NEW YORK -- 7-Eleven Inc. is planning to conduct an experiment in Southern California later this year to eliminate inefficiencies from direct-store delivery (DSD) that will bundle rival marketers' brands on one truck from consolidated warehouse locations, president and CEO Joe DePinto said following a presentation at Beverage World's Beverage Forum 2008 in New York City last week. According to Beverage Business Insights magazine, the idea is not to bypass DSD, but to minimize delivery runs.
During the session, Building Enduring Partnerships: Key Retail Issues Requiring Collaborative Solutions, [image-nocss] DePinto decried "fragmented, inefficient" DSD delivery system that generates chaos at store level, cluttering small parking lots during high consumer traffic periods while leaving fast-moving items out of stock and slower-moving items gathering dust, the publication said. DePinto called for migration to more green, efficient system by which "like products are delivered on the same truck."
The panel discussion explored issues facing retailers in their effort to compete, profit and grow while facing channel blurring and consolidation; continued pricing pressures; and margin compression from cost increases, category fragmentation and SKU proliferation, among other challenges. It offered opportunities to address these issues through a partnered approach with suppliers. Other speakers joining moderator Derek Blackburn, vice president of BMC Strategic Associates, New York; Bill Sinnott, chairman of the executive committee for D.L. Ryan Cos. Ltd, Wilton, Conn.; and Tim Brown, executive vice president retail operations with Nestlé Waters North America Inc., Greenwich, Conn.
He said the approach would resemble the more-consolidated distribution systems of the U.K. or Japan.
DePinto added that the experiment would be voluntary, but that he expects enough key players to cooperate so that he can launch it sometime after the conclusion of the summer selling season.
So far, Anheuser-Busch and Coca-Cola are believed to be aboard, Beverage Business Insights said, adding that Dallas-based 7-Eleven "almost certainly will be gunning for Miller and Pepsi and maybe others" to be part of the test.
Such experiments are central to a message that DePinto has been evangelizing about for some time. Speaking at last year at the NACS Show, he exhorted attendees to "challenge the status quo. Make the change, and we will overcome."
For 7-Eleven, success is built on customizing assortment on a regional and local level, he said. It is about increasing a fresh offering to help reduce dependence on fuel and tobacco. It is about working with wholesalers and DSD vendors to maximize each shipment while reducing the number of deliveries. "Just as we have to change, we believe our wholesalers have to change," DePinto said, adding, "Some may say changing distribution in our channel is nearly impossible.… We don't think so."
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