Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 24, 1993 TAG: 9304260394
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: Dallas Morning News
DATELINE: DALLAS LENGTH: Medium
The remodeling carries big stakes for Southland. Handcuffed by debt from an ill-fated management-led buyout in 1987, the company is in the early stages of a sweeping attempt to rejuvenate the once-dominant chain.
Southland and its well-heeled majority owners, Japanese retailer Ito-Yokado Co. and 7-Eleven Japan, are wagering heavily that a new look, newer, popular merchandise and more consistent prices will reverse sliding sales and profits. Southland, which for much of the past two decades posted huge profits, last year lost $131.4 million on revenue of $7.4 billion. It has had only one profitable year since 1988.
Industry observers say the jury is still out on Southland's efforts in a highly competitive industry that remains in considerable turmoil. Circle K, a major rival, remains in bankruptcy reorganization. And after a decade of rapid growth, much of it from major oil companies entering the fray, about 1,600 convenience stores closed in 1990 and 1991. Still, there were more than 69,600 convenience stores at the beginning of last year.
Last year, Southland itself shuttered 358 stores and opened just 34 new ones, opting to pump resources into improving the stores it will keep open. The company also jettisoned its food processing and distribution operations last year, in effect dismantling the internal supplier network it had pioneered.
"I think the whole industry is watching what they are doing," said John Callanan, senior writer for Convenience Store News, an industry publication. "No one is sure whether they are doing the right thing, but I think they are committed to this for the long run."
"In the past, it had been `How many locations can you build and how much stuff can you sell?,' " said Ralt Bohn, general manager of 7-Eleven's Texas division. "That is changing as the convenience-store industry is changing. The practice of putting stuff up, stacking it high and letting it fly is over."
Nowhere is that as evident as in the stores, where most Sunday and Monday nights this year teams begin around-the-clock remodeling to compress what normally would take two weeks into four days.
"We want it to have a new look, for people to see it as a new, bigger store," said Diane Arnold, who directs the remodeling effort for 7-Eleven in Dallas-Fort Worth.
The plan is to overcome problems typical throughout the chain: poorly illuminated stores and counter space that's limited and cluttered with merchandise and donation jars.
Floors are being replaced, aisles and sales counters widened, and food and beverage counters made more accessible. Open-air cases for fruit and other fresh foods are being added at the rear of the stores and fax and copy machines installed at the front.
Beyond the physical changes, 7-Eleven will give store managers more control of inventories.
In the past, much of store ordering was done by corporate purchasers who had little direct contact with customers. As a result, 7-Eleven didn't stock items until they had established market share, resulting in lost sales as the product was gaining popularity.
Now the division offices will keep store managers promptly posted on the 30 to 40 new items available to 7-Eleven stores nationwide. The manager will cull that list to items that best fit the customers' tastes and replace slow-selling items with popular new ones.
"At 2,000 square feet, you don't have a lot of space," Bohn said. "So you have to discriminate on the products that you bring in."
\ 7-ELEVEN'S FACE-LIFT
Southland is remodeling stores in eight markets:
\ Northern Virginia\ \ Detroit\ \ Philadelphia\ \ Denver\ \ Dallas-Fort Worth\ \ San Diego\ \ Orlando, Fla.\ \ Long Island, N.Y.
Company officials hope the remodeling will be finished by 1996. The company said it has not decided when its Western Virginia stores will be remodeled.
From its district office in Roanoke County, the company has:\ \ 13 stores in the Roanoke Valley\ \ 4 stores in the New River Valley\ \ 5 stores in Lynchburg\
by CNB