THE Western Cape has a new retail format now that one of the best known convenience store catastrophes has been revamped into a dual brand under the 7-Eleven/Friendly banner.
And far from it being a ‘survival merger’ with plans to double the number of stores within two years.
7-Eleven was bought out of liquidation last year by retail giant Metcash after the somewhat misguided Hadjidakis family had steered the convenience store franchise into some serious financial troubles. Many observers contended although Metcash was paying virtually nothing to snatch 7-Eleven it would be an arduous – if not impossible – task to resuscitate the flagging brand.
So is a dual branded store strategy – a ploy used by Shoprite (with Checkers and OK Bazaars) - the best way forward for Metcash to regain 7-Eleven’s stature in the community?
Friendly’s marketing and development executive Frederick Appel points out that three years ago Metcash had three retail brands: Friendly Grocer, IGA Everyday and Foodies.
“A market survey indicated that there were no common factors that were being used to strengthen the image of these three chains in the marketplace and no single brand name with which the consumer could identify. We therefore took the decision to rationalise and relaunch their three independent brands under the umbrella name Friendly”.
This meant there were three tiers: Friendly Supermarket, Friendly Everyday and Friendly Shoppe. The Friendly Shoppe brand covered the convenience market, and was then in fact competing against 7-Eleven.
Appel says that prior to the 7-Eleven take-over, a research study conducted by Metcash showed that the 7-Eleven brand was one of the best-known brand names in SA - especially in the Western Cape. “We realized that there was better value in the 7-Eleven brand name than in Shoppe, which led to the decision to take over 7-Eleven and to incorporate it into our convenience tier.”
Marketing experts probably won’t miss the Friendly 7-Eleven catchline, which recalls the old advertising jingle: “There’s a friendly Spar wherever you are…”
In the meantime the Friendly chain had established itself as a major player in the Southern African retail industry. Appel argues: “There is therefore tremendous value in the Friendly name, and likewise in the 7-Eleven name, which has strong convenience market connotations. So it was important to retain both names and for these names to complement each other.”
In the instance of Shoprite it seems the Checkers and OK brands – although retained initially as dual brands – have fallen away to make room for the parent company or mother brand.
Does this mean that the 7-Eleven brand will eventually be assimilated by Metcash’s original Friendly tag?
Appel discounts this scenario. “7-Eleven is such powerful property that we need to retain it in conjunction with the Friendly name. There is massive equity in the brand name 7-Eleven, which we obviously cannot ignore.”
Perhaps the more pertinent question would be how the multitude of 7-Eleven franchisees viewed the new livery.
Appel says when Metcash did market research it was clear that 7-Eleven franchisees themselves saw tremendous value in being part of the Friendly chain. He says by the end of this month all 220 7-Elevens will be rebranded. “In addition, all of our current Shoppes - which number 34 – will be rebranded by the end of July.”
With regards to rationalisation, Appel says that with any major acquisition there will always have casualties – but adds that at the same time the new franchisor has an opportunity to sort out the good from the bad.
“We were very fortunate in this respect because we did not have to do a major clean out with regard to 7-Eleven. We preferred to take the route of talking to the new members and giving them the assistance they so badly lacked, to either become profitable or to generate additional profits.”
Appel reckons that overall less than one percent of the original members are no longer with Friendly.
Appel says so far the new dual branded trading format is trading “exceptionally well” with the franchisees giving the new dispensation their full support. “In fact, 99% of 7-Eleven franchisees have been happy to sign the new franchise agreement, because they realize that we will add value to their businesses by offering a wider range of products.”
He says while it is still too early to measure, the situation in most 7-Eleven stores has improved dramatically since the take-over and this trend is expected to continue. “Our involvement will put them in a position to compete more aggressively against the other players in the convenience market – especially the garage forecourts.”
Appel says Metcash will also be remerchandising all stores by the end of October, ensuring the new look 7-Eleven/Friendly stores carry ranges to meet specific customer needs.
“In certain stores we will also be introducing added value departments which will contribute towards a change in customer perceptions and, very important, the profitability of the stores.”
Expansion of the new look stores will be one challenge that Metcash will need handle carefully with Pick ’n Pay’s Friendly stores and soon-to-be listed Spar going great guns in the Cape suburbs.
Appel says a critical mass for 7-Eleven/Friendly is not easy to gauge at this juncture – but he estimates that the number of Friendly/7-Eleven stores could be doubled in the next two years.
“This growth will mainly be in the areas outside the Cape Town municipal boundaries because we are already very strong in that area. ”
Publisher: Cape Business News
Source: Cape Business News
THE Western Cape has a new retail format now that one of the best known convenience store catastrophes has been revamped into a dual brand under the 7-Eleven/Friendly banner.
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