SCOTTSDALE, Ariz. -- Jim Keyes’ passion for aviation is an apt metaphor for the futuristic retail executive whose vaunted career path has enjoyed both soaring successes and, most recently, turbulence.
The former 7-Eleven executive was brought in more than two years ago by Yucaipa Cos. to save the financially troubled Fresh & Easy concept. But late last month, the company he tried to save filed for Chapter 11 bankruptcy, with plans to shutter all stores this month.
That did not stop Keyes from sharing his retail career highs and lows during an engaging and intimate interview with CSP founder and Winsight chairman emeritus Paul Reuter at the 2015 Outlook Leadership conference in Scottsdale, Ariz.
Keyes touched on his 21-year career at 7-Eleven that saw him help guide a highly leveraged chain out of bankruptcy and navigate it toward a steady growth trajectory that acquired companies like White Hen Pantry, and invested millions of dollars in commissaries, more sophisticated supply-chain logistics and sales software solutions.
After holding executive posts, Keyes served as president and CEO of 7-Eleven from 2000 until 2005, retiring when Japanese minority stakeholder Seven & I Holdings Co. acquired control. But putting around on the golf course only to see his handicap rise--“I confirmed I’m terrible in golf”--Keyes eyed a return to the world of retailing.
In 2007, he was named chairman and CEO at Blockbuster, the former national movie-rental powerhouse that prior to Keyes’ arrival was struggling against the likes of Netflix, TiVo, Redbox and the nascent universe of streaming video.
Keyes said his original intention was more audacious than trying to resurrect only Blockbuster. A believer in the synthesis of brick-and-mortar and technology, Keyes told the audience he aimed to get backing to acquire Radio Shack as well, and to ultimately create an entertainment platform akin to an Apple or Verizon store, where customers would shop at local outlets to stream movies and other forms of entertainment onto assorted platforms.
He hoped to usher in a “convenience store for electronics.” But there was a problem. Blockbuster was publicly traded and Keyes believed the only chance to turn the company’s fortunes around would be to take it private.
“Had we taken Blockbuster private, I think we would have been fine,” he said, blaming Wall Street pressure to deliver quarterly profits at a time the company required time to pursue a new direction. Further cementing Blockbuster’s epitaph was its misguided attempt in 2008 to purchase a foundering Circuit City, a move roundly criticized on Wall Street. The deal did not go through.
Blockbuster declared bankruptcy in 2010.
In 2013, after Yucaipa purchased the 167-unit small-box Fresh & Easy chain launched by U.K.-based Tesco, Keyes spurred a turnaround plan that called on stores to focus on convenience, low prices, ready-to-eat meals, wider selection of craft beer and more fresh foods. He also brought back the defunct Wild Oats organic brand.
Despite the efforts, store sales flagged and the company last year began paring store count.
Keyes told the Outlook audience that he envisioned a more focused store with 3,000 to 4,000 SKUs.
“The concept was sound,” he said, lamenting that Tesco had the right concept but wrong store size.
Finding the Keyes
With his successes at 7-Eleven, and despite the failed resurrection attempts at Blockbuster or Fresh & Easy, Keyes remains excited about the future of retailing, of the consumer desire for real-life, brick-and-mortar experiences.
The 60-year-old retail veteran offered some additional thoughts:
- 7-Eleven’s franchise model. “A franchise system can be amazing, powerful. … But at the end of the day, every individual store has to stand on its own.” He added that weak franchised units can undercut the total brand.
- Technology’s effect on retail. “There’s a notion that technology is going to take away brick and mortar. I really don’t see that.”
- Tesla. “I’m a car guy,” he said. Intrigued by the latest technology, Keyes purchased stock in Tesla and has since purchased one. “I see it as much a game changer in the car industry as the iPhone was to the (mobile) phone industry.”
- Retailing. “Retailing is the most interesting profession you could ever have,” he said, later adding, “Change is real, especially at retail. The more you can embrace it, the more successful you will be.”
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