7-Eleven's precious shelf space

7-Eleven's precious shelf space

Summary: Baseline Magazine has an interview with 7-Eleven CEO James Keyes on how the company uses data from its point-of-sale systems to spot trends, find growth opportunities and control shelf space. 7-Eleven's store are like a big, distributed research facility, where it can test market ideas for different products in different geographies in near real-time.

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TOPICS: Tech Industry
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7eleven.jpgBaseline Magazine has an interview with 7-Eleven CEO James Keyes on how the company uses data from its point-of-sale systems to spot trends, find growth opportunities and control shelf space. 7-Eleven's store are like a big, distributed research facility, where it can test market ideas for different products in different geographies in near real-time.

We're able to track actual behavior by having technology facilitate a trial-and-error process of market research. For example, when we're going to introduce a new bottled water, we can have two  options. The traditional way would be to do some market research on what customers like in terms of enhancements—flavorings, vitamins added, etc.

What we do instead is try three or four [water products] with different flavorings, with different nutritional enhancements, and we can within a very brief period of time determine how the customer behaved by the actual velocity of the items in different stores. By measuring our sales velocity in different stores with different demographic presence, we can get a read on actual behavior rather than predictive behavior.

Keyes said that his objective is to control his shelf space, increasing the sales per square foot.  With 28,000 stores, each averaging between 2,400 and 3,000 square feet and carrying about 2,500 different items, that turns out to be a lot of number crunching.

Topic: Tech Industry

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5 comments
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  • The problem with this approach is that...

    ...oftentimes things aren't given enough of a chance. Companies are too quick to write something off in the name of speed and having new revenue streams. The TV show Cheers was near the bottom of Nielsen ratings in its first season. Fred Astaire was panned by a reviewer as a guy who "can't act, can't sing, can dance a little."

    Great things need time to develop or build to an appreciation. But companies can't think long term because they need more money today.
    ordaj9
    • yes, and . . .

      I agree with your post, and I want to comment on the last sentence, "companies can't think long term because they need more money today." The difference between a good company and a great one is that a great one has the $$$ and the vision to allow late-blooming products to develop. I know that it's not always possible, but it's the key to being dominant and staying there.
      tmurph1810
      • There's a lot of bad management out there.

        Amongst other things. Many other things.
        ordaj9
    • There is nothing wrong with this approach

      Shelf space equals money. The faster the product turns the more money the store makes. Consumables are not like TV shows or actors. Those things can be changed to make them more appealing. Actors can be placed in roles that enhance their strengths. Food products are different. They have a shelf life for starters.

      Many new products are introduced in a demographic area with some type of sales promotion. There will be a initial bump in sales. It is after that period that repeat buyers judge whether the products stays or goes. If there is not enough repeat buyers the product is gone. Shelf and display space is a very important fixed commodity in stores. They (7-11) ain't got time to mess with slow movers.

      I hated Cheers BTW.
      Squawkbox
  • To Sum it up

    Every minute something sits on a self that doesn't sell is that much less shelf space for something that will.

    You can't allways give the products "time to move". You rotate in the new products on a short cycle until you find one that moves quickly, then stick with it for as long as it continues to sell.
    John Zern