7-Eleven Adjusts Prices as It Balances Traffic and Costs

7-Eleven has recently decided to adjust its pricing strategy as it navigates the tricky waters of rising costs and foot traffic. After initially trying to absorb the costs to attract more customers, the retailer is now shifting back to passing some of those costs onto consumers.

During its Q1 earnings call, a 7-Eleven executive mentioned that they had aimed to boost traffic by keeping prices sharp and not raising them too much. In contrast, competitors like Couche-Tard have taken the opposite approach, which has benefited their sales.

Now, 7-Eleven is ready to change course again. The plan for the rest of the year includes passing along costs “where necessary,” staying competitive with prevailing market prices.

The company’s locations tend to be in urban areas, with only about 28% in rural zones. While urban stores are generally doing well, rural locations have their own strengths due to factors like inflation and a pullback in government assistance impacting urban areas more significantly.

In contrast, Casey’s General Stores, which focuses heavily on rural markets, boasts around 80% of its stores in such areas. This difference highlights the various challenges each store is facing in this economic climate.

A silver lining for 7-Eleven lies in its delivery service, 7Now, which saw a remarkable 30% increase in sales year over year in Q1. The close proximity of customers to stores aids in driving these delivery sales, which account for about 6% of total sales for participating locations.

Beyond pricing adjustments, 7-Eleven is exploring various strategies to enhance sales and customer traffic. They’re working on modernizing their food and beverage options, upgrading technology at Speedway stores, improving delivery services, and refreshing about 4,000 store locations.

These store refreshes have already shown promising results in sales and overall performance, making the company optimistic about a competitive edge as these strategies are implemented.

Additionally, 7-Eleven is keen on focusing on higher-margin products. This year, they plan to add 215 new private brand items, which have a much better profit margin than national brands. Some exciting new offerings include energy drinks in July, prosecco wine in September, and a hamburger steak bento in December.

The company is also looking to boost its financial performance by reducing costs and increasing efficiencies, particularly through synergies from its recent Speedway acquisition.