We're a Small Box'

7-Eleven to test consolidating beverage deliveries to stores

DALLAS -- Next year, 7-Eleven plans to test centralized distribution for bottled and canned beverage deliveries at 300 stores in Los Angeles, Joe DePinto, president and CEO, told The Dallas Morning News. DePinto was the featured speaker Tuesday at Southern Methodist University's Cox School of Business Ernst & Young Management Briefing Series.

At 2,400 square feet, the average 7-Eleven has limited storage space and no docks for unloading, he said. "All goods go through the same door as the customer. Distribution systems were built for big-box retailers, and we're [image-nocss] a small box."

The average 7-Eleven gets 62 deliveries a week, including 18 to 20 deliveries from beer, water and soft drink makers such as Anheuser-Busch and Coca-Cola. "This creates a challenge for a store," he told the newspaper.

In a large market such as Dallas-Fort Worth, the trucks cross paths all day long, said the report. If trips were consolidated, deliveries would be more accurate, shoppers would be less inconvenienced and fuel costs would be lower, DePinto said.

Several years ago, the company consolidated fresh-food deliveries to its stores through a network of its own bakeries. Eventually, if the Los Angeles test works out, DePinto added, he wants to consolidate distribution for groceries, frozen foods and newspapers and magazines.

The company was taken private in 2005 by its largest shareholder, Japan-based Seven & I Holdings Co. It had worldwide sales last year of $46 billion from 35,000 stores, including $16 billion in the United States from 6,200 stores. On a worldwide basis, a 7-Eleven opens every 4.5 hours, and by 2020, the chain could be three times as big, DePinto told the paper.

In the United States, 7-Eleven is growing by building stores, acquiring regional chains and bringing individual store operators into the 7-Eleven fold, the report said. About 75 independents have been converted under the Business Conversion Program (BCP) the company started a couple of years ago. After conversions, sales have increased from 40% to 100%, DePinto said. "We think we have a home run with this program."

Under a $1 billion multiyear remodeling program, all U.S. stores are being updated, and one-third will be done by year-end, said the report.