Keyes, president and CEO of 7-Eleven Inc., spoke at Merrill Lynch's Retailing Leaders: Household Products and Cosmetics Conference in New York on Wednesday, highlighting the company's successful transformation of its business model. "We are transforming dramatically what was a good business into what we believe can be a great business with growth opportunities, now that we've fixed the business model to be able to continue improving our traditional business while adding new segments like fresh foods or services," Keyes said.

According to Keyes, proof of success is evident in the company's operating statistics, namely that it is in its 34th quarter of improved same-store sales.
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Moreover, the vendors’ systems were designed to maximize opportunities for their businesses, not for 7-Eleven.7-Eleven stores are not all alike. What their customers want depends a great deal on the neighborhood and region of the country where they are located. What sells well in Boston may not work in Texas. Without detailed knowledge of its customer and sales patterns, 7-Eleven was unable to determine which items were selling well, or which items were most profitable to sell in the first place.
This made a difference to the company’s bottom line because of missed sales opportunities, lower profits, and excess store inventory, some of which consisted of perishable goods that had a very short shelf life. Profit margins are very thin in the convenience store business, so a quarter-point increase in sales volume cans spell the difference between success and failure. In 2004, 7-Eleven installed Hewlett-Packard servers and networking switches in all its U.S. stores to implement a Retail Information System. This system collects data from point-of-sale terminals in every store about each purchase made daily by its six million U.S customers and transmits the information in real time to a 7-terabyte Oracle database operated by Electronic Data Systems (EDS).With this database, 7-Eleven keeps track of its purchase transactions and analyzes them to a mass information about customer demand, pricing, and interest in new products, such as the Diet Pepsi Slurpee.

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