23. JIM KEYES, President and CEO, 7-ElevenKey development: Expanded 7-Eleven's store-based merchandising.What's next: Rolling out more fresh food and in-store kiosks.In Beijing, where Dallas-based 7-Eleven opened its first store in China this year, it is possible to see the company's "Retailer Initiative" strategy in action.The strategy, which Jim Keyes helped 7-Eleven develop in the mid-1990s when

23. JIM KEYES, President and CEO, 7-Eleven

Key development: Expanded 7-Eleven's store-based merchandising.

What's next: Rolling out more fresh food and in-store kiosks.

In Beijing, where Dallas-based 7-Eleven opened its first store in China this year, it is possible to see the company's "Retailer Initiative" strategy in action.

The strategy, which Jim Keyes helped 7-Eleven develop in the mid-1990s when he was vice president of planning, is based on consumer demand instead of manufacturer sales. It stresses a "pull" method to ordering as opposed to the "push" from manufacturers, with stores placing all of their own orders.

So in Beijing, consumers will find warm soy milk rather than coffee and freshly prepared rice balls rather than hot dogs. Company-wide, 7-Eleven offers more than 2,500 products tailored to meet the preferences of local consumers.

Allowing local consumer demand to determine product selection has helped Keyes, who joined the company in 1985 and became its top executive in 2000, to drive a renaissance at the venerable, 77-year-old convenience operator.

7-Eleven, which had worldwide sales of more than $36 billion last year, operates or franchises about 5,800 stores in the United States and Canada, and licenses roughly 20,500 stores in 17 other countries and U.S. territories. With a growing emphasis on fresh food and supported by sophisticated IT systems, it is clearly a retailer that has gained notice by conventional food retailers.

Keyes, 49, is now expanding on the Retailer Initiative strategy with what is called the "model market" concept. This approach, introduced two years ago in Fort Worth, Texas, is designed to implement the principles and benefits of the Retailer Initiative in every facet of a store and market.

Currently in 37 markets representing more than 1,000 stores, the model market concept has already resulted in double-digit sales increases, reduction of excess inventory, and improvement in inventory turnover, said Kevin Gardner, 7-Eleven's director of marketing communications.

The company plans to roll out the model market to all markets by 2007, including global franchises like Beijing.

This year the company also plans to "aggressively roll out a new, improved menu and better store execution," said Keyes. The menu will offer an array of fast foods, sandwiches, salads, snacks and bakery items.

7-Eleven has gained a reputation as an in-store technology innovator with its "Vcom" kiosks. The kiosks, currently in 1,000 stores, offer a variety of financial services, with the latest being check-cashing solutions. "Customers said they liked the availability [of financial services] 24 hours a day," said Keyes.

While a date for installing the kiosks chainwide has not been set, the company is pleased with the results so far and is "very optimistic" about rolling the technology out to all stores, said Keyes.



Key development: Opening new stores around the globe.

What's next: Battling for market share with worldwide rivals.

Theo Albrecht Jr. is following in his father's elusive footsteps.

Theo Jr. reportedly fosters the same secretive corporate culture that his father and uncle, Karl, created as they built up the company from a single general store in Essen, Germany, to a sprawling global enterprise of 6,600 units. The Albrechts also own the wildly popular U.S. format, Trader Joe's.

Officials shun the media and make it a point to operate quietly. Theo Sr. and Karl are believed to be retired. However, Theo Sr., now in his 80s, is said to report daily to the office in Essen, Aldi's headquarters. Some observers contended he continues to have influence over the company.

Though smaller than Wal-Mart, the German retailer has been compared to the Bentonville, Ark.-based giant in its disciplined approach to stripping extra costs out of operations and offering rock-bottom prices. In the United States, Aldi stores typically measure 12,000 square feet and carry about 700 stockkeeping units. Groceries, mostly private-label products, are stacked on pallets in a no-frills environment.

Aldi is best known in Germany, where it has a 40% share of the grocery market and accounts for two-thirds of sales. There Aldi competes fiercely with another discounter, Lidl, which has been gaining market share. Aldi's U.S. operations grew slightly in the past year, from 671 stores in 25 states to 700 stores in 26 states. Supermarkets are starting to notice.

"As I talk to supermarket executives, for the first time I'm hearing them say alternative formats are now among their greatest challenges," said Jon Hauptman, vice president, Willard Bishop Consulting, Barrington, Ill. "[Even] Wal-Mart has adopted some principles of limited-assortment stores such as having strong store-brand programs that offer low price points."

Selected stores in the United States have introduced wine and beer. Hauptman speculated Aldi is borrowing an idea from Trader Joe's, which it also owns, where the "Two Buck Chuck" wine is a top seller. Furthermore, Aldi continues to expand its selection of packaged fresh foods, including produce and meat.

Officials don't talk to the media about their growth plans, but some observers believed the company intends to expand in the United States. While Aldi historically has appealed to lower-income shoppers, that's changing. Aldi also is opening more stores in neighborhoods that are simply convenient to customers.

"Aldi is a very credible, well-accepted shopping option among middle- and even upper-middle-class households," Hauptman said. "The demographic for this stuff is absolutely expanding."


25. DAVID W. BERNAUER, Chairman and CEO, Walgreen

Key developments: Continued dedication to strategic vision and low-key innovation propelled Walgreens to new growth, despite competitors' headline-grabbing acquisitions.

What's next: Regain rank as No. 1 drug store.

Upholding commitment and integrity may not scream exciting innovation. However, if this modus operandi works and works well, then why change it? No one understands that better than David W. Bernauer, chairman and chief executive officer, Walgreen, Deerfield, Ill.

Walgreens is known for its old-school approach to retailing: Make the business convenient so it appeals to the customer, and it will succeed. This plan is simple, but effective, industry observers said. Walgreens' corporate culture and philosophy haven't changed much through the decades as it rose to the top of the drug store channel.

"The beauty of Walgreen is that nothing changes," said Neil Stern, partner, McMillan-Doolittle, Chicago. "That's the hallmark of the company. It's the hallmark of management. They are the slow-and-steady steamroller: inevitable movement, inevitable growth. They stick to their plan. They deliver on the plan. They execute. They ignore all the distractions along the way."

CVS' acquisition of Eckerd this year made headlines and appeared, at first, to shake up the drug store industry. Due to the acquisition, CVS, Woonsocket, R.I., surpassed Walgreens to become the largest drug store chain in the United States. Yet following the acquisition, CVS has announced its intention to close 200 to 250 stores in markets where Walgreens has a presence, pointed out Andrew Wolf, analyst, BB&T Capital Markets, Richmond, Va. In the short run, Walgreens has the opportunity to regain some market share. In the long run, the chain's unwavering dedication to its well-thought-out strategy of opening new stores, closing underperforming units and maintaining a strong cash position could easily allow it to reclaim the No. 1 spot, analysts stated.

"As long as Walgreens continues on the course with the strategy they are currently employing, I see no reason why they can't regain the No. 1 position," said David Bishop, director, Willard Bishop Consulting, Barrington, Ill.

Walgreens' pioneered three of the major industry developments that revolutionized drug store retailing: the stand-alone drug store, the drive-thru pharmacy, and the 24-hour pharmacy. "Walgreen is an innovator. They're the leaders. They're just not out there with large megaphones promoting themselves," Wolf said.

Bernauer's role as CEO has been to bring to fruition Walgreens' goals in accordance with the company values of commitment and integrity. Moving forward he will need to couple that with a continued focus on smart innovations, observers agreed.

"Bernauer has to break with tradition but simultaneously build on tradition," said Diane Garber, president, In Sight Communications, Buffalo Grove, Ill.



Key developments: Opened 7,000th store in July; developed new Dollar General Markets format with more food.

What's next: Open 20 more Dollar General Markets by the end of January.

With annually rising profits, store counts and new management, David A. Perdue Jr. is paving the way for the next phases of growth for Dollar General, Goodlettsville, Tenn. Among the company's focuses: Dollar General Markets, Western expansion and new leadership.

In an effort to capture more trips and bigger baskets, Dollar General Markets are selling a greater variety of food, including fresh produce, refrigerated and frozen items. Dollar General also celebrated the opening of its milestone 7,000th store on July 1 in Clovis, N.M. Year-to-date, the company has opened 357 Dollar General Stores and two Dollar General Markets. Reports state that the company plans to open another 20 Dollar General Markets by the end of January.

Dollar General stands apart from other dollar stores in the way they "always have stronger focus on consumables," said Neil Stern, partner at McMillan-Doolittle, Chicago. "Dollar General was really one of the first to try to focus on becoming much more of a weekly shop and pattern shop to a customer."

Perdue, former president and chief executive officer at Reebok Brand, was named CEO in April 2003 and chairman of the board of directors in June 2003. In his 30-year career, Perdue has developed expertise in the areas of business, marketing, sales, manufacturing and global operations. Prior to joining Dollar General, Perdue served as chairman and CEO of Pillowtex Corp.

"David Perdue has come from outside the industry and he is bringing more discipline and more professional management into the business," Stern said. "I think at the time he came to Dollar General, they desperately needed that -- more controls, more systems to maximize their growth and potential."

In September 2003, Perdue hired Lawrence V. Jackson as president and chief operating officer. "That's a major change in that the company is bringing in some new management and new leadership," Stern said.

In a recovering economy, success in the dollar channel is based on going beyond $1 prices. "Dollar General is not stuck on dollar-only price points," said Todd Hale, senior vice president, Consumer Insights, ACNielsen, Schaumburg, Ill.

In adding flexibility to its pricing, Dollar General still offers most goods at $1 or less, with the highest-priced products near $50.

"Our research shows that the dollar channel is somewhat immune to Wal-Mart Supercenter expansion," Hale said. "We still see strong store growth for this channel." Dollar General roots itself in low-income neighborhoods in inner cities, as well as communities too small for supercenters.

Dollar General began in 1939 as a small family wholesaler in Scottsville, Ky. It switched to retail in 1945, and by 1955 it reached annual sales of $2 million in 35 stores. Third generation Cal Turner stepped down in 2003 after 25 years as CEO, naming David Perdue to take his place.