Building a Brand

7-Eleven rolls out 32 private-label packaged-goods products under 7-Select banner

Published in CSP Daily News

DALLAS -- 7-Eleven Inc. announced the launch of a new line of private-label products under the brand 7-Select. With the rollout of the 32 new items, 7-Eleven aims to strengthen its presence in store-brand packaged foods, a business that has increased dramatically over the last year and promises strong future growth, according to the company, especially in light of consumer budget-tightening during the decelerating U.S. economy.

"Given the current economic environment, consumers are looking for ways to trim household costs, yet they still want to indulge in a favorite candy, [image-nocss] cookie or snack," CEO Joe DePinto told the Dallas Morning News.

The new items, several of them rolled out this month, include cookies, candy, nuts, potato chips, beef jerky, trail mix, chocolate-covered pretzels, coffee espresso beans, raisins and peanuts. Suggested retail prices offer a significant savings from 10% to 20% for customers vs. the national brand equivalent, according to the company.

"When we began to develop products under the 7-Select name, our first and foremost requirement was to create high-quality products that were equal to or better than the national brands," said Kevin Elliott, 7-Eleven's senior vice president for merchandising and logistics. "Focus groups verified that we exceeded that goal by scoring taste, texture and flavor profiles higher than the name brand equivalent in every case."

Of course, consumers' primary reason for selecting private-label goods is to save money, and more shoppers are reaching for house brand products in this uncertain economy. According to a new survey by the Nielsen Co., as previously reported in CSP Daily News, nearly three out of four American consumers believe store brands are good alternatives to national brands, and more than 60% consider them to be just as good. Click here to read more of the Nielsen survey results.

Not only did the 7-Select snacks have to meet or beat name-brand quality, they needed to beat the price or offer a better value. According to Elliott, added value might mean a lower price vs. the comparable branded item or, in some cases, more product for the same price.

In May, 7-Eleven began a pilot program to offer the new private-label products, such as snacks, candy, nuts and cookies, in 1,500 stores in Florida and the Mid-Atlantic area. With in-store displays and point-of-purchase signs to communicate the benefits of the new snack line, 7-Eleven customers showed immediate interest in the new value-priced items, according to the company.

Sales have continued to climb steadily, and many items are already outselling the name brand. Of the original 31 items first tested, 26 were selected for the initial launch, along with several new candy additions.

"We have selected only top suppliers to develop and produce 7-Select snacks, and many also manufacture similar products for the recognized national brands and other top private-label retailers," Elliott said. "New 7-Select items are already in the pipeline, and we plan to widen our assortment in early 2009."

7-Eleven first offered private-label paper goods, batteries and stationery supplies with the 7-Select brand in 2004. Its private-label bottled water is sold under the name of Quality Classic Selection, which will soon convert to the 7-Select brand. By the end of the first quarter 2009, 7-Eleven expects to have more than 180 private-label items available for its stores to offer their customers.

"The 7-Select name builds on the strength of the 7-Eleven brand and will help define who we are as a retailer, much as our Slurpee and Big Gulp beverages have over the past 40 years," Elliott said.

Elliott said that because of 7-Eleven stores' volume of snack sales and store traffic (the company reports that it serves some 6 million customers each day), the company can work with manufacturers and packaging companies that already provide product for name-brand labels to offer consumers an attractive price for popular snacks.

"Just as important, 7-Eleven can control and maintain the product quality and the amount of product in each package," Elliott said. "For example, in our 7-Select Swiss Trail Mix, we use whole cashews and real M&Ms, not cashew pieces or generic chocolate bits. Plus it's at an attractive, suggested retail price of $2.29 for 2.5 ounces compared to a well known brand that offers a similar mix in a 2-ounce-size bag for a suggested retail price of $2.69."

The private-label packaged and processed foods category is an $81 billion business across grocery, drug and mass merchandisers, up more than 10% in just the past year, according to 7-Eleven. While private-label products account for 13% of drug-store sales and 18% of supermarket sales, they make up just 3% in convenience-store sales, according to the Nielsen report. Yet, perhaps because of such low volumes, sales of store-brand products are growing faster in convenience stores than at other retailers.

"Convenience stores' bread-and-butter itemssnacks and beveragesremain a relatively untouched category for private label and present tremendous opportunities for growth, especially in a lean economy when consumers have a heightened awareness of the cost of goods and are actively seeking out ways to stretch their dollars," Elliott said.

"I think the great prices and 7-Select name will entice customers to try these new snacks," he added, "but the quality is what will keep them coming back."

Elliot said 7-Eleven plans to expand its 7-Select-branded snacks to its Canadian stores in the first quarter of 2009.

Based in Dallas, 7-Eleven operates, franchises or licenses approximately 7,600 7-Eleven stores in North America.

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