retail news in context, analysis with attitude

Reporting in from the FMI MarkeTechnics Conference…
DALLAS -- Technology, according to Jim Keyes, president and CEO of 7-Eleven, created an environment during the mid-eighties in which the company was suffering because it was focused on the wrong things. The company focused relentlessly on price, depended on products being “pushed” through by suppliers, and it almost killed 7-Eleven. “We had lost control of out business,” Keyes told a general session audience at the Food Marketing Institute (FMI) MarkeTechnics Conference yesterday.

Now, Keyes said, 7-Eleven uses technology enable better customer information, better supply chain controls, better relations with suppliers, and a better environment for employees.

"I can make every store as nimble as a mom and pop" with technology, Keyes said, noting that it allows 7-Eleven top better react to new products or local conditions.

A new model for the new 7-Eleven approach is its doughnut program. The company knew it wanted to get into the burgeoning doughnut business, and had three choices: go the low price route, partner with a company like Krispy Kreme, or develop (at greater expense, with a longer ROI time) a quality, proprietary doughnut program. 7-Eleven picked the latter.

Keyes also said, reflecting a common problem in the grocery industry, that 7-Eleven became too reliant on making money through buying, as opposed to selling. The company asked itself it if was making money by retailing, or by “subletting shelf space.”

While Keyes pointed to the ways in which 7-Eleven is working to redefine the c-store business, he noted that it is not something his company can do by itself, despite its size and dominance. 7-Eleven, he said, cannot enable all these changes by itself. It must work with other retailers to create new and effective standards for the industry.

In other news from FMI’s MarkeTechnics…

  • A new FMI report, Technology Review Highlights 2003, revealed that:

    • Nearly 30 percent of food retailers are now experimenting with self-checkout systems, which provide a solution to cashier shortages and improves customer service by allowing more checkouts to remain open during busy times. There are two main types of systems in use: self-scanning checkout lanes, which are more popular in the US, and hand-held (portable) scanners, which seem to be more common in Europe.

    • Data communication between stores and company headquarters has become a daily activity for food retailers. Currently, 90 percent of survey respondents use e-mail systems at store level and 85 percent provide stores with Internet access. Retailers are also using the Internet to communicate with vendors and customers. Nearly one-third of retailers use it to communicate regularly with vendors, particularly for product ordering.

    • Just over six in 10 companies surveyed use electronic data interchange (EDI) for transactions with suppliers. A smaller number, 29 percent, have participated in B2B exchanges, which allow companies to perform efficient transactions via a network of companies worldwide. Approximately 23 percent use scan-based trading (SBT), which allows retailers to synchronize supply and demand at the POS and to reduce inefficiencies that increase overhead in the direct-store-delivery (DSD) supply chain.

    • Just over one-quarter of companies offer home shopping and other store services through the Internet.

    • Biometrics, a method of scanning thumbprints, eyes or other unique physical qualities, are primarily being used in the retail arena as a method of customer and employee identification. Currently, eight percent of respondents are using this technology, but nearly three times that number plan to implement biometrics at store level. Fingerprint recognition systems are the most widely used. Two out of three food retailers employing biometrics have used the systems for managing employee attendance. Half have used them to authorize checks and 17 percent to process POS payments.

    • Wireless systems have become much more common at the store level, with close to 90 percent of the surveyed companies using some form of wireless communication. The majority, 66 percent, is using them for in-store communications. Nearly 40 percent use wireless networks at the POS, 16 percent use wireless scales and 6 percent use wireless hand-held payment terminals.

    • Companies surveyed expressed an increasing interest in the electronic product code (EPC), a system of microchips embedded in product packaging and radio frequency technology to communicate with readers throughout the supply chain. The chips provide individual item identification and enable retailers and manufacturers track products as they are produced, distributed and sold at checkout. Although commercial use of the EPC may be years away, several major manufacturers and retailers are participating in trial uses of the system. The technology is currently being studied and demonstrated at the Massachusetts Institute of Technology (MIT) Auto-ID Center.

    • Six our of ten companies surveyed said they have a policy statement on consumer privacy, and an additional 15 percent plan to establish policies. In addition, 90 percent of companies are using firewalls to keep shopper data private and an another 8 percent plan to install firewalls.

    • Just over half of the companies participating in the survey have stores capable of scanning the EAN-13 code at the POS. This multi-industry standard was established by the UCC to facilitate trade on a global scale. The UCC set January 1, 2005, as the deadline for North American retailers to be capable of handling the standard. Of those companies not yet compliant with EAN-13, 97 percent plan to be so by 2004.

    Nearly three in 10 are currently capable of scanning the EAN-14, an even more important standard that the food industry worldwide is expected to move to in the next few years. Ninety-five percent of remaining companies plan to be capable of scanning EAN-14 by 2004.

    At the database level, 67 percent of respondents are capable of storing EAN-13 transactions and just over one-third can handle EAN-14 ones.

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