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Changing Convenience

7-Eleven's DePinto portrays evolving industry

ATLANTA -- A passionate subscriber of Jim Collins' Good to Great blueprint to successful business, 7-Eleven Inc. president and CEO Joe DePinto shared how the world's largest proprietor of convenience is reshaping its model to address long-term consumer trends and evolving competitive landscape.

For the convenience store industry to remain relevant, DePintowhose chain oversees a 7,300-store U.S. network and more than 33,000 units worldwidesaid the channel and its supplier and distribution partners must slash costs in logistics and stimulate consumer interest [image-nocss] through continuous innovation. Challenge the status quo, he exhorted attendees Thursday at the annual NACS Show 2007. Make the change, and we will overcome.

For 7-Eleven, such change centers on four critical components:

Improving product assortment. Driving efficiencies. Improving logistics. Fostering a high performance culture.

Indeed, since his arrival two years ago, DePinto has helped usher a new ethos at 7-Eleven, one built on servant leadership, where top executives act as enablers rather than performance enforcers. Likewise, 7-Eleven has shifted its operational model from a tense balance of company-run and franchisee sites to a nearly exclusive franchise model, one that has heralded harmony between its national franchise association and corporate headquarters in Dallas.

We believe our franchisees are invested in the business and have a vested interest in succeeding, he said. There's an intimacy that local storekeepers can deliver better than a national headquarter-based operation.

For 7-Eleven, success is built on customizing assortment on a regional and local level. It's about increasing a fresh offering to help reduce dependence on fuel and tobacco. It is about working with wholesalers and direct-store delivery (DSD) vendors to maximize each shipment while reducing number of deliveries.

Just as we have to change, we believe our wholesalers have to change, DePinto said, later adding, Some may say changing distribution in our channel is nearly impossible. We don't think so.

Pointing to a slide, he said 7-Eleven's logistical reform mandates fewer deliveries and fewer markets per delivery, while zoning in on four primary areas: fresh food; groceries and tobacco; beverages (liquids); and frozen products.

To further drive costs out of logistics, 7-Eleven is growing in core markets through targeted acquisition, groundups and a new model called Business Conversion Program, or BCP. In fact, just a few days ago, as reported in CSP Daily News, incoming NACS chairman Richard Oneslager, president of Firsthand Management LLC, the retail operating arm of Balmar Petroleum, announced plans to convert 10 of his Colorado sites to 7-Eleven under this initiative.

So, after surveying the industry's challenges with his company's replies, DePinto concluded, We believe our people and culture are true competitive advantages. To remain successful in the long-term, 7-Eleven will stay focused on the brutal facts.

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