7-Eleven "stays the course" as consumer confidence hits 16-year low
DALLAS -- With the Consumer Price Index at a 16-year low, hitting 57.2 on Tuesday compared to 54.6 in October 1992, even the staunchest of convenience store retailers is taking a hit. And for 7-Eleven Inc., fewer dollars in consumers' pockets means "staying the course" and not overreacting, CEO Joe DePinto told CSP Daily News.
"I wish we had a better economy right now, but everybody's in the same boat here," he said. "Consumer demand is down given that people are stretched from a discretionary income standpoint.… We're trying to update our product assortment to be more viable to [image-nocss] a customer that has less discretionary dollars."
How does DePinto know profit can rise even as the economy falters? He keeps an eye on other retailers that are showing growth.
"Look at Costco," he said. "The other day they announced their sales were up 13%. What's Costco doing? It's a value-oriented organization. We'll be smart about it by not overreacting."
DePinto also wisely recognizes that gasoline prices, while problematic, are only part of the economic challenge consumers and retailers are facing.
"When gas hit $2.50 a gallon, we were somewhat shocked that the economy was as resilient as it was, he said. "But I think when you couple [high gas prices] with what happened from a sub-prime [mortgage] perspective, and then you throw that in with what's going on with ethanol and all corn-based derivatives driving up commodities, a weakening dollar driving up commodities, all that converging at one time has put more pressure on the consumer than I think we saw just eight months ago and consequently things are tight right now."
"Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy," said Lynn Franco, director of The Conference Board Consumer Research Center. "Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, [our research] suggests little likelihood of a turnaround in the immediate months ahead."
Thus, DePinto reiterates 7-Eleven's current stance: "Like any other good retailer, we're going to make sure that we've got a product assortment that's meeting their existing and current needs."