Executives at 7-Eleven Inc. call it "the biggest thing since the Slurpee": a plan to offer financial services through Web-enabled kiosks at their convenience stores around the country.
The company already cashes checks for customers, and its management envisions a day when people who pop in for a sandwich and some chips will also be able to make a quick deposit, wire money to a relative, and buy books or music CDs from an Internet site. The idea is that convenient financial services will make the stores more of a destination and encourage more frequent traffic and bigger food purchases.
So far 7-Eleven, which is based in Dallas, is taking this strategy in small sips rather than a Big Gulp.
Like other big store chains, such as Blockbuster Video, the Target discount stores, and the Duane Reade drugstores, 7-Eleven has been installing automated teller machines. It is dabbling in various card products, including prepaid gift cards and Internet shopping cards issued by American Express Co.
Through what seems to be an expanding partnership between 7-Eleven and American Express, the convenience store chain is planning to install interactive touch-screen kiosks that will give customers round-the-clock access to financial products.
At first, these kiosks will mainly handle check-cashing and wire transfers, but in the future, the companies say they plan to introduce a range of services, including event ticketing, e-commerce applications, and online shopping. 7-Eleven has dubbed its Internet strategy "V.com," for virtual commerce.
7-Eleven, which last year changed its name from the Southland Corp., is still fairly mum about its plans in the banking and e-commerce arenas. In May it hired Michael Gade as vice president of business development. He is responsible for overseeing the V.com effort.
Mr. Gade's previous job had been executive vice president for Associates First Capital Corp., where he developed and managed Internet activities. 7-Eleven would not make Mr. Gade available for an interview. The company said it was premature to discuss its intentions.
But 7-Eleven, which is owned by a Japanese holding company called IYG Holding Co. (itself a subsidiary of Ito-Yokado Co.), has made enough information public to suggest that big plans are afoot. A Japanese sister company, 7-Eleven Japan, is doing a number of odd things for a convenience store chain, such as working as a sales agent for the online auto seller CarPoint and joining with Sony Corp., NEC Corp., and other companies in an electronic commerce venture called 7dream.com.
In the United States, 7-Eleven has been pursuing some new strategies that seem naturally aligned with its core business, such as getting more fresh foods on its shelves; and some that do not, such as a new deal to sell AT&T prepaid wireless phones.
With 5,700 convenience stores in the United States and 19,400 worldwide, the company has come far since its founding in 1927 an ice company that began selling milk, eggs, and bread for the convenience of its ice customers.
For nearly three years 7-Eleven has been running a pilot program of financial services kiosks in Austin, Tex. Each store has two kiosks, one for typical ATM transactions, and one for wire transfers and to register for the service. There is also a shelf area for writing and for brochures, according to Rob Evans, director in the industry marketing group of NCR Corp., which developed the kiosk hardware and software.
American Express, which deploys 5,000 ATMs in 7-Eleven stores, did not participate in the Austin pilot program, but the companies will partner in the next phase of the deployment.
7-Eleven had said it would deploy 200 more kiosks in the Dallas-Fort Worth area in November, but those plans have been pushed back to early next year, the company said. Ultimately, the goal seems to be to put financial service stations in all the stores, then to connect them to the Internet, so customers can shop online.
The Austin pilot has been a learning experience, according to 7-Eleven officials and others involved. For one thing, the company found out the equipment it installed was too large. Instead of the seven-foot kiosks that were put in the Austin stores, the new kiosks will take up no more than three feet, Mr. Evans said.
"We went to school on those sites," he said. "We basically learned how to shrink the footprints of the machines."
Margaret Chabris, a 7-Eleven spokeswoman, said the Austin pilot remains a success because "it gave us reasons to believe this could evolve to the next generation."
Meanwhile, 7-Eleven and Amex are busy promoting their cobranded prepaid gift cards, which have been sold since Thanksgiving and can be loaded with $25 to $1,000 (for a 4% load fee). These cards can be used at any retailer - online or offline - that accepts American Express.
An American Express spokes-person said the gift cards are being offered temporarily, and that after the holiday season Amex will decide whether to continue the product or change it. In June the two companies had offered a similar prepaid Internet shopping card, but that card was available only in Austin and Fort Lauderdale, Fla.
7-Eleven has offered check-cashing for years, because so many of its customers do not have traditional bank accounts. Mr. Evans said the kiosk plan is meant to shift the burden of check cashing away from the cashiers, who complain that, in addition to their checkout duties, they also have "to be a bank teller."
Ms. Chabris said another lesson from the Austin pilot was that many patrons who cashed checks at the kiosks were bank customers. "A lot do having checking accounts, but they like the ease of cashing checks there as well."
She would not place a time frame on the plan to Web-enable the kiosks. The company is negotiating with certain e-commerce companies, and the Web sites that would likely be made available would sell simple items, such as books and CDs, she said. "We don't want people to surf the Web. It would be some very specific destinations."
Each kiosk transaction will bear a fee, but Mr. Evans said that 7-Eleven already charges fees for the financial services it conducts over the counter. "This isn't another example of ATMs gone amok."
Equity analysts who follow 7-Eleven said they saw some potential in the kiosk plan.
"It makes sense, but whether it works or not, we'll have to see," said David Tannehill, senior vice president of equity research for Morgan Keegan & Co. "It's just to give their customers another reason to come into the store and buy stuff."
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