This past May, Dennis Lane’s 7-Eleven marked 40 years serving customers on Adams Street in Quincy, Mass. The decades-long streak is remarkable, and it is clear to Lane what has helped fuel it: milk.
In an era when c-store sales of milk are down or flat, Lane’s story is all the more remarkable. It underscores that the convenience channel remains ideally suited to serve a local community’s needs.
“It’s been known in the c-store industry that if you’ve got a healthy milk business, you’ve got a healthy store,” says Lane, a longtime 7-Eleven franchisee and president of the New England 7-Eleven Franchise Owners Association. While he declines to share specific numbers on his milk sales, Lane says his store sells “hundreds of units” per day, and at times sells 12 times the national c-store unit average, regularly outpacing other 7-Elevens in his market. He also contends that the store leads in sales of take-home half-and-half and cream.
“It’s the traffic driver,” says Lane. “If you’ve got a healthy milk business, you’ve got traffic. With traffic comes a market basket. Milk is its own success story.”
Lane’s dairy supplier is one of his biggest supporters. According to Frank Whorfe, director of c-stores for Garelick Farms, Franklin, Mass., a division of Dean Foods and one of the largest milk brands in the Northeast, Lane simply understands the category.
“He dedicates the right amount of space to milk,” says Whorfe. “He recognizes milk as a destination item and uses milk to encourage the purchase of other items.”
While Whorfe cannot vouch for the store’s specific sales, he agrees that it is an unusually high-volume site, crediting Lane’s attention to handling—monitoring temperatures, keeping product rotated—staying on top of point-of-sale (POS) and pricing signage, and the store’s stellar customer-service record.
“He sets the standard for the way you should handle products,” he says. “Dennis is very passionate about what he does; that’s why he succeeds.”
CONTINUED: Master the Basics
Master the Basics
Talk to Lane about milk, and it becomes clear his is not a homogenized view.
“Some of my fondest memories of being a kid is my mom sending me to the variety store for milk and giving me change to buy a candy bar,” he says. “Milk is the most personal purchase in a convenience store.”
From his standpoint, there is no special magic to his strong milk business. It begins with his store’s location—in this case, a main street flanked by single- and multifamily homes in a blue-collar community.
“It’s almost like the perfect storm of neighborhood businesses, and homes to support neighborhood businesses,” says Lane. “It’s one of the things that makes my neighborhood a great milk neighborhood.”
The store has two cooler doors out of 12 dedicated to dairy, with 90% of the space filled with milk and milk products. About 90% of his sales are gallons, with 1% milk the “superstar” of the store. Sometimes—before a Nor’Easter is due to slam into the area, for example—customers have been known to pick up several gallons of milk at a time.
But it’s not rock-bottom pricing that is driving sales, Lane contends.
“We couldn’t build our milk business on price—although we’re extremely competitive,” says Lane, who typically keeps gallons priced below supermarket retail, and will match competitors’ prices. Of course, this relationship becomes strained when milk prices are on the upswing; in May, a gallon of fortified whole milk averaged $3.735 per gallon, the highest price since September 2008, according to the Bureau of Labor Statistics. At press time, Lane’s 7-Eleven was selling gallons of Garelick Farms 2% milk for $2.89.
“It’s a commodity,” says Lane. “What we do to offset that is we keep the experience personal. We tell customers, ‘Sorry, milk went up—we didn’t go up, the milk market did.’
“We take great pains to build relationships with our customers, and that means so much more than price,” he continues. “Anyone can lower price. ... Saving a dime or 20 cents on a gallon of milk means less to me than being treated well.”
This personal touch has built up a loyal customer base among families in the neighborhood, many of whom are in their second or third generation. “The kids [that were] catching the school bus on the corner near my store in the ’70s and ’80s are sending their kids in for a gallon of milk and hopefully a Slurpee or candy bar,” he says.
Employees use suggestive selling to encourage a milk purchase from customers, and they won’t hesitate to help carry the gallons to customers’ cars. The team also stays on top of freshness. “We fill the milk multiple times a day, and we rotate it,” Lane says. The store has an internal system of rotation it follows for the category. “We pride ourselves on the fact you will never get a gallon of bad milk in my store.”
Similar to foodservice, there is a strong link between store cleanliness and perception of milk freshness. “People won’t buy milk in a dirty environment, one that’s not clean and bright,” he says. “Milk, to some degree, is an emotional experience to the families. Mom’s keeping the family healthy, well-fed, serving them fresh milk.”
CONTINUED: Milking a Category
Milking a Category
According to 2013 NACS State of the Industry figures, c-store milk sales fell 4.1% in 2013 to $26,592 per store, while margins dropped more than 8% to $7,428 per store.
Here, Lane is no exception to the trend. Like other retailers, his store has seen a slowdown in the growth rate of milk sales, which he pins on a shift in consumers’ milk-buying habits. “I think there’s been a cultural change, a shift in that traditional domestic ‘Pick up milk, bring milk home’ [routine],” says Lane. At the same time, he takes comfort in the stability of his sales, pointing out that retailers not seeing erosion are ahead of the game.
The rest of the industry, however, has lost its mooring in the category, he believes. “Who’d have thought we’d be selling bottled water and that electronic services would become such an important part of our business?” says Lane. “But milk has really been a constant in my business.
“If you’re a neighborhood grocery store and want a strong center of the store and strong neighborhood business, as hokey, corny and boring as it sounds, focus on milk. Nothing brings people through the door like milk, and it’s as true today as it was 40 years ago.”
The Dairy King Talks Milk
7-Eleven franchisee Dennis Lane discuss details of creating a well-developed dairy section.
- On skim, 1% and whole milk: “In families, there is often one individual who prefers skim. When the family also buys another SKU, it’s usually the 1%. What we found is, once we own that 1% customer, we own all of their dairy buying.”
- On cross-category relationships: “We’ve done some research that shows 50% of our milk customers buy cigarettes. I would say the phenomenon is related to the fact that the adult smoker—Mom or Dad on their way home from work—is saying, ‘Hey, we need a gallon of milk; I’m in the store anyway, and sooner or later will need cigarettes or a candy bar, or want a lottery ticket.’ [Milk] gets them into the store. It’s truly a traffic builder.”
- On the single-serve opportunity: “Most single-serve milk is sold during the morning coffee rush. It’s someone who’s going to have cereal at the office, or just drink it as an alternative to coffee. There is a unique single-serve customer—it’s someone who just grew up drinking milk.”
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