PEST ANAYLSIS 7 ELEVEN


1.1     CompanyBackground(7-Eleven)
7-Eleven, founded in 1927 in Dallas, Texas, is the world’s largest operator and licenser of convenience stores with more than 21,000 units worldwide and nation’s largest independent gasoline retailers. The name 7-Eleven was originated in 1946 when the stores were open from 7am to 11pm. Today, offering customers 24-hour convenience, seven days a week is the cornerstone of 7-Eleven’s business.


1.2 Customer-Orientated Factors

7-Eleven focused on meeting the needs of convenience-oriented customers by providing a broad selection of fresh, high-quality products and services at everyday fair prices, speedy transactions and a clean, safe and friendly shopping environment. Each store’s selection up to 2,500 different products and services is tailored to meet the needs local customers.

7-Eleven is expanding its food offerings to bring consumers a proprietary line of daily-prepared and daily delivered item and baked goods. However, its also offers consumer a number of convenience services designed to meet the unique needs of individual neighbourhoods including fax machines and automatic teller machine.


1.3 Major Players and Competitors

The major players of retailing industry include Coles , Franklins and 7-Eleven. Obviously, Coles and Franklins are the major competitors of 7-Eleven. Coles is a full service supermarket operating 431 stores throughout Australia, its offers
customers convenient shopping that aims to fulfil all of their expectations and requirements under one roof. A major focus for Coles has been to tailor store product ranges and concepts to meet the needs of the local residents.

Franklins is Australia largest discount supermarket, it has a well-established reputation as “the discounter”. The major aim for Franklins is to ensure that the important factor of freshness and quality is established within their discount-orientated format.


1.4 Target markets within the Retail Sector

From here, we can see the differences in the target markets of 7-Eleven and the competitors. As mentioned above, 7-Eleven is focused on meeting the needs of convenience-oriented.

Coles also holds great onus on the customer satisfaction as it offers customers cheap, broad and convenient shopping. Franklins on the other hand concentrates more on price factors, appealing to customers looking to save.


1.5 Critical Success Factors

7-Eleven is the world’s largest operator, franchiser and licensor of convenience stores. Its refines the business strategy to take advantage of their widely recognized brand and to leverage the size, technology and people, and the successful factors of 7-Eleven including the following key elements: Information technology, provide 7-Eleven with a competitive edge. The proprietary retail information system is designed to build efficiencies into ordering, distribution and merchandising processes and to provide timely and accurate store information on an item-by-item basis. Merchandising is aided by retail information system as product availability is improved by ensuring high-demand products are always available.

7-Eleven fresh food program continues to evolve and in this category represents a tremendous opportunity, as food-to-go increases in popularity. Finally, a major success factor of 7-Eleven is the development of new stores and continues to be a major initiative. Accordingly it opened 120 new stores in the United States and
Canada in 2000.


2. Macro Environment / External Market Environment

2.1 Definition

The external market environment is one of the two categories that combined make up the marketing environment. In strong contrast to the direct market environment (micro environment), the macro environment is of a much broader context and can be defined as consisting of “economic, technological, political, legal, cultural and social environments.” (Quester, McGuiggan, Perreault and McCarthy, 2001 pg 69) Many of these individual macro environment categories intertwine, resulting in one or two major outcomes which are summarised in table 3.2)

2.2 Economic Factors
2.2.1 The State of The Nations Economy
The state of the nations economy is a macro factor which can at times strongly influence spending patterns, hence influencing the retail/grocery sector, however, it is one macro factor which is hard to control. The Australian economy, just like all other economies around the world goes through a cycle which lasts on average ten years and consists of periods of peaks as well as downturns. (Refer to Diagram 3.1 )

Figure 3.1 The Trade or Business cycle
Although it is evident that the state of the nations economy directly impacts on spending patterns and consumer confidence levels it can be argued that this has a lesser effect on milk bars and 7 Eleven stores than other grocery and retail sectors. This is mainly due to the fact that the main items purchased at 7 Eleven stores (disregarding cigarettes) are household necessities ie: milk and bread and sales of these items would not be directly influenced by the state of the nations economy or recent unemployment or consumption figures. (Refer to Section 5.3?? for micro analysis) Currently the Australian economy is experiencing a period of negative growth however, this is likely to have a larger impact on supermarkets who stock items other than necessities compared to 7 Eleven and milk bars.

2.2.2 Impact Of GST
The Goods and Services Tax was implemented on the July 1st last year and has created a whirl of confusion amongst the general public which resulted in a decrease in consumer confidence by 7% (ABS Website) Although 7 Eleven and Milk Bars benefited by the actions of Senate Democrats who were instrumental in excluding fresh food from the GST, the Goods and Services Tax has also had an adverse impact on these small businesses. The nature of the GST was to change the way in which a large percentage of the nations tax was collected, thus automatically pressuring small businesses into purchasing complicated business software, when many of these businesses have never operated with computers. Not only did the GST mean the installation of expensive computer programs but it also lead to added complications with the running of small businesses and as was the case of many small family milk bars the added expense and complication proved to be too much.
2.3 Political Factors
2.3.1 Government Action Regarding Trading Hours
On September 12, 1996, the Shop Trading Reform Bill was introduced into the Victorian Parliament and acted as a turning point which dramatically liberalised retail trading in Victoria. The bill was essentially about freedom. “It is about the freedom of local communities to determine their own retail commercial environment” (Hon, Mark Birrell M.P 16th 1996 October Legislative Council) Under this legislation shop trading was able to trade 24 hours a day seven days a week except on Christmas Day, Good Friday and before 1pm on Anzac Day. As evident in Diagram 3.2 trading limitations have slowly been diminishing since the 1950’s.
Table 2.1 History Of Legislative Changes To Victoria’s Trading Hours

Year Change

1953 Opening hours were fixed, Sunday trading prohibited
1957 Petrol St., butchers, chemists, car shops allowed longer hours
1969 Uniform trading regulations exempted tourist areas
1970 Most shops close on public holiday
1972 Petrol St. allowed open on Good Friday
1983 Businesses more than 20 employees exempted from restrictions
1987 All shops could be open on Sat 1pm – 5pm
1991 10 Sundays per year legal trading days
1992     Trading hours deregulated in CBD
1996 Shop Trading Reform Bill – resulted in unrestricted trading for all shops except Anzac Day, Christmas Day and Good Friday

(Information adapted from J M McInerney, Echo Issues Outline)
This had an adverse effect on 7 Eleven and milkbars as 24 hour supermarkets began taking their late night and early morning trade after the 1996 bill was passed in Parliament. As shops were gradually granted extra freedom in regards to trading hours, milk bars began their slow decent towards extinction and 7 Elevens have started to relocate inner city where supermarkets a few and demand is high.

2.3.2 Government Legislation Regarding Tobacco Sales
The Victorian ‘Tobacco Act 1987) was the first broad tobacco legislation and aimed to reduce smoking prevalence. The Act states ‘A person must not sell a tobacco product to a person under the age of 18 years.” (Human Service Western Region Tobacco Project Report) As part of this Government intervention, penalties were introduced with the maximum penalty for breaching the provision being $1000 first offence, $2000 second offence and possible loss of tobacco license for subsequent offences. Tobacco sales make up a large percentage of convenience stores sales (Refer to 5.????) and this Government crackdown on cigarettes which has continued to be prevalent has in some respects increased cigarette sales. The state government has acknowledged and concluded “A Disproportionate number of cigarette sales to minors occurred at milkbars and service station convenience stores compared to supermarkets, newsagents, and tobacconists.)