7 11 stores case study

PRESENTED BYGROUP-3

OVERVIEW:

1. BACKGROUND OF 7 ELEVEN

i. PRODUCTS AND SERVICES BY 7

ELEVEN

ii. MARKETING STRATEGY OF 7 ELEVEN

1. IMPLEMENTATION OF IT

2. MIS AS JIT (JUST IN TIME)

3. MIS AND DSS AS QUALITY

CONTROL

4. REVISION OF A FEW CONCEPTS

5. QUESTIONS FOR DISCUSSION

6. CONCLUSION AND LEARNINGS

THE BACKGROUND:• 7-Eleven, Inc. was founded in Dallas, Texas in 1927• 7-Eleven, Inc. is the world's largest operator, franchisor and licensor of

convenience stores with more than 24,000 units worldwide. • The company name was changed from “The Southland Corporation” after

approval by shareholders in 1999.• IYG Holding Company, a wholly owned subsidiary of Ito-Yokado Co., Ltd.,

and Seven-Eleven Japan Co., Ltd., has owned a majority interest in 7-Eleven, Inc. since 1991. Seven-Eleven Japan operates more than 9,400 7-Eleven stores in Japan and Hawaii under an area license agreement with 7-Eleven, Inc. 7-Eleven, Inc. stock is traded publicly on NYSE under the symbol SE.

• 7-Eleven purchases a wide variety of goods and services on the local, regional and national level. They are not a manufacturer, so every item we sell in our stores and all goods and services we use in day-to-day business operations must be supplied by vendors.

• 7-Eleven has been the leader in franchising and licensing in the convenience store industry for 46 years. The company entered franchising in 1964, signed its first United States area licensing agreement in 1968, and signed the first international licensing agreement with Mexico in 1971.

• OPERATING IN Australia, Japan, Taiwan, Malaysia, Philippines, Singapore, South Korea, Thailand, China, Hong Kong, Macau, Scandinavia, United States, Canada AND Mexico.

PRODUCTS AND SERVICES:1. Among 7-Eleven's offerings are private label products, including Slurpee, a

partially frozen soft drink introduced in 1967.

2. Big Gulp introduced in 1980 that packaged soft drinks in large cups ranging in size from 20 to 64 US fluid ounces (0.59 to 1.9 liters)

3. Citgo, the gas brand sold at many locations up until 2006; as well as Chief Auto Parts, which had locations adjacent to or near several 7-Eleven locations.

PRODUCTS AND SERVICES:4. They bought White Hen Inc. on August 10, 2006, mostly in or around the

Chicago area, and plans to convert all of the remaining White Hens to 7-Eleven stores

5. Since 2005, the company has offered 7-Eleven Speak Out Wireless, a prepaid phone service where a cellphone can be purchased directly from a 7-Eleven store in the US and Canada and activated on the spot.

6. On November 3, 2009 that it was releasing two low-priced proprietary wines in the United States and Japan (under the "Yosemite Road" brand)

MARKETING STRATEGIES OF 7 11:1. July 11 is marketed as "7-11 Day" in the USA, during which participating 7-Eleven stores offer up

to 1,000 customers a free Slurpee of their choice of 7.11 oz.2. 7 Eleven Cycling Team is an early example of their sports marketing. The 7-Eleven Cycling

Team, later the Motorola Cycling Team, was a professional team founded in the U.S. in 1981 under Jim Ochowicz, a former U.S. Olympic cyclist. The team lasted 16 years under banner of 7 11.

3. Since the 2007, 7-Eleven began a promotional partnership with the Chicago White Sox to begin home night games at 7:11 PM.

4. In anticipation for the July 2007 release of The Simpsons Movie, 7-Eleven turned 12 of its North American stores into Kwik E Mart. many regular items, such as coffee and sandwiches, had special Simpsons-themed wrapping and packages. As part of the movie promotion, 7-Eleven held Simpsons contests as well, which one entered by buying certain products in 7-Eleven stores. This promotion turned out to be a huge success for 7-Eleven, with Simpsons fans driving as far as hundreds of miles to buy the special themed merchandise. It also resulted in a 30% increase in profits for the converted 7-Elevens.

1. Year 2004 7-Eleven installed HP servers and networking switches in all US stores for implementation of RIS (Retail Information system) .

2. This system collect data from point of sales terminals in every store and transmit the same to central database.

3. 7 T.B Oracle Database is managed by EDS to store 6 Million US customers transactions every day across country.

4. Analysis of above database to help understanding of

Customer Demand

Pricing of each product

Interest in new product

Which items are selling in which store

Seasonal demand of item ,

which items are most profitable etc .

IMPLEMENTATION OF IT:

IMPLEMENTATION OF IT:

Use of IT Management help in

1. Understanding of sales trend

2. Improve product assortment

3. Eliminate slow moving product from inventory.

4. Increase same sale by stocking products that are high in Demand

5. Develop New product according to Customer needs (i.e fresh food)

6. Help to determine which item to order exact quantity for each store.

7. System consolidate the order and transmit to same to Suppliers .

8. Use of this system to get information for customer choice and Preferences.

MIS AS JIT:

• Inventory arrives at stores just as it is needed, a minimum inventory is kept on the shelves.

• It reduces the cost of investing in and keeping inventory, as well as the cost of spoilage, they seldom run out of stock.

• Most stores have arrangements with their suppliers for quick delivery of products they sell, and so they do not need large inventories.

Other uses of the information system are :

1. Electronically transmit orders to distribution centers and manufacturers (via satellite), 2. Determine which products to keep in each store (70 percent of the products are

replaced each year),3. Determine how much shelf space to allocate to each product.4. Track employee performance (for rewarding high performers).

MIS AND DSS AS QUALITY CONTROL:

1. The company maintains a high level of quality.

2. A team of 200 inspectors visits 7-Eleven stores regularly. Even the company’s president

occasionally drops into stores incognito to check quality.

3. Quality control data are collected and analyzed continuously by a computerized decision

support system at headquarters.

4. Brands that do not meet strict quality requirements are immediately discontinued.

5. Quality is extremely important in USA, where fresh hot meals are sold at convenience

stores

BEFORE WE PROCEED….. A FEW CONCEPTS TO REVISE

Response Strategy(Porter)

Response Strategy (Porter and others)

Porter’s Model in ActionPotential New

Entrants •Foreign general merchandiser and distributer•Established retailer shifting strategy to discounting and megastores

Substitute Product and services

•Home shopping network (TV)•Electronic shopping (Internet)•Telemarketing •Purchasing Clubs•Door to door sales

Bargaining power of Suppliers

•US Product Manufactures•Foreign Manufactures •IT Product and service suppliers•Business Partners

Bargaining Power of Buyer•Consumer in small Town USA•Consumer in Metropolitan in USA•Canadian and American Consumers•Other foreign Consumers•Corporate buyers

Intra industry Rivalry

•Wal-Mart

Porter’s Value Chain Model

Inbound logistic

Operations

Sales and Marketing

services Outbound Logistic

Automated warehousing system

Computer controller machining system

Computerized ordering system

Equipment maintain ance system

Automated Shipment scheduling systems

Administration and management electronic scheduling and messaging system

Human resource work force planning system

Technology computer aided design systems

Procurement computerized ordering systemFirms value chain model

SOME QUESTIONS TO DISCUSS:

WHAT ARE THE BENEFITS OF RETAIL INFORMATION SYSTEM OF 7-11 ?

1. The store can keep record of the daily transactions and saves data in database(EDS).

2. Analyzes information from above, about customer demand, pricing of products and

customer’s interest in new products and identifies fast selling items / seasonal items /

not-so-profitable items.

3. Managers can identify sales trends, improve products, eliminate slow moving products

from inventory, increase same store sales by stocking products of high demand.

4. Store managers get information of weekly/daily/monthly sales to determine which item

to order and exact quantity to need for their stores.

5. Above info + OTS knowledge of neighborhood Final Ordering Decision


WHY KNOWING THE CUSTOMER IS IMPORTANT FOR 7-11 ?

To check the other way round technically … What is CRM and why it is important ?

Goals of a Customer Relationship Management Plan

1. Increase customer retention and company profits.

2. Better serve the customer and increase competitive advantage.

3. Build and maintain a relationship with your customers, so that you know their current

and future needs and can incorporate trends into your strategy.

4. Manage customers through the sales pipeline by creating a relationship.

Moreover …. “Studies consistently show that it costs 8 times more to cultivate a new customer than

to keep an existing one.”

7 Eleven is a retail outlet – CUSTOMER IS GOD !

IN TERMS OF PORTER’S MODEL , WHAT STRATEGIC FORCES DOES THE RIS SEEKS TO ADDRESS?Bargaining Power of supplier

In order to counter Bargaining power of supplier , company need to supply from multiple supplier and different products as for as certain product specification are meet .

In 7- Eleven Product as to meet quality specification and deliver JIT and therefore the force of suppliers are decreased .

Substitute Products and services

This can be encounter by innovative approaches with the help of IT

In case of 7-Eleven the IS supported the creation of new innovative products and services , that no other retail company offer at that time.


WHICH OF THE STRATEGY DESCRIBED IN THE CHAPTER DOES TO THE RIS SUPPORTS?

• Cost leader ship- Providing products and service at lower cost in the industry (JIT )

• Product differentiation- Being unique in the industry

• Customer focus- Selecting niche market and achieving cost leader ship and product differentiation , taking customer taste ,choices and preferences .



Referring to Porter’s 5 forces model …


Referring to Porter’s value chain model …


Referring to Porter’s 5 forces model …

CONCLUSION & LEARNINGS:

7 11 stores case study

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