Australia’s largest convenience store chain 7-Eleven has sought to mimic Google and Netflix’s lean operations by restructuring its head office to create smaller and more agile teams, which is delivering improvements at its outlets.
The reorganisation — which was carried out earlier this year during the pandemic — saw around 40 staff from its head office pool of 550 made redundant.
However, 7-Eleven has hired 30 new employees with specialist skills to help speed up its decision making process to directly benefit stores such as bring new products to market in half the usual time.
You can go to Google, Netflix and a lot of the big tech and modern digital companies that have been using this structure for quite a while, and it has now become more mainstream. And other retailers around the world are using it like Warehouse Group in New Zealand, Wholefoods in the US as well big banks overseas and it is gaining traction,” chief executive Angus McKay told The Australian Business Network on Thursday.
“This is a way to completely flatten our structure.”
It comes as 7-Eleven continues to trade strongly through the pandemic as people shop locally and favour corner stores rather than visiting high-traffic supermarkets and shopping centres, while consumers buy up ready made meals and snacks as they work from home.
7-Eleven’s cheap coffee offer remains popular with customers, with the chain selling around 90 million cups of coffee annually before the pandemic, making it the second biggest buyer of coffee beans in Australia.
The group — which set-up shop in Australia 40 years ago with it novel Slurpee frozen drinks, chocolates, meat pies and drinks — now boasts more than 700 stores around the country and $4bn in annual sales.
Mr McKay said 7-Eleven is the first Australian retailer to introduce the new corporate structure, which has eliminated large pillars within the company where each function such as finance, supply chain or IT was separate, to fashion small teams of six to 10n employees drawn from all the key business functions.
“We have implemented an agile structure, it eliminates traditional hierarchies in an organisation and breaks the organisation down into smaller groups of people … and those groups are completely autonomous,” Mr McKay said.
For example, when it comes to a key category such as confectionary it will have a team of buyers, supply chain experts, finance, IT that will be responsible for confectionery “end to end”, he said.
“So it means they don’t need to dive into another function to get decisions made, they don’t need to bring things all the way back up to leadership groups, it really has smashed the old hierarchies and empowers a lower base made up of people.
“It changes an employees profile completely, it very rapidly turns them from being one trick ponies to now being far broader, far more commercial and have to become more accountable because they are expected to make the decisions rather than push them all away to someone else. People are loving that, they feel it helps them to get on and do their jobs.
“And it means if you are a store manager rather than having one person that is the choke point for everything in our organisation you now have a group of around seven people who literally handle everything from making you a better retailer to handling supply chain issues, maintenance of stores,” Mr McKay said.
Mr McKay said this has produced immediate benefits to the retailer.
“The core changes have been speed with as it quickens the decision making time frame, it reduces our time to market, so an example would be that it would have taken 24 weeks to bring in new products to market but now we can do that in 12 weeks – we’ve done that on things like new sushi and sandwiches.”
Turning to recent trading, Mr McKay said overall the business was performing well, despite the disruptions of lockdowns and restrictions on movements, with more freer states recording robust sales growth
“WA is moving like freight train, it is fantastic. Queensland is equally moving like well and catching up, the lockdowns do smack you at the time and the recovery can be a bit longer, we are already seeing momentum coming back into NSW with a positive tone coming from the government there.
“In Victoria, it is a little slower than what I would like, the good news is that we have clarity on how lockdowns will end but we are not all convinced perhaps on how it will actually end.”
Mr McKay said 7-Eleven was doing well in staples as people were opting to pick up sandwiches, rather than make their own and fuel sales were resilient.
Extracted from The Australian