Reitan Convenience Denmark, the 2019 NACS International Convenience Retailer of the Year, has completely transformed its way of doing business to stay relevant in Denmark’s competitive convenience store marketplace. The digitalization movement, from online versions of newspapers and magazines to online purchases of transportation tickets, has had a huge impact on Reitan’s business.

“Categories that used to be very good for us started declining,” explained Jesper Østergaard, CEO of Reitan Convenience Denmark, which operates 7-Eleven stores and is part of the Norwegian Reitan Group. “We had to decide whether we wanted to accept that 7-Eleven was becoming less and less relevant for consumers, or whether we wanted to prosper and survive.”

Østergaard’s turnaround strategy has been centered on three key areas: people, focus and communication, and it has made 7-Eleven one of the biggest retailers in Denmark selling food on-the-go.

The convenience retailer, which opened its first store in Denmark in 1993 and today operates 177 stores across the country, always had a strong focus on food, including bakery and beverages, but the liberalization of grocery store opening hours in October 2012 meant it had to act. “We had to change our strategy from being a more traditional convenience store to become a food destination selling convenience products,” said Østergaard.

To make that transition, the business needed to find fresh talent and expertise. “Internally we said that to be the best in food, we needed the best people to work with us,” Østergaard recalled.

So 7-Eleven set about recruiting a different type of franchisee—those with more of a focus on food products and customer service, rather than retail operators who solely ensured a store was open 24/7.

The business looked at the staffing at its support office with a fresh mindset, too. Category managers could be great at negotiations and spreadsheets, but they also needed to be passionate about food products, said Østergaard. In addition, the company began bringing on broad new expertise and skills—people who were trained as chefs and/or had worked in the restaurant business.

Customers are willing to pay a premium if a product is quality. Sometimes we want to be cheap as well, but it’s not our prime focus.

Fresh-Food Focus

The company also conducted extensive market research to identify areas of growth, which included beverages and foodservice, as well as healthier options. To fulfill the new vision, the store grew from a traditional kiosk into a modern convenience store format with dedicated areas for in-store eating. Today, the new layout is more akin to a café in terms of design and ambience; while the seating has promoted customer dwell time and increased basket sizes to boot.

7-Eleven Denmark is tapping into the consumer desire for fresh, healthy food options by stocking more organic products like fair-trade coffee served with organic fresh milk in 100% plant-based cups. The stores now carry more than 64 SKUs of vegan and vegetarian ranges. “That’s unheard of in our market,” Østergaard said. The packaging of all products, meanwhile, utilizes environmentally friendly solutions whenever possible. “Every time a customer came into our store, we wanted to surprise them with products they perhaps didn’t even know they wanted,” said Østergaard.

More food is prepared fresh on-site, and an extensive grab-and-go section is stocked with private-label fresh salads, wraps, sandwiches, juice, smoothies, fruit and snacks. Today, 35% of in-store sales of food, drinks and bakery come from healthier product lines. A move to made-to-order products may come in time, especially at larger stores, Østergaard offered.

Embracing Digital

Technology plays an important role in helping customers navigate and choose products at 7-Eleven Denmark, with digital platforms providing nutritional information. The company ties deals and loyalty initiatives into its established app, which has led to a significant increase in the number of downloads. The stores accept mobile payment, and some high-traffic locations allow self-scan-and-pay options. Østergaard believes scan-and-pay by mobile phone will be the future and what customers will prefer. In addition, home delivery via a third-party delivery service is available in select markets.

7-Eleven also is exploring how technology can help it serve more customers and will soon be equipping staff with tablets at railway station sites and other high traffic locations and taking products such as breakfast items out onto the concourse to sell. Mobile sales units are under scrutiny, too, and are being deployed at festivals and concerts. “We like to be where there are a lot of customers and, if a customer can’t come to us, we will come to the customer,” said Jesper Østergaard, CEO of Reitan Convenience Denmark, which operates the 7-Eleven stores. It’s building an improved brand perception that the business has shifted from providing simple, fast food to catering for every customer requirement, be that healthy, vegetarian or vegan, too.

Uniquely, 7-Eleven is partnering with restaurants and food start-ups in Denmark, too, where it is winning first-mover advantage from seeing innovative new lines, which the business can then look to produce in a more industrialized way. Healthier yogurts, salads and hot food products have all been developed as a result. “We are benefiting from working with the restaurant industry in Denmark,” said Østergaard. “We don’t have the products exclusively for ourselves for a long time as people tend to copy. But being first when something happens brings credibility.” Inspiration for new lines, such as ginger shots, also comes from traveling to other markets, including Dublin, London and New York.

The retailer relies on its employees to showcase the store format and its offers. Staff receive valuable training through gamification, and they also receive extensive training in food safety, since more fresh food is prepared on-site. A trained chef, meanwhile, manages the food category.

7-Eleven has begun to shift its marketing focus by communicating the healthier choices on offer at its stores. This tactic is introducing new customers into branches, although Østergaard conceded it’s a balance. “We don’t want to lose customers that come for a hot dog and Coke, but we also want to attract a younger crowd,” he said. Promoting quality over price is another shift in communication style for the retailer. “Historically, we were very focused on price, but we are now moving away from price because we don’t want to be known for selling cheap products but high-quality products, Østergaard said. “Customers are willing to pay a premium if a product is quality. Sometimes we want to be cheap, as well, but it’s not our prime focus,” he added.

Railway and Hospital Stores

Østergaard reported that 7-Eleven is achieving some of its biggest sales growth at railway locations (for more on railway station convenience stores, see “Platform for Growth” in the July 2019 issue). Reitan Convenience Denmark established a master franchising agreement with the state-owned railway nine years ago.

According to Østergaard, there was a lot of skepticism at the start, and few people believed in the model. However, it’s clear that today a strong solution has emerged, despite combining two very different management styles and cultures.

We had to change our strategy from being a more traditional convenience store to become a food destination selling convenience products.

“Today the co-operation is very good, and with the compromises we have made, we have created some brilliant stores,” he said. That’s even more remarkable given that Denmark is experiencing a decline in train passengers, unlike most European markets.

Østergaard credits the railway stores’ growth to working in tandem with the state company to better understand passenger needs and what they believe constitutes good service. The product offer also has to be very slick indeed, he said. 7-Eleven addresses this through dayparts and labor as well as product and category management. “The results are really good for both parties in spite of the decline in passenger numbers,” Østergaard said.

Hospitals are another avenue of opportunity. 7-Eleven opened its first store at Denmark’s biggest university hospital five years ago. Again, there was a lot of negotiation surrounding the concept, but it has since expanded to more stores. These cater to some of the broadest customer groups: young and old, patients and visitors, plus hospital employees, Østergaard said. For patients too unwell to visit the stores, there’s a mobile sales unit, as well.

University campuses are another possible avenue for growth. Østergaard shared that Reitan will start a test in Sweden but is unsure if the concept will be viable in the smaller Danish market where 7-Eleven already operates many city center stores near larger universities. However, unmanned stores, similar to those in operation in Asia, could be an option, he added. The company will test the concept in Sweden and offer approximately 500 SKUs, although there is a question mark over possible shrinkage.

And there’s still an opportunity to open new stores, Østergaard said. The Danish market is not yet saturated, and Reitan Convenience Denmark believes there’s potential for a further 50-100 7-Eleven stores, even in a small country like Denmark.

Reitan Convenience Denmark is rightly recognized as an innovative and successful international convenience store that breaks new ground and sets innovative standards for the industry with the 2019 NACS International Convenience Retailer of the Year Award, sponsored by Jack Link's.

“Reitan Convenience Denmark joins a prestigious group of retailers selected to receive this award, which marks the best in convenience retailing,” said Henry Armour, NACS president and CEO. “An aggressive growth strategy with a focus on critical areas—healthy foodservice, technology and its employees—has allowed it to prosper. The retailer continues to enhance the customer shopping experience through its innovative strategies.”

The turnaround strategy is working. “We have become more relevant to more customers than we have ever been in the last 25 years,” concluded Østergaard.