Reviewing the latest sales figures in his Dallas office in July 2003, James Keyes, president and CEO of 7-Eleven, Inc., was pleased with the continued progress of fresh foods sales. The popularity of its Big Eats® Deli sandwiches, rolled out a year earlier, remained strong. A few years earlier, the company had embarked on a strategy of making fresh foods, which traditionally accounted for less than 5% of total sales, into a major profit center in the future. The project was a huge undertaking that required creating food preparation plants and a logistics network throughout the country.
The strategy of concentrating on fresh food sales was the idea of Toshifumi Suzuki, the chairman and CEO of Seven-Eleven Japan Co., Ltd. (SEJ), which owned the 7-Eleven franchise in Japan. He was also chairman and CEO of Ito-Yokado Co., Ltd., a premier Japanese supermarket chain that owned 50.6% of SEJ. Since 1991, Ito-Yokado and SEJ had owned over 60% of 7-Eleven, Inc. (SEI), the U.S. company, formerly known as the Southland Corporation, that had started the convenience store chain. Fresh food regularly accounted for over 40% of total sales in Japanese 7-Eleven stores and profit margins were the highest of any product category. Suzuki felt fresh food would prove equally popular in U.S. convenience stores, and he had prodded the Dallas-based subsidiary into adopting the Japanese strategy.
As a Marketing Manager perform the analysis to answer following questions:
1. What are the main issues facing the organization?
2. What are the options available to the organization to resolve those issues?
3. What can we learn from the case as it relates to Marketing strategy and Marketing Management in general?
4. What are the key takeaways of the case?
5. What Recommendations do you make to company or industry executives?