About Seven Eleven Supermarket

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Question :

Discuss the role of stakeholders' involvement in successful development and stability of a business organization. Consider the example of 7-Eleven as the case to justify your discussion.

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Answer :

7- Eleven Supermarket

Executive Summary

7- Eleven is a privately owned company, with around 700 stores across different parts of Australia, such as Queensland, Victoria, Australian Capital Territory, New South Wales, and Western Australia. It is the largest convenient retailer in Australia, with around 33.5% market share. 7- Eleven has excelled at two major aspects of the business, including innovation and environmental sustainability. It started using biometric digital time clock and rostering system. The company has developed Store Carbon Reduction Strategy to reduce in-store energy. However, 7- Eleven has failed in maintaining an effective relationship with its key stakeholders, including suppliers, employees, and franchisees. It has been recommended that the company must involve its stakeholders in the decision making process to devise a strategy collaboratively that appears to be productive for all involved in the supply chain. 

1. Introduction

The supermarket and grocery industry is one of the most competitive industries in Australia. With the rapid expansion of ALDI, the Coles supermarket and Woolworths, the operational landscape of the supermarket industry has altered over the past few years (Kumar 2008). Supermarkets involve in the price wars in order to gain competitive advantages in business and gain market share in the Australian supermarket retail sector. From 2004 to 2017, the Australian supermarket and grocery industry has experienced stable growth, with the continuous increase in annual turnover. As shown in the graph provided below, the annual turnover of the supermarket and grocery industry in Australian has increased from 56.95 billion Australian dollars in 2004 to 105.23 billion Australian dollars in 2017. 

Figure 1: Annual turnover of the Australian supermarkets and grocery stores retail industry from 2004 to 2017 (in billion Australian dollars)

Annual turnover of the Australian supermarkets

(Source: Statista 2018)

Seven-Eleven supermarket encounters huge threat from its rivals, including Aldi, Coles, and Woolworths. With the effective business strategy development, the particular supermarket would be able to increase its market share in the Australian supermarket industry. 

2. 7- Eleven 

7- Eleven is a private company held by the Withers and Barlow family. The first 7- Eleven store in Australia was established in August 1977. Presently, the company has around 700 stores across different parts of Australia, such as Queensland, Victoria, Australian Capital Territory, New South Wales, and Western Australia. 7-Eleven Stores Pty Ltd, through its wide store network, carries out around 200 million transactions annually, producing sales of approximately $3.6 billion. More than 400 franchisees have joined 7- Eleven, which certainly facilitated the company to grow its business and develop a strong brand image across the nation (7eleven.com.au. 2018). In 2011, the company won Australian Retailer of the year. 7- Eleven is the largest convenient retailer in Australia, with around 33.5% market share. The company is also the largest autonomous fuel retailer on the eastern seaboard, with around 500 fuel stores.  The mission of 7- Eleven is to be the best in the Australian market and fulfill the changing needs and demands of customers. If we analyze the history of the company, it can be assessed that the company has gained its revenue margin since its establishment. The chart provided below shows how the revenue of 7- Eleven increased between 1995 and 2005.

Figure 2: The growth of revenue of 7- Eleven Inc from 1995 to 2005

The growth of revenue of 7- Eleven Inc from 1995 to 2005

(Source: FairlyValued 2018)

2.1 Innovation

Innovation is one such area, where the company has excelled the bar in recent years in order to be the best in the Australian market and deliver the changing needs and demands of customers. Convenience retailing was an innovative concept when 7- Eleven’s first store was established in Australian in 1977. It became the first 24-hour store in 1978. For 7- Eleven, innovation is about conducting business in new ways that may not be tapped by other supermarket retailers in Australia (7eleven.com.au. 2018). With the new advertising and marketing techniques, the company has already achieved huge success in the Australian supermarket industry. 7- Eleven has a dedicated team, which takes the responsibility to gather and develop new ideas and apply those in the business. One of the major innovations the company has made recently is the launch of world’s first 7- Eleven Fuel App. The company has promoted its products and services through Instagram, an online image-sharing platform. 7- Eleven also started using biometric digital time clock and rostering system. The innovation team has also put their best efforts towards using pioneering digital system both in-store and out of the store to engage customers effectively. 

2.2 Environmental sustainability

7- Eleven has committed to making continuous efforts towards reducing the adverse impact of business operations on the environment. The company has a dedicated environmental department that carries out audits on a regular basis in stores and offices in order to investigate environmental practices and assesses the areas for improvement. 7- Eleven has developed Store Carbon Reduction Strategy to reduce energy, which is used in-store regularly (7eleven.com.au. 2018). All in-store electronics goods, including refrigerators, air conditioners, and lighting systems, are energy efficient. The environmental department has also trailed a wide range of energy saving initiatives, such as temperature controls, smart online marketing, and lighting upgrades. 

The company also carries out environmental monitoring on all fuel sites of the company. In order to remediate site pollution, the environmental department at 7- Eleven has also made a huge investment in developing a wide range of innovative technologies. However, many of the innovative technologies are not available in Australia, such as chemical and compound injections, surfactant additions, and multi-phase extractions. With the help of huge investment in developing advanced technologies, the company has been reduced the site contamination largely. Since 2007, the company has been an active participant to the Australian Packaging Covenant. 7- Eleven has committed to reducing customer waste and proprietary packaging. The company has focused on working collaboratively with its suppliers to enhance sustainability practices throughout the business. Therefore, it can be assessed that unlike other large-scale companies in Australia, 7- Eleven certainly has achieved its objective of maintaining environmental sustainability through its multiple business functions. 

2.3 Relationship with Stakeholders

Over the past few years, the company has been criticized for its wrong approach of dealing with stakeholders, such as employees, suppliers, and store owners. The company was found blameworthy for reducing product sales in its franchisees’ stores. Over the years, 7- Eleven has put the company logo on a wide range of products, including frozen pizza, laundry detergent, foam cups, and others. Consequently, customers avoid purchasing these products with brand logo and go for branded products, such as Nestle and Gatorade. This practice of 7- Eleven certainly has affected profitability for its franchisees. Another issue is that the company was criticized for its underpayment of employees’ wages (Grimmer 2018). Although the company has made a sound investment into innovation and technologies, they do not focus on enhancing employee benefits in order to increase employee engagement, leading to improved productivity. The company does not have good relations with its suppliers, which is another significant barrier to the growth of business in the competitive market in Australia. Without developing appropriate strategies and improving business practices, it would not be possible for the company to build up a strong relationship with its key stakeholders. 

3. Conclusion and recommendations

In conclusion, it can be assessed that 7- Eleven has successfully managed its growth in the supermarket industry in Australia since its establishment. Innovation and environmental sustainability are the two most significant part of the business, where 7- Eleven has focused on and excelled over the years. 

It is recommended that the company needs to focus on developing its strong relationship with the suppliers, employees, and franchisees to grow more business opportunities in the competitive marketplace. The HRM of the company should take responsibility to deliver employee benefits and encourage the workforce towards delivering a high level of performance. It is important for the company to involve suppliers and franchisees in the decision making process to devise appropriate decisions for the business.