Reviewing Retail Stores Service Of The Seven Eleven Malaysia Marketing Essay

The main purpose of this report critically reviewing retail stores service of the 7-Eleven Malaysia at last two years and how the main role person respond to those challenges.

Concept of 7-Eleven retail stores is, to be best retailer of convenience. 7-Eleven facing two major challenges such as, how factors in the external environment and market forces. The record stores are responding to the challenges in terms of product development an innovation, marketing is being organized in local level and the relationships are developed among consumers. 7-Eleven Malaysia is first franchisor system marketer in Malaysia.

1.0 Objectives:

Point out what the challenges faced 7-Eleven retail at last two years. Recommend 7-Eleven retail stores of the Malaysia as best retail marketing among all retails in Malaysia. Ensure in all process 7-Eleven retail shows targets (goals) consumers.

Overall of this report only point out challenges faced of the 7-Eleven Malaysia retail at last to years.

2. Overview of the retail

2.01 Retail

In April 1984, the first 7-Eleven convenience store in Malaysia was opened in Bukit Bintang Kuala Lumpur pursuant to an Amendment to the Area Service And License Agreement dated 19 April 1983 signed between 7-Eleven, Inc. (USA) (owner of the 7-Eleven branded names and various parties. 7-Eleven focus is in the operation of a chain of conveniences stores and direct selling of consumer durables with installment option schemes.

2.02 7-Eleven product

7-Eleven convenience stores commonly offer a range of grocery and food items including hot food and beverages. In contrast, many of the provision shops and mini markets offer primary grocery items. Also offer services that are usually only available in more specialized store, such as pre-paid mobile phone reload, fax, photocopying services. A selected number of 7-eleven convenience stores also sell automotive supplies and offer access to ATM. These type of products and services provided by 7-Eleven Malaysia.

Product: Tobacco product, beverage, confectioneries snack foods, household good, publications, perishables and other foods.

Services: Food services and in store services.

The numbers of differences increase from year 1984 to year 2010 in product levels. Whichever 7-Eleven stores selling are customers expected product. Need when all shop closed at night because not all shops open 24hours.

Price

Malaysia 7-Eleven retail currently embarking on a program to franchise a significant proportion of existing 7-Eleven convenience stores. The franchising program will provide 7-Eleven stores with additional income derived mainly from franchising fees and will free up capital for reinvestment in areas. All 7-Eleven stores’ price level higher then mini market and other retail stores. But customers willing buy for higher price because only 7-Eleven open 24 hours. When the other store closed 7-Eleven open for customer needs. Price differences are RM0.20 to RM1.00. For example: Beverage and snacks normal price between RM1.20 to RM1.40 but in 7-Eleven selling around RM2.00 to RM2.30. However, in price wise 7-Eleven might competitive with other retailers.

2.04 Place

7-Eleven convenience stores are commonly located at high-traffic and easily accessible sites such as along side busy roads, highway rest stops, petrol stations, transportation hubs and shopping centers. This makes it easy and convenient for customer to visit the stores. The 7-Eleven brand names are an established and global brand name that has generated high brand name awareness among consumers. So, 1,127 7-Eleven convenience stores spread throughout to Peninsular and East Malaysia. There is good chance that 7-Eleven stores are located close to most urban customers. Surround Malaysia, 7-Eleven needed when emergency situation for consumers. Easy to purchase food and things whenever client needs.

2.05 Promotion

7-Eleven Malaysia promoted every month such as contest and promote certain products. Pick certain products reduce the price and promote for 1 month or 2 month period. Monthly highlights food and non food parties for promote 7-Eleven among public. 7-Eleven prize certificate is an ideal convenient gift as it is valid at all 7-Eleven Malaysia. 7-Eleven Malaysia visit some handicapped to contribute some foods and non food. Malaysia 7-Eleven retail won number of awarded with a National Franchisee of the Year and Best outlets sales growth categories from YB Dato Tan Lian Hoe, Deputy Minister of Domestic Trade Cooperative and Consumerism. Each month promotes 7-Eleven retails websites like own 7-Eleven websites and Facebook. 7-Eleven retails announce through newsletter as The Star, New Straits Times, See Hua Daily, Oriental Daily, Kosmo and The Sun.

2.06 Process

The “Retailer Initiative” concept, individual 7-Eleven convenience stores prepare a sale fore cast for their goods. Each convenience store has access to 14 weeks of historical sales analysis data to help in preparing the sales fore cast (Appendix- A). Orders for goods are made based on the sales forecast.

7-Eleven stores send their orders for goods to a Business to Business vendor, which is simultaneously notified to 7-Eleven’s head office and the CDC. The BTB vendor aggregates orders from individual 7-Eleven convenience stores, and places orders to good vendors.

A substantial portion of the goods that the group purchases for its 7-Eleven convenience stores are delivered to the group’s CDC. In keeping with the “flow-through warehouse” concept, the CDC acts as a central clearing house that distributes goods from various vendors to individual 7-Eleven convenience stores.

Some goods, such as tobacco product, products with short shelf life (such as newspaper and bread) and product that require specialist channels (such as an ice-cream and chocolate) are delivered directly from the vendor to individual 7-Eleven convenience store.

The good are received by individual 7-Eleven convenience store, where they are checked to ensure that the order is complete.

The goods are then placed on display at the 7-Eleven convenience stores and sold to customers.

2.07 Sales life-cycle

7-Eleven Group’s inventory turnover for the year 2009 is 39days. Most of the merchandise are non-perishable with the exception of food and certain health and beauty aids (“HABA”) products. Such food and certain HABA products are perishable and carry expire dates. Should such products remain unsold or expire and in the event such products are not returnable, the costs of these products would be written off. This will adversely affects the results of the stores.

However, 7-Eleven retails has mitigated such risk by having special arrangements with his suppliers where by most unsold or damaged products can be returned to the suppliers at their costs. The costs of these returned products will be set off against the amount owing to the respective suppliers.

3.0 Risk and Challenges

7-Eleven Malaysia faces number of risk and challenges at last two years. Through political, economical and some other retail push some difficulties. However 7-Eleven out from those difficulties become success level.

3.01 Specific Risk

7-Eleven retail affected by political such license risk, competition in the retailing and convenience store industry. Among sales cycle of perishable products return. Security risks and high turnover store operations staff. Finally, 7-Eleven retail recorded low margin among all retail group in Malaysia.

3.02 Employee’s well train

7-Eleven stores continuously employ and trains staff via its new Employee Training Program and Store Manager Training Program. The training centre is in KL there are also 35 training stores all over Malaysia to ensure the sufficient flow of trained workforce for 7-Eleven outlets’ new convenience stores. So, 7-Eleven employees know how to impress and serve customers.

3.03 Competition amongst existing retailers

Consumers now enjoy a wide choice from spectrum of retail outlets ranging from small private retailers, mini markets, shopping centers to hypermarkets. The entry of foreign retail player into the market has undoubtedly intensified all areas of competition including price, quality, variety and convenience. 7-Eleven retails Group faces competition from various retailers such as “99 Speed mart”, “Tesco”, “Carrefour” and “Giant”. Petrol kiosks such as “Shell”, “PETRONAS”, and “ESSO” also have ventured into the operation of convenience stores such as “Select”, “Mesra” and “Tiger Mart”.

In terms of operations, 7-Eleven convenience stores have a distinct competitive advantage compared to other retailers because it open 24 hours a day whilst most of the other retailers do not operate on a 24 hours basis. 7-Eleven convenience stores have an advantage over petrol kiosk based convenience stores in terms of location as 7-Eleven convenience stores are not restricted geographically in terms of location where stores may be opened. Petrol kiosks, on the other hand, can only be opened in certain approved locations designated for the purpose.

3.04 Entry of new players

7-Eleven retailers also faces the inherent risk of entry of new player to the convenience change industry in Malaysia, especially established foreign convenience store giants like “Circle K”, “am/pm”, “Lawson”, and “Family Mart” which are direct competitors of 7-Eleven worldwide. Currently, the aforementioned stores do not have a presence in Malaysia, but their existence in Japan, Taiwan, Hongkong and Thailand are evidence of their interests in the East Asian region.

Nonetheless, 7-Eleven convenience stores have been operating in Malaysia for 25 years and have successfully built a strong reputation, thus providing advantages to 7-Eleven retail Malaysia over renew entrants. In addition, 7-Eleven has implemented the “market concentration” business concept to protect its business by expanding market share and creating a dominant market position to discourage other players from entering the market.

3.05 Security Risk

As the 7-Eleven convenience stores operate on a 24 hours basis it is inevitably affected by pilferage, shoplifting theft and robbery. This is a real risk faced by all 24 hours convenience stores. To mitigate such risk, all 7-Eleven convenience stores are filled with closed-circuit television and time delayed safes. In additional, 7-Eleven has taken insurance coverage for theft and robbery.

3.06 Low margins recorded by 7-Eleven

However the risk arising from the low margins recorded by the 7-Eleven are mitigated through its efficient cash flow management and usage of trade lines from financial institution to fund its operations.

Moving forward, the revenue of the 7-Eleven retail is expected to grow further with the full implementation of it’s from chaise program. The franchise programs which also aim to provide a sense of “ownership” to the franchisees, is anticipated to drive revenue and profit of the 7-Eleven retail and B- retail group through increased sales as well as enabling the 7-Eleven group to the free up capital for investment.

4.0 Marketing and distribution channel strategies

4.01 7-Eleven marketing strategies

7-Eleven marketing strategies for the “7-Eleven” brand name is to position “7-Eleven” as the convenience store of choice. 7-Eleven meet the challenge strives to create strong brand name values to associate shopping at 7-Eleven convenience stores with convenience values and choice.

7-Eleven conduct national advertisement campaigns to promote the 7-Eleven brand name. Advertisements are normally placed on television, radio and in print media such as newspaper and magazines.

In addition, 7-Eleven periodically organize events and competitions to encourage customers to shop at 7-Eleven convenience stores.

4.02 Distribution channel

Distribution channel strategy for 7- eleven is currently primarily based on direct distribution. 7 – Eleven’s direct distribution strategy is executed through its chain of 7-eleven convenience stores. As at LPO, almost all of the 7-Eleven convenience stores in Malaysia are operated by 7-Eleven and CSSSB, while thirty eight (38) of 7-Eleven stores are operated by franchisees.

As part of 7-eleven’s future plans, has begun to sign up entrepreneurs to operate existing 7-eleven convenience stores on a franchise basis. As at LPO, a total of 142 candidates have paid the deposit and initial franchise fee for the franchise program. In additional, 7-eleven formalized a joint collaboration with Perwira Niaga Malaysia (PERNAMA) in December 2009 to offer at least 100 ex-servicemen resettlement opportunity with job placement at 7-eleven stores within the next two(2) years, with the aim of becoming 7-eleven franchise.

4.03 Place

7-Eleven keep on open new stores wherever 7-eleven don’t place. 7- Eleven make new operation system will facilitate to costumers. 7-Eleven will delivery good and branded product.

What is consumer’s expected product will get in 7-Eleven. Will more convenience to consumers.

4.04 Product and Service

7-Eleven is expending food service offering at 7-Eleven convenience stores by offering new premium fresh food and beverage items to customers.

7-Eleven retails plans to work closely with fresh food manufacturers that are located close to 7-Eleven convenience stores to supply freshly prepared food items, including local specialties, for sale at 7-eleven convenience stores.

7-Eleven retails have embarked on a pilot “Hot Beverage” program which was launched on 19 April 2009. The goal of the “Hot Beverage” programme is to provide customer with both high quality and freshly brewed specialty coffee at affordable prices, available to customers 24 hours a day, seven days a week. The pilot program was a success, and 7-Eleven expects to roll out the “Hot Beverage” program to about 100 7-Eleven stores in 2010.

7-Eleven retails efforts to introduce new premium fresh food and beverage items at 7 -eleven convenience stores are ongoing. New items are being progressively introduced at its 7-eleven convenience stores.

According to Johansson, J.K (1997), competitor is very important to improve quality of product and service makes more affordable.

5.0 Conclusion

7-Eleven retails of the Malaysia are a basically very outstanding of other retailer because of time wise and service. Since, year 1984 to 1996 growth average 60% only among other retailers. After the year of 1996 7-Eleven retails put some different afford from other retails improved 10% average.

7-Eleven was achieved challenges from difficulties. 7-Eleven growth among other retails in Malaysia and it is in top level. Competitors will continuously open same retails like 7-eleven with different name as well.

7-Eleven retails contest and promotion forward coming year and future. Contribution should forward a year two (2) or three (3) times. This will impressed consumer heart.

The future plan may result in 7-Eleven retails facing business and operational risks which may include, inter alia, insufficient cash flow funding capability and inadequate experienced workforce.

The mitigate these risks, director will ensure that adequate funding of store growth is available either through internally generated funds and borrowings. 7-Eleven practices stringent selection guideline and review policies before embarking on any decision to open new convenience stores.

Additionally, going forward, 7-Eleven retails is not envisaged to record further interest income from its related companies in view that all non- trade debts owing by related companies outside the group have been fully settled.