In the convenience store business, a change in weather can make a big difference in sales. Consumers’ desires for food and beverages vary greatly depending upon local conditions. If the weather is hot, customers are rushing out for cold drinks, cool sandwiches, and frozen dessert treats. And it goes without saying, when the temperature slips below 60 degrees, hot drinks and warm sandwiches are more likely to be top sellers.
For the franchisees of about 8,000 7-Eleven stores in the United States, weather information is just one of many data points that they track each day to make sure their stores are stocked with the right mix and amount of products. Managers and owners access current and historic sales data to help them determine which items and quantity that they should display for sale on any given day. This information is vital to profitability. If a store runs out of Slurpee drinks on a hot day, for example, it will lose sales that can never be recovered. Indeed, a steady stream of data has become just as important as a reliable supply chain.
The executive in charge of disseminating vital data to franchisees in a form they can most beneficially use relishes this challenge. “It’s a great time to be in retail,” says Steve Holland, senior vice president and chief information officer for 7-Eleven . “Technology is not only enabling progress, it is a business requirement.”
Holland has overseen game-changing initiatives, including a mobile app for customers, enabling technology for local delivery, and wireless access to databases for franchisees. In a highly competitive, low-margin industry that has to battle with quick-service restaurants and full-sized grocery stores, these and other IT capabilities give the world’s largest convenience retailer an edge, Holland says.
When Holland joined 7-Eleven in 2010, the company had a problem. “We had eight million people a day coming to our stores, but we didn’t know much about them,” he says. An IT needs analysis led to the development of a CRM system with a real-time engine and mobile apps that could boost customer loyalty. Other retailers were moving in this direction, and Holland believed 7-Eleven should jump into the mobile digital age.
Top executives were receptive to this idea, but Holland still had to prove his case to justify a considerable investment. His team looked into a wealth of statistics, including consumer adoption rates of smartphones, how often consumers used their phones, and the increasing amount of people ordering products from their devices. The pitch was persuasive, and the executive team quickly recognized the potential value and backed the initiative.
7REWARDS, a new customer loyalty program, was the result. The company’s IT staff runs lean, with no application developers on staff. To build the CRM back-end and the mobile app, Holland’s team collaborated on the project with its contractors, who provided the development services, as well as vendors NEC and Oracle. This arrangement has worked well, Holland says, due to the close coordination between his in-house team, business experts, and the hired guns—the application development specialists.
The mobile app provides customers with access to promotion notifications, digital coupons, and real-time tracking of rewards points. For instance, after buying six cups of a beverage, the seventh one is free. The app automatically tracks this information in real time, allowing customers who buy their sixth drink to get their bonus immediately. “You don’t have to wait forty-eight hours or have to get a card punched,” Holland says.
Another feature provides contextual information that helps customers find the closest store—in minutes, not miles—and also takes into consideration variables such as weather and time of day. So, if a particular store is not offering hot food that day, the app will not show those products as an option. While Holland was confident the initiative would ultimately be successful, he did have some doubts. “Would smartphone users adopt it? Is it going to be easy enough to use?” he asks.
The answer to both questions turned out to be “yes.” Introduced in January 2013, 7REWARDS has proven its worth. “We’ve seen very good download rates and sustained engagement rates,” Holland says. There have been significant revisions since the first rollout, which has helped with engagement, he continues. “We’ve found that we need to continually refresh and upgrade the application,” he says, adding that these changes help to hold customers’ interest. The company continues to promote the app and believes there is room for greater adoption. “We’re not satisfied until every customer knows the value of 7REWARDS,” Holland says.
Another project—mobile-enabled delivery—takes 7-Eleven to a new level of service. The company has partnered with delivery services Postmates and Tapingo to deliver products from stores to neighborhood homes and businesses. Popular items for delivery include beverages, medications, and lunch items. “Millennials have taken to delivery fast,” Holland says, adding this service has tremendous growth potential. “People are more time-starved. They are visiting fewer stores and trying to consolidate trips to save time.”
It was important to make the delivery front-end as simple and seamless as possible, Holland notes. The work to do that was relatively easy—as compared to, say, building a CRM system from scratch, a matter of integrating the app with existing systems.
New services can also help fuel continued growth for 7-Eleven, Holland says. The company has entered Vietnam this year—its eighteenth country worldwide—giving it a total of roughly 59,500 stores globally. Holland’s team plays a key role in overseas expansion, advising counterparts abroad on how to create digital connections with customers, IT best practices, and evaluating vendors and suppliers.
It’s all proof that IT is a vital component to the company’s future—one that becomes more important each and every year.
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