The world may not need 52 versions of the Big Gulp, but 7-Eleven Inc. is hoping that by super-charging its inventory management system and providing simple banking services it can lure more customers through its doors in the future.
it celebrates its 75th anniversary, the Dallas-based chain has teamed up with EDS Canada to help it compete in the increasingly crowded convenience market, realizing it needed more than the Slurpee to stay competitive
With 17 million customers daily in its 22,000 stores worldwide (Manitoba is the world leader in Slurpee sales, selling an average 8,300 of the drinks per store each month), it also needed to upgrade the back end systems managing all that traffic.
Last fall 7-Eleven CEO Jim Keyes launched the chain’s concept store of the future in Plano, Tex. It is a test lab for a range of new technologies including an inventory management system that monitors what customers buy at what times, a wireless device that spits out directions to drivers and a machine that dispenses endless combinations of its signature Big Gulp soft drink.
“”For a CIO, it’s a two-edged sword. The best thing that can happen is the CEO buying in, but it sets a high expectation – he has us on a really quick cycle of innovation,”” said Keith Morrow, vice-president of information systems and CIO for 7-Eleven, speaking to a group of retail IT executives in Toronto Thursday.
In 18 months, Morrow has worked to take a company with seemingly endless legacy applications and move it to a consolidated environment with a common interface known as the 7-Connect Enterprise Portal.
For North America, the IT spend was US$100 million in expenses and US$65 million in capital. At the top of the list was device integration aimed at cleaning up the frontline operations in the individual stores.
“”We had a lot of disparate peripherals in our stores,”” said Morrow, noting that clerks had a separate device to verify a cheque when presented one by a customer.
Using a PIN pad, 7-Eleven introduced a tool that took all point-of-sale hardware at a store counter and created a workflow on one device that walks a clerk through the system.
“”We do US$5 million U.S. in money orders but it went through a separate device and a clerk could print out money orders all day if they wanted to, and funnily enough, that did happened,”” Morrow said.
By eliminating the number of ways systems can be tampered with, 7-Eleven not only streamlines processes but also cuts costs.
“”It doesn’t sound like a big thing, but the expense reduction next year will be $10 million,”” he said. “”Initiatives are great, but only if they reduce expense.””
7-Eleven is also implementing dynamic pricing using wireless and RFID technology Morrow says will change things more than any other technology. It will allow stores to keep up with manufacturer price changes on items such as cigarettes, and mark down items to sell.
“”The donut sitting there at eight o’clock at night isn’t what it was at 6:00 a.m. when it was first set out with coffee,”” he said.
While many of the things 7-Eleven is pursuing are already being done by other retailers, EDS vice-president and chief technical officer Jeff Wacker says the company is going through step change innovation – finding a new way of using existing real estate.
“”If you’re a storefront, what are you going to do when product starts coming in with embedded chips? You have to be prepared for some of the things that might come up and bite you.””
Also being rolled out are kiosks called Vcoms that will replace ATMs in stores. Morrow describes the machine as a “”souped-up Web-enabled ATM.”” Vcoms will issue Western Union money orders, cash cheques, provide change from larger bills and enable payment of bills online. About 1,000 machines have been rolled out to date in the U.S., with another 2,500 planned for the end of next year.
Morrow wasn’t sure when the machines would find their way into the 500 7-Eleven stores in Canada. However, he did acknowledge that alterations might be required, as Canadians are more likely to use a debit card at the point of purchase, as opposed to using a cheque or cash.
“”We work closely with CIBC here and will perhaps be in discussion with them,”” he said.
The Vcom may be a drawing card in the United States because an estimated 100 million consumers in the U.S. don’t have access to credit cards, and 37 million lack basic bank accounts.
By comparison, as of January 2001, 77 per cent of Canadians hold a credit card issued by a financial institution, retailer or gas/oil company, according to the NFO CFgroup, www.nfocfgroup.com one of Canada’s largest marketing and social research organizations.
Debit cards have also surpassed cash as the most popular mode of payment at department stores and supermarkets in Canada, according to NFO.