Convenience redefined. That’s what 7-Eleven Canada under Vice-President and General Manager Doug Rosencrans is talking about with Convenience Store News Canada. Convenience where and how customers, urban or rural, from global backgrounds, young and old, want it. Convenience that comes to customers through e-delivery or is ready for pickup after e-ordering. Fresh foods and baked goods that turn 7-Eleven into an eating occasion. It’s all on the table…and much more.
What’s your target for growth in Canada?
We’re at 650 stores. There’s a targeted number of 20,000 for the U.S. and Canada combined. So right now, we’re a shade under 10,000 with the recent U.S. acquisition of Sunoco. But the goal by 2027 is to reach 20,000. Our short-term goal within the Canadian business is to be at 1,000 by 2020.
Will those be new builds, or rebranding?
It will be a combination of a number of things. The most important aspect for us is to be where the customer wants us and needs us, regardless of how we manage to get there. The key message for us, or the key consideration, is to be close and convenient for the customer. So, where are they? And how do we put ourselves in the position to take care of them and serve them?
Urban vs. suburban vs. rural breakdown?
All of the above, depending on whether you’re talking about servicing a more rural population or an urban population. We’re comfortable in any of those scenarios.
How do we be close and convenient for those customers? The store format and store size all depend on who we’re trying to take care of. We can flex from 3,000 sq. ft. and we’re now in three 500 sq. ft. spaces. We operate in airports in Vancouver and Toronto today which are in smaller formats. As urbanism continues and customers move more to public transportation, we could potentially be looking at mass transit stations like many of our sister brands around the world. That’s a space that we would look at, again because it’s convenient to the customer, it’s close and on their way. We have to flex to meet their needs and their patterns rather than, okay I’ve built it, now show up.
What are some of the key trends that you’re looking at?
Urbanization is one. Additionally, how people eat and what they eat. Food and proprietary beverages are clearly at the centre at our strategic map. Customers want more from their food. (As a customer) I want to know what’s in it, I want to know what the caloric makeup of it is, I want to be able to know what those ingredients are. Nutritional transparency is important. So, when we look at how we develop, we have to keep those things in mind.
I also have less time as a customer, so I want all these things at a value. You can traditionally value price, but we believe it involves these other factors as well: quality, speed of service, my experience in the store. I have to be able to deliver that when the customer wants it.
That then takes us into the omni-channel consideration. It’s no longer good enough for us to have just a box for the customer to come visit. Working habits have changed, patterns have changed, school has changed. So, customers are looking for different ways to get the goods and services they need.
How have your customers changed?
Our customer base has switched over time, more from a blue-collar, traditional, “got a set work schedule on these days, I come in the store every day at this time,” to what I’ll call a gig-economy. People are moving all over the place, working at different times, working in different locations. It’s not always convenient to come to us, so how do we go to the customer? How do we take our business, the fact that we have 650 points of light within Canada, 650 distribution points, to be able then to reach that customer with those goods and services that they need? We now need to be able to go to them, rather than just relying on them to come to us.
What does that mean? Are you talking about delivery?
Yes, it’s really the digitization of convenience. How do we move into being able to work with this in order to meet the customer’s needs? So, if I want a Slurpee and a bucket of chicken and a salad for lunch, but lunch is at 3 o’clock in the afternoon and I really don’t have time to go… They can go to their phone, order what they need, we can deliver it. Or if they want, they can come pick it up, it’s up to them.
Could I be able to order things that I like, like the 7- Select all dressed chips? Fine, maybe we put that on Amazon for them to be able to go and order them directly. E-commerce comes into it directly.
You partner with others as well, it won’t just be your own proprietary 7-Eleven Inc. delivery?
It could be a mix. The U.S. is piloting right now a propriety network (in Dallas). At the same time, we’ve partnered with a company called NOMI here in Canada to begin delivering. So, we’re gradually moving our way through starting in the west and bringing that service to our customers sometime this year.
We’re learning from that, enhancing our offer, but again it’s a way for us to bring 7-Eleven to our customers, as they want it, when they want it, rather than say, okay you have to come to us. This is a way for us to have direct communication and provide the service they want.
You’re redefining convenience
You can get a 591ml coke at Best Buy. There’s so much blurring that’s going on in the channels, whether it’s pharmacy, grocery, QSR, etc. but at the end of the day the customer’s making all the decisions. They also hold the microphone for feedback through social media. And so, the experience becomes just as important as anything else. We can deliver an experience that is memorable and good, as well as what they’ve actually ordered, the physical items. That’s how we believe we’re going to win.
Being open 24-7, having a store in a convenient location, maybe you have gas, maybe you don’t, that’s table stakes. Our job is to try to stay at least with, if not a step ahead of where the customers are, so that we can stay ahead of what they demand.
You mentioned competition: pharmacy, grocery, dollar stores. Whom do you see as your biggest competitors?
We are all competing for a finite number of customers. It’s many times a shared customer. We have to be cognizant of how we appeal to them, so I think we’re all competing for that finite tool. I have to make sure as a brand we differentiate ourselves from all of them in one way or another. I don’t have one particular one (competitor) in mind because our business, our industry touches the fringe of so many of them, some more than others. And again, that channel blurring has occurred: pharma has been getting into packaged beverages, QSR is always involved, grocery has now gotten into more single serve, so we have to consider all channels and how are they servicing the customer.
Quite frankly, if the experience is better at those stores, if that value equation is better in the customer’s mind at those stores, then that’s where they’ll go. It won’t matter whose name is out front. I’m more concerned with what the customers think, and am I providing the flexibility that we have within 7-Eleven, to tailor the assortment for that neighbourhood, to that corner, to that customer base, so we can appeal to that group more directly than perhaps somebody with a static offer. That’s our ability to differentiate.
So, you have different sized stores. What about the look of the store? Do you see that changing? Starbucks has just launched a different kind of Starbucks which doesn’t even have the mermaid, it’s a totally different Starbucks. Would 7-Eleven ever go down that path?
That is something we’re discussing with our partners in the U.S. There is a group looking at the store of the future and what it looks like. In Canada we ask that question even more locally. We’ve got lean bars as part of our typical package, but what about store construction that offers customers a place to eat? As we look at different configurations we’re comfortable looking at seating areas, we’re comfortable looking at stores that may have two floors in them. Again, it’s, are we close to where customers want us to be? We’ll adapt accordingly.
We talk more in terms of elements than we do a specific store design, of what we want to have in a store. There will be things that we will always have in there. Slurpee will always be there; it’s an iconic brand in Canada for sure.
What percentage of 7-Elevens include a fuel offer as well?
Right now, we’re about 50% and that’s the result of the Imperial store acquisitions in Alberta and BC in 2016.
How important do you think the whole fuel offer is to 7-Eleven’s success?
I think it’s important from what our customers expect. It is a business that in many areas they expect us to be in. But one of the things that’s unique about 7-Eleven versus many other convenience retail operators is that we don’t necessarily need fuel to be successful with our customer. We can operate without it. We can open in a central business district. We can open in the first floor of a high-rise building, we’re comfortable operating in those non-fuel spaces. It’s something that we’re very comfortable operating with, we’re happy offering it to our customers, but we don’t need it to be able to bring the store to them.
How do you see foodservice in terms of 7-Eleven’s growth strategy?
It is our strategy. Fresh food and proprietary beverages for sure. If you take everything that’s sold within our store – packaged food, fresh food, packaged beverage, proprietary beverage – it’s 43% of our business in Canada. People come to us for food, and that is what they expect from us.
The evolution of food is something we have to stay ahead of. Better-for-you options are certainly what customers are looking for, options besides the traditional taquito and big bite and things like that, that are more indulgent. They want offers that are going to be easy to bring on the go. It’s a convenience store, and we don’t want to be an inconvenient convenience store. So, we have to balance the expectation of freshness – them wanting to see the product is fresh – so that’s where our proprietary food centres and the daily delivery of fresh items come into play.
Other items we finish in store. For example, our fried chicken is all done on site, it’s breaded on site, it’s fried on site, it’s served on site to our customers. So that helps again with understanding where my food is coming from. The customer wants to understand. But that evolution will have to continue. So, if I go back to the close and convenient theme, the neighbourhood in Richmond, BC is probably going to be looking for a different food item than a neighbourhood in Hamilton, Ont. How do we tailor that assortment so we’re delivering what those local customers want?
So, there’s customization.
That’s the secret to 7-Eleven: how you customize for that neighbourhood. We have a very high expectation that our operations team understand who shops your store.
When we go in to visit, one of the first things we’ll ask is, tell me about your customer. What do they need, who is your customer, who is coming in and shopping, and it’s not a statistical conversation, it’s who do you see coming in your door? It may not match up with who’s in your neighbourhood. If it doesn’t, how do we increase the traffic coming in? Our interpretation of that message is we don’t have what those customers want. So, it’s our role to go and find that and bring it into the store. It helps our business grow and also, we become a part of that community because we’re tailoring to the community around us.
You have kitchens now. That opens up questions of staff training and different types of staff. What’s the impact in terms of staffing, food safety and training?
It’s ongoing. It never stops. We have designated individuals who are trained to be cooks with chicken, and they are certified by our quality assurance team. Between the quality assurance team and the training team, they’re responsible for building the programs that are then delivered to the stores through a combination of online learning, but then also hands-on practical testing of knowledge. That certification is ongoing.
Now you’re in the food business, that means pathogens.
We understand those risks and we do everything to mitigate them because it’s what our customer wants to eat. To make sure that we’re living up to our standards, we have a scheduled third-party audit for all of our stores that comes in specifically around food and proprietary beverages.
I mentioned the quality assurance. We have a quality assurance manager internally. In 2016 the chicken program expanded to 220 sites, and this individual was brought on board. That’s his background, that’s his entire role. He is involved with building the training, ensuring the delivery of it, the certifications. He not only looks at our store kitchens, he’s looking at our food centres, he’s looking at our bakery operations. He is involved in every aspect of our quality assurance for food.
What are your top five sellers?
Chicken is certainly one of them, but that’s only in about a third of the locations right now. Our top sellers are taquitos, and we have sold more than one million croissants, which are fresh baked in store, over the last year. Wings are certainly a popular item; we’ve sold more than 28 million wings over the last year. When you look at the amount of fruit we sell, cut and whole, we’re close to five million if you combine those units together between whole fruit, and cut fruit and bananas.
What are some of the other food items you’re looking at bringing on?
Rather than the specific item, it’s more the theme around how we service that need for the guest. “I don’t have much time to eat, I’m going to make a decision quickly, I might even have it delivered, or I’m going to come in and get it quickly. And I might even do it over the phone and come get it. So, it’s got to be easy for me, and it’s got to be portable for me.”
We’re going to keep looking for ways to bring in new products rather than line extensions. We’ve had a look at the bake-in-store opportunity. We cook, we bake in-store croissants, brownies, apple strudels, that’s another area that we only began to work in a couple of years ago, so we’ll expand on that opportunity.
If you were to look at 7-Eleven five years from now what do you see?
Where we’re as much of a digital service provider for our customers as we are a bricks and mortar retailer. In other words, 7-Eleven will be the omni channel that we have envisioned today. Whether you’re online, in store, on your phone, you can connect with us, and we’ll respond. That could be with food, it could be with non-foods….It’s going to depend again on what customers want. For the next five years we have to be figuring out what customers expect from convenience, how they want it brought to them, and how we do that. It’s not going to be a question of can we do that, it’s going to be how we do that.
You get to travel the world looking at 7-Elevens. What can Canada learn from some of the other 7-Elevens?
I think one of the takeaways I’ve had from seeing stores in Thailand, Japan, Hong Kong, Australia, the connection between customers in those countries and 7-Eleven for fresh food is very strong. The ability to connect with customers and be close to them through food is very powerful. And as we as an industry go forward in Canada, I don’t think we can underestimate the power of that connection, and how important it is to our customers in order for our businesses to continue to thrive. Don’t underestimate the power of that connection or what you can bring to customers. By that I mean it’s way beyond the traditional roller grill. It’s been there for many years. If we challenge ourselves and begin blurring those lines that others are trying to blur with us, we could be successful. We’re going to blur back.
Quick facts about Doug Rosencrans
- Vice president and general manager of 7-Eleven
- Been in Canada since December 2016 and with 7-Eleven just over eight years.
- An American, born in the U.K. to an American father and Australian mother. An Air Force child who grew up in San Antonio, Texas.
- Background is fuel marketing. Began his career with Mobil Oil in the U.S. as a co-op student when at Texas A&M University, then joined Mobil full time upon graduation. Went through the merger of Exxon and Mobil oil in 1999-2000. He spent half his time in supply and logistics for fuels and the other half in convenience retail.
- Joined 7-Eleven in 2010 to lead the fuels team; from there became responsible for retail operations in Texas before coming to Canada.