With a new store popping up almost every three and a half hours, the retailer has no plans to slow down, the report said. This year, the company said, it will open between 2,000 and 2,500 [image-nocss] stores worldwide, and at least 300 through new stores and at least 200 through acquisitions in the United States and Canada.
(Click here for previous CSP Daily News coverage of 7-Eleven's milestone.)
Citing examples of brands that have overextended themselves in the United States and subsequently been forced to pull back--Starbucks and McDonald's--this kind of growth can set off alarms, said CNN, which asked, "Can 7-Eleven write a different ending to this tale?"
7-Eleven executives said the company has significant room to grow before it has to worry about cannibalization--once a big problem for both McDonald's and Starbucks. Carole Davidson, 7-Eleven senior vice president of finance and communications, said that right now, the company operates in only 30 states and 16 countries. "We do our due diligence," she told the news network. "We make sure there's a need for our brand."
(Click here for previous coverage of 7-Eleven's expansion plans in markets such as New York, Norwalk, Conn., Orlando, Fla., Silicon Valley, Calif., Northern California, New Jersey, Detroit, Washington, Baltimore Chicago, Boston and Los Angeles.)
The company is now a subsidiary of Seven-Eleven Japan, which is owned by Japan's Seven & i Holdings. The chain has its roots in the United States, having started in Dallas in 1927.
BB&T Capital Markets analyst Andrew Wolf told CNN that the convenience sector, after decades of growth, may have reached a point of saturation. With its new appetite for acquisitions, 7-Eleven is acknowledging that it is important to look beyond ground-up store openings. Last year, the company launched an M&A group and has already purchased several assets from Exxon Mobil Corp. (Click here for previous coverage.)
7-Eleven also has a business conversion program, in which it transforms existing c-store operators into its brand. "We're actually taking out a competitor when we do that," said Davidson. The U.S. industry is fragmented, she added, with about 70% of the industry comprised of tiny 10-store-or-less chains, and it is going through a period of consolidation. 7-Eleven may have more locations than any other convenience store in the United States, but it only makes up about 5% of the industry's store count domestically.
Industry watchers say 7-Eleven and its competitors are going to have to do more than open new stores in order to keep expanding. 7-Eleven's advantage, said Wolf, is that while its scale allows for efficiencies, buying power and brand awareness, the company is still very nimble for an operation of its size. "What I think is positioning them well in the U.S. is their strategy to adapt to change and to where the convenience store is going," he told the news network.
Cigarettes are still the top-selling item at 7-Eleven, as is the case with the overall industry, but the company is working to grow the number of fresh items it sells. (The Japanese parent company already has a strong fresh food business, said Davidson.) Fresh can mean better margins and proprietary products that entice consumers to come into stores. Expect to see more hot foods and bakery items (click here for previous coverage).
Scale also allows 7-Eleven to have a robust private-label program (click here for previous coverage), to the point where the chain has been able to take entire categories of products and only offer them in their own brand, said Wolf.
"That speaks a lot of a brand's equity," he said.
The company differs from its industry counterparts in that while 80% of U.S. c-stores sell fuel, according to the NACS; less than half of 7-Eleven's domestic locations are at gas stations. Doing away with the pump today means that a 7-Eleven does not always require as big a footprint as its competitors, said the report; that helps the company churn out new locations at such a dizzying speed, it added.
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