Food service is opportunity in Australia

Food service and deli is underdeveloped in the Australian convenience market but provides an opportunity for growth, according to Warren Wilmot, ceo of 7-Eleven Stores, Australia.

Speaking at the Insight/NACS Global Convenience Benchmarks event in Dublin, Wilmot said profits at the 380-strong franchise chain, comprising 185 fuel sites and 195 non-fuel sites, were driven by merchandise sales, mirroring the total market.

Australian convenience store total market sales are up 7.9%, he said. The average c-store takes between A$16,000-60,000 a week and the average transaction is A$8.37. Fuel sales, meanwhile, have been hit by higher and then lower prices.

Wilmot said 7-Eleven has been buffered when motorists moved to public transport because it also sells transport tickets. However, he added that when fuel prices came down, motorists bought more fuel, but visited less frequently and the percentage of fuel customers converting to shop sales had not changed.

Cigarettes are a key category in convenience, accounting for 31% of overall sales, said Wilmot. Stores also offer hot, chilled and ambient food.

“But Australians don’t expect that a c-store can sell coffee, so there’s still an opportunity to get it right.”

Wilmot told delegates the non-fuel sites in his portfolio, located in central business districts, had lower set up costs, take off more quickly than fuel sites and keep maturing. Fuel sites, by contrast, grow more steadily.

In his business fuel sites generally have separate canopies to the stores, to reinforce the aim of being a “merchandise retailer that just happens to have fuel”.

“We want to make sure it’s clear what we are about – traditional categories of food and soft drinks,” said Wilmot.

A remodeled but new store look, incorporating new food service areas, is reported to be delivering a 30% sales uplift.

Slurpees, frozen carbonates, are another success story for 7-Eleven with sales growth of 30-40%. The chain now celebrates ‘7-Eleven day’ on the 7th November each year, giving away free Slurpees, bringing customers into store and boosting additional sales.

A new pole design on forecourt sites has also generated massive sales uplifts, said Wilmot. The company is about to trial in-store kiosk technology to sell phone cards and potentially airline tickets, and has the capability to pay out lottery winnings via the ATM (which operates on the stores LAN) or to make payment via Visa debit cards on its EFTPOS technology.

“Both on fuel and merchandise we can’t be a discounter, so have to concentrate on getting the overall merchandise offer right,” he said.