Who's Mining the Store?
In the first of a series of "View from the Top" interviews, 7-Eleven President and CEO James Keyes says the role of IT is to help the company sell more stuff by creatively using point-of-sale data.
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We discovered that, with technology, we can track every item literally every hour and use that point-of-sale data to drive revenue. In effect, we have come full circle in our ability to respond to the needs of the customer. Because now, we can use technology as a surrogate for being able to talk to every customer who walks in the door. We don't just have to rely on items we know will sell quickly, like 12-packs of beer; we can actually stock something that we're taking a chance on. And in short order, we'll understand how the customer responds.
Before we had much technology in the stores, we used the approach of "space selling." To build sales and traffic, you'd use big displays and make customers literally trip over the product. But we discovered that you don't need a whole door full of Coca-Cola Classic for it to sell well, you can sell just as much with one shelf. That's freed up space to try something new—let's say Red Bull. We partnered with Red Bull and said, Let's give it a couple of shelves. When customers went to buy their Coca-Cola, they saw an equivalent display of Red Bull. And pretty quickly, we discovered that using space to drive new opportunities, rather than using it to [push known products harder], allowed us to increase our sales-per-square-foot in the stores.
What convinced you that technology could help generate sales?
This got its start at our stores in Japan. Here in the United States, we had recognized in the '80s that the future of convenience stores was going to be to sell proprietary products and fresh foods. They are unique, have higher margins and drive more store visits. Our answer at the time was the hot dog grill. Hot dogs were about the only thing that we could manufacture in the store. We were wildly unsuccessful in using [outside providers] or any more efficient means of producing high-quality food.
I went to Japan in 1990, and I saw that there were customers lined up to buy sushi at 7-Eleven stores. And I'm scratching my head, saying, You know, we can't sell a decent hot dog, and they're over there selling high-quality sushi; how are they doing that? The answer was this: We had licensed two 7-Elevens in Japan 30 years ago, just as scanning technology became available. They grew up with scanning in the stores. They discovered that they could manage a fresh-food manufacturing capability using that data. They created commissaries, bakeries, places where they could make high-quality, fresh rice products.
