Evolving 7-Eleven through Innovation

By Patricia Riedman Yeager |  July 8, 2015

Rob Chumley’s mission: help 7-Eleven Inc. become more than just a quick place to stop for a sandwich and a Slurpee.

Chumley is Senior Vice President of Innovation at the privately-held $85.7 billion company — a role that was created in 2011 with the backing of CEO Joe DePinto. 7-Eleven operates, franchises, or licenses more than 55,800 stores around the world, which makes it not just the convenience store chain with the largest footprint, but the biggest retailer or food service operator of any kind. Fifty-five million customers walk through the doors every day.

“We do have what we call market concentration,” Chumley says. “The stores are open 24/7, and they’re well-lit. They’re safe and secure, and the customers can then leverage that store to meet other needs.” That includes everything from picking up products they’ve purchased on to paying utility bills to getting keys made.

“What we’re really focusing on now is this transition from convenience, which is defined by the products, to a convenient store, which is defined by the solutions it provides.”

Here’s what Chumley has been working on since he took on the new role in November 2011.

Getting Started

Originally, Chumley says he started with a focus on:

    1. The in-store shopping experience: “To better understand the in-store shopping experience,” Chumley says, “7-Eleven took a close look at the customer who wants to come into our stores and grab a couple of items. We focused on our fresh food and beverage offerings.” They explored redesigning and rethinking the store to better meet customers’ needs, and to make it easier for the franchisee to operate. Chumley says that work carries on today. “The team has morphed and changed a little bit, but we’re still ongoing work on the physical redesign of our stores.”
    2. The digital connection with customers: “The other work we started working on was making a digital connection with our customers. As you can imagine, with more than 8,000 stores across the U.S., we’re doing millions of transactions each and every day. The challenge that we had is that we didn’t have a way of truly knowing those customers, and being able to find a way to generate a relationship with them outside of the four walls of our store.” In early 2013, his team launched the 7-Eleven mobile app. “We then also created our loyalty system — our customer relationship management system, whereby we leveraged the information we’re capturing on their purchases to get to know them, to learn about what they’re buying and then being able to serve them with unique offers.”
    3. Voice of the customer: Chumley says that “the days of a customer calling an 800 number to give you feedback — I think those are long gone. Customers more often today will give you feedback by not showing up and by not buying anything in your store again.”
    To deal with that, 7-Eleven amalgamated feedback from e-mail, phone, social media, and within the 7-Eleven mobile app. “The amount of feedback we’re getting on a monthly basis, by leveraging the digital channels, is 10X what we were getting from the straight 1-800 number,” he says. If feedback is about immediate opportunities in the store, it is routed to the store operator, so they can address the situation. “If it’s a recommendation or suggestion or feedback with regards to a product, then that is routed immediately to the appropriate merchants, so they can investigate it further and follow up with the customer,” says Chumley, who was formerly a VP of merchandising at the company.

Reporting Structure and Team Size

“I report directly to the CEO,” Chumley says, “which gives you a sense of how much he and the leadership of the organization values the work that we’re doing and the ability to think ahead of where the business is,” he says. “We’re 100 percent dedicated to the innovation work, so we don’t have any accountability to the day-to-day business whatsoever. … We have a massive business to run here and cannot and should not expect the people running the day-to-day also be expected to think about and craft the future.”

The team he oversees has twenty employees. “I keep thinking back to Jeff Bezos and the Amazon two-pizza rule,” he says. “I could feed the entire team with two pizzas, but they’d probably still be a little bit hungry when they were done.”

Filtering Ideas

While he says his team doesn’t expect every innovation to be a home run with 7-Eleven customers and franchisees, he says the team does have a set of disciplined filters that they put all of these opportunities through.

    1. Desirability: Does the customer want the solution we’re putting in front of them?
    2. Feasibility: Can our business system execute it? Have we made it really easy for our franchisees and sales associates to be able to execute the solution?
    3. Viability: Is it mutually profitable in the long-run for the franchisees and for 7-Eleven, Inc.?

Partnerships to Create Convenient Solutions

In July, Chumley’s team launched its first-ever delivery service. It enables 7-Eleven customers in the San Francisco and Oakland, Calif., area to order goods and have them delivered through a service called Postmates. “We have a time-constrained consumer, enabled by technology, connected 24/7, living in densely populated areas,” Chumley says. “That’s taking the convenience and high quality of 7-Eleven products and getting them to our customers wherever they might be.”

Using the Postmates app, right, customers can select a 7-Eleven store of their choice, and then order from a curated assortment of items to be picked up and delivered by a courier working for Postmates. The retailer expanded the service this week to Austin, and plans to add New York, Los Angeles, Washington, D.C., and Chicago soon.

7-Eleven has also run financial services trials with a company called PayNearMe, which enables people to pay bills with cash at some 7-Eleven locations. “There are various estimates, but we believe that about 30 percent of people in the U.S. are unbanked or under-banked,” Chumley explains. “They don’t have a credit card; they don’t have a checking account.”

People can even purchase Greyhound bus tickets online, indicating on the website they want to pay in cash through PayNearMe at a 7-Eleven. The website generates a bar code, which they can take into any 7-Eleven. Once the clerk scans the code and the customer hands over the money, a ticket is generated. Previously, Chumley notes, the only way to buy a bus ticket with cash was at the bus station. “Greyhound was seeing a lot of customers abandon [travel purchases] on their website, because they didn’t have the credit card to pay for it.”

Another successful relationship for 7-Eleven has been with KeyMe, a Manhattan-based digital locksmith. Numerous KeyMe kiosks have been set up in 7-Eleven locations in New York. They allow people who are locked out of their homes to go to a 7-Eleven, pull up a digital file of a key they’ve stored, and then have another one recut in minutes, versus having to wait several hours and pay hundreds of dollars for a locksmith.

7-Eleven stores as shipping centers are also becoming more common. In 2012, 7-Eleven began installing Amazon Lockers, which make it possible for customers to receive and return their Amazon purchases. (They eliminate the need to be at home or have a secure place for a delivery to be dropped off.) Right now, Chumley estimates of the roughly 300 Amazon Locker locations in the country, half are in 7-Eleven stores.

“These are pragmatic everyday solutions,” Chumley says, and “we’ve been leveraging technology and partnerships to solve [problems for customers] in a very convenient and efficient way.”

Starting a Venture Capital Arm

In mid-2013, 7-Eleven began making investments through a new entity called 7-Ventures, led by Chumley and vice president Raja Doddala. The goal was to learn about new products and technologies that had the potential to change retail. (A portfolio manager and an analyst who helps evaluate new investment opportunities round out the 7-Ventures team.)

“We spent a significant amount of time with some of the leading capital firms around the country and in the Valley and elsewhere,” Chumley says, “and the conversations started at first, ‘You’re from where? And you want to talk to us about what?’ But what really resonated was when we started to talk about our stores as the product, and what that means is — there’s a lot of them, they’re everywhere, they never close, and our business system is such that we make daily deliveries of fresh food and products to every single store in a network every day of the year.”

The company now has financial stakes in many of the companies it is partnering with, including PayNearMe, Postmates, KeyMe, and others. 7-Ventures is also invested in Belly, a Chicago-based startup that operates a customer loyalty platform in several cities where 7-Eleven has stores; Core Natural, which produces PH-balanced water; and YooLotto, an app that enables people to easily check if their lottery ticket won. (If it wasn’t a winner, the app serves up discounts and promotions at 7-Eleven Stores.)

“We’ve spent the first year or so doing outreach and saying, ‘Hey, we’re open to new ideas. Here’s what we bring to you and the customers.’ Now we’re actually fielding a lot of inbound opportunities where people are coming to us with new product ideas, new food ideas, new technology ideas, new ways of engaging the customer, and new ways of connecting us to their network of customers and their products and services.”