7-Eleven has positioned Big Gulp pop as a value brand, which explains its knee-level shelf position. Smith explains, "Value is becoming more and more important to a certain segment of the market. Our challenge is to find out what the customer wants and provide it."
It's not the first time 7-Eleven has offered its own white-label products. The chain previously sold Classic Selection branded soft drinks—it still maintains the brand for bottled water—but the customer response fell short of goals, so the switch to the Big Gulp brand was made earlier this year.
"We feel the Big Gulp branding is stronger and more recognized than Classic Selection," Smith says. "The customers have a connection. Everybody knows what a Big Gulp is—it's synonymous with 7-Eleven."
With more than 27,900 stores worldwide, 7-Eleven is the largest convenience store retailer in the world. Those are impressive numbers, but Smith reports that the company hasn't received any negative feedback from the major bottlers about the chain's dual role as distributor and manufacturer.
The Big Gulp brand expansion story doesn't end there. While chocolate bars are rarely, if ever, gulped, 7-Eleven simultaneously launched a pair of Big Gulp chocolate bars—one milk chocolate, the other dark chocolate. And yes, they're a mouthful and then some. The plain milk chocolate bar is available in the 100-gram size, while the dark chocolate with rice crisps version weighs 85 grams.
The marketing decision wasn‘t difficult, Smith explains, because the Big Gulp name stands for quality and value, and it transcends individual products. Customer recognition of the brand is the key. "The chocolate bars represent the same thing to the customer. It's a solid serving for a value price," she says.
Rob Warren, director of the Asper Centre for Entrepreneurship at the University of Manitoba, says the decision to rebrand the soft drinks as Big Gulp products was the right move. "It's a great name, especially in Canada; it's very well known. 7-Eleven has done a very good job marketing itself." Even using the name on chocolate bars makes sense, he adds. "People think of Big Gulp as a brand name more so than a fountain drink. 7-Eleven is guessing that a lot of people who buy Big Gulps also buy candy bars."
Smith agrees, noting that private-label products are a growing trend in the marketplace for two reasons: they allow the retailer to own the brand and create a better connection with the customer.
And then there's another factor to consider. Both Smith and Warren are quick to point out that the margins on proprietary products are higher. Warren explains that distributors don't make significant margins selling national brands. "Traditional players like 7-Eleven and Mac's [Convenience Stores] have been squeezed in recent years. They're being hit hard by the gas stations, which have opened up their own convenience stores."
Even some grocery players are getting into the stop-and-shop game, says Warren. They're opening up small kiosks in the corner of their parking lots, offering a quick way to buy selected items.
Like 7-Eleven, Mac's has entered the white label market, too. The firm launched an energy drink called "Joker" at the beginning of the year. Al Suggitt, operations manager for the store's Manitoba and Saskatchewan operations, says the logic in taking on the Red Bulls of the world was simple given the attractive margins.
"We make a buck," he says. According to his figures, Joker, which comes in one flavor (citrus) and one size (591 ml) but in regular and low-carb varieties, became the number five energy drink in North America just seven months after its launch.
Mac's has 3,200 stores across North America, including more than 600 in Canada. Among the retail names under its umbrella are Circle K, Big Foot and Dairy Mart, all of which are in the US.
Reducing the firm's dealings with independent distributors is a priority now. "If we can do more in-house product, it's beneficial to the company," Suggitt says.
Of course, 7-Eleven isn't the first store chain to offer proprietary soft drinks. Grocery outlets such as the Real Canadian Superstore have been doing it for decades. In fact, the introduction of its President's Choice branded pop (which enabled connoisseurs of carbonation to pick up their favorite drinks while shopping) marked the beginning of the end for some soft drink companies that had created a niche for themselves. Witness the Pop Shoppe and Pic-a-Pop, chains that required customers to make a special trip to their stand-alone stores. (After lying dormant for a number of years, both brands have recently re-emerged with new formats.)
How all this will shake out in years to come is anyone's guess, but as the Big Gulp move illustrates, convenience store chains are finding refreshing and potentially lucrative ways to live up to their billing.
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