For your convenience: 7-Eleven, others adding stores

It might seem as if there’s a convenience store on every street corner in the Pikes Peak region. 7-Eleven dominates the market with dozens of stores, while Loaf ‘N Jug and Circle K are among chains with multiple stores.

Even so, more locations are on the way as convenience store chains see continued opportunities for expansion in high-growth areas of the region, and as time-strapped consumers continue to clamor for the quick, in-and-out service that convenience stores offer:

• Dallas-based 7-Eleven, which has roughly 50 area stores, says three to four more are planned this year and another five to six are coming in 2013. Among the new sites: A former Bennigan’s restaurant near Academy Boulevard and North Carefree Circle will be razed to make way for a store, while another location is targeted on Woodmen Road, west of Marksheffel Road.

• Loaf ‘N Jug, an arm of the Kroger grocery chain that owns Kings Soopers, has about 20 stores. Another store is planned southeast of Northgate Boulevard and Voyager Parkway on the Springs’ far north side.

• Circle K, based in suburban Phoenix and with about 20 locations in the area, plans a store on the city’s northeast side, at Tutt Boulevard and North Carefree.

• Midwest-based Kum & Go has aggressively entered Colorado Springs with plans to build 20 to 25 stores over five years. Its first location opened in May at Academy and Vickers Drive. Stores are under construction east of Interstate 25 and InterQuest Parkway, west of Powers Boulevard and Woodmen Road and at Powers and North Carefree, among other locations.

• San Antonio-based Valero, which operates corner stores under the Valero and Diamond Shamrock names, has about 30 area locations. A spokesman said the company plans no additional stores in the area, but occasionally looks to remodel and expand existing locations.

“They sell time,” Jeff Lenard, a National Association of Convenience Stores spokesman in suburban Washington, D.C., said of the popularity of the stores. “When they started back in the 1920s, they sold staple items like milk and bread and eggs after the groceries closed at 5. Over time, what they have sold has changed, but they (continue) to sell time. It’s get them in, get them out, get them on their way, and do it without a hassle.

“We are becoming more time-stressed and time is money,” he added. “And people will give you money if you give them time.”

There are about 150,000 convenience stores nationwide, Lenard said. With a U.S. population of roughly 311 million, that means there’s one store for nearly every 2,100 people.
Using that ratio, the Springs-area’s 2010 population of about 634,000 could accommodate nearly 300 convenience stores — meaning there’s room for growth.

States such as Colorado and cities such as Colorado Springs — with rising populations of young people and outdoor enthusiasts — are prime targets for convenience store chains, Lenard said.

“You’re talking about people that just want an energy bar or a bottle of water or whatever,” he said. “Whether they’re in their car or on their bike, stores are where people are.”

That’s why several new convenience stores are going up in fast-growing parts of the Pikes Peak region that have been relatively under served up to now, said Mark Useman, a retail specialist with Sierra Commercial Real Estate in Colorado Springs who has represented Kum & Go in its local land acquisitions.

“We’ve had decent growth in our city, and there are areas of the city that haven’t seen the expansion or growth of these convenience stores in the last four or five years because of the slowdown of our economy,” Useman said.

Kum & Go evaluated several markets before deciding to enter Colorado Springs, Useman said. The family-owned chain, based in West Des Moines, Iowa, likes secondary cities where it believes it can have an impact, he said.

7-Eleven has sought to expand in markets where it already has large numbers of successful locations, while also acquiring existing stores in markets that are near areas where 7-Eleven operates, said spokeswoman Margaret Chabris.

The chain, a wholly owned subsidiary of a Japanese retail conglomerate, has nearly 48,000 stores worldwide, according to its website; 7-Eleven opened more than 600 stores last year in the U.S. and Canada, and expects to open another 630 this year, Chabris said.

“We’re on one of the biggest accelerated growth strategies I’ve seen in quite some time,” she said. “You will see more 7-Eleven stores. What we have found is that when there are more 7-Eleven stores in a geographic area or our market area, people are more comfortable. They know what you have to offer. They can count on you being open. It increases sales for all the stores because people just know what to expect.”

At 7-Eleven, customers have come to expect familiar products, such as the popular frozen Slurpee drink that has its own website and Facebook page; 24/7 store hours; and promotional campaigns for products that are often tied into movies or television shows.

7-Eleven also prides itself on a sophisticated retail information system that lets store operators track inventory to determine what’s selling and what’s not — allowing them to stock particular items, and their quantity, to fit a particular store and its location, Chabris said.

“In the past decade or two, we have had a real laser-like focus on what the consumer and customer wants,” she said.

Kum & Go is hoping to grab some of those customers. Its Colorado Springs stores are 5,000 square feet each and built on 1.5-acre sites — buildings and parcels that are larger than its stores in other markets and its rivals in the Pikes Peak region. Stores have full kitchens, while fuel pumping areas have more room for motorists, Useman said.

“They cook fresh food,” he said of Kum & Go. “They are coming in with a different prototype and should take some of the pie away from the other stores.”

But even as convenience stores expand, they also face challenges.

Convenience stores fight a perception that their prices are much higher than their rivals. It’s true prices can be more, Lenard said, but convenience stores have high real estate costs to go along with big electricity bills that result from coolers and freezers for cold foods and drinks. Also, because their stores are smaller, they can’t buy products as cheaply as larger groceries, Lenard said.

Still, milk, soda fountain drinks and other items are competitively priced when compared with other retailers, he said. And price isn’t as much of an issue for some customers — even in a slumping economy — if they have a need they want to fill in a hurry.

“You don’t think about your stock portfolio when you’re thirsty, you get something to drink,” he said. “And when you’re hungry, you get something to eat, you don’t worry about the economy. So, it’s more impulse items. A few bucks here to solve a need or to reward yourself doesn’t seem so bad in the scheme of things.”

Meanwhile, convenience store chains aren’t just competing against each other; they’re also fighting larger groceries and, increasingly, Walgreens and other drug stores that sell milk, soda and food items, Lenard said. Even discount dollar stores in some parts of the south are selling cigarettes, he said.

Convenience stores also wrestle with changes in consumer buying habits when it comes to two longtime profit makers: gas and tobacco sales.

Soaring gas prices have driven motorists to seek the cheapest gas they can find, even if it means saving a penny or two. Not only do convenience stores compete with service stations, but with grocery chains whose loyalty programs reward consumers with additional savings on gas. Profits on gas sales are only 3 cents per gallon to begin with, Lenard said.

Meanwhile, tobacco sales are down because fewer people are smoking.

“Your two big traffic drivers are facing a tough road,” Lenard said.

That’s why Springs-area consumers are likely to see more and higher quality food prepared the way they want it, and expanded drink items; food accounts for 23 percent of convenience store sales, while beverages are another 30 percent, Lenard said.

Despite those challenges, the overall state of the convenience store industry has been healthy; three of the last four years have been the most profitable on record for the industry as a whole, Lenard said.

“There are huge challenges when it comes to the future of fuel, the future of tobacco and all of the issues related to credit card fees. And not to forget competition,” he said. “But if you can deliver what the customer wants and solve their needs, and do it fast, you can do very well.”

Contact Rich Laden: 636-0228 Twitter @richladen
Read more: http://www.gazette.com/articles/stores-144657-adding-convenience.html#ixzz26oDmrthG

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Shops lose 88% of customers due to poor service

Despite an overwhelming preference for in-store shopping, consumers are being turned off to high street retail by low customer service levels, new research released today reveals.

In a survey conducted by customer intelligence company Market Force, electrical retailers had the lowest customer service satisfaction score of any service industry with just 2.24 per cent of shoppers left happy.

Shops lose 88% of customers due to poor service

Clothing retailers scored only 2.69 per cent, supermarkets polled 6.10 per cent, local convenience stores received 6.48 per cent backing from consumers, while department stores got the highest score of any retail business type with 9.72 per cent left satisfied.

Of those surveyed 41 per cent said that their biggest frustration with store staff is a lack of interest in their needs and wants, and despite more than three quarter of people preferring bricks and mortar shopping to online as a many as 88 per cent will leave a shop if service is poor.

Tim Ogle, CEO at Market Force Europe, commented: “Good customer service doesn’t have to be expensive. Small, inexpensive changes can have an oversize impact on whether someone buys in your shop and how much they spend.

“For example, our research shows eight out of ten shoppers want to be taken to a product when asking about its location. It’s these little gems of insight that turn a question into a sale.”

Retailers are increasingly realising that in order to make their bricks and mortar offer as compelling as their online platforms they have to improve the experience of visiting their stores.

This morning the UK’s largest retailer Tesco announced a huge recruitment drive, which in part is in reaction to a perceived drop in the supermarket chain’s service levels in recent years.

Several simple service techniques could be employed by businesses to boost trading it seems, with Market Force also finding that 59 per cent of shoppers like products to be recommended to them by staff members.

Although shoppers like to have a personal service, they also seem open to new technologies which cut out staff interaction, with 63 per cent saying they like to use self-service machine and 49 per cent in favour of contactless payments.

In a warning to retailers keen to make more transactions automated however, the research shows that 37 per cent of consumers feel they should pay less when using self-service checkouts.

Compared to other industries retail appears to be struggling to please its consumers at present, with banks (10.8 per cent), restaurants/pubs (28.3 per cent), and hotels (31.5 per cent) all scoring higher customer satisfaction levels in the Market Force survey.

Ogle added: “These findings should be a wakeup call to retailers looking for cost effective ways to grow their business.”

Its Convenience, Not Price, which Limits Veggie Consumption

A research paper published in Public Health Nutrition posits that price is less of a factor in deciding to buy vegetables and fruits. Rather, it’s the convenient access to quality produce that increased purchases.

String Beans in bulk at a supermarket

The research was conducted in low income neighborhoods in Chicago, where you would expect every dollar to count.

Participants who agreed that they had “convenient access to quality” produce were more than twice as likely to eat the FDA-recommended amounts of fruits and vegetables, compared to those who said they did not have such access. read more from the Washington Post…

While this proves a correlation, it does not necessarily mean causation. The laws of economics have taught us that low prices are indeed a factor in food purchase decisions. Obviously not the only factor.

What we’ve heard and seen (qualitatively) is that many people don’t purchase vegetable because they don’t quite know what to do with them. Or can’t be bothered with the cleaning and trimming which takes time.

That’s why simple and quick recipes need to be made a part of kids’ curriculum in school and extra-curricular activities. If it’s too late for our generation, perhaps our kids can come from school one days and teach us how to prepare broccoli that doesn’t stink.

What’s holding you back from consuming more produce?

The small-store owner is too important, nimble and innovative to be bumped off by big-box retailers in India.

Kirana RIP? Not Yet.

The arguments for and against FDI in retail are, at a generic level, valid on both sides. However, since the devil is usually in the detail, the facts about India’s small retailers and suppliers, the conditions stipulated for FDI, and recent experience with the effects of domestic modern retail need to be viewed together before the likely outcome pronounced. The big fight is about whether this new policy will kill small shops, massively destroy livelihoods and take away GenNext’s opportunities. Facts suggest otherwise. Consider the kirana, the one most feared to be at risk. About 5-6 million of the 8 million FMCG-stocking kiranas are in rural India, and are totally safe, as the new ones can only come into the top 53 cities.

R Sriram, founder of Crossword and retail expert, tables two insights. One, in many big cities, kiranas are already not participating in the growth offered by the newer settlements like Gurgaon or Powai, because without their advantage of historically-priced real estate, they are not viable. Two, increasingly, small shopkeepers’ children are getting better educated and want to exit ‘sitting in the shop’ as soon as possible, just as small farmers’ children are exiting farming. Sadly, the country’s retail density has been increasing in recent years, not driven by passion or profit, but because of lack of options — hopefully that will change. It is true that traditional income streams of small shops in the vicinity of a large supermarket plummet; but we have seen that they soon recast their business model, exploiting the inherent advantages they have that the supermarket cannot emulate: free, prompt and no-conditions home delivery, superior and customised customer relationship management, khaata- credit and willingness to stock small quantities of something used by only a few people in their catchment — a classic ‘long-tail’ strategy. Notice two more things: even in upper-class areas in large cities, despite large retail chains in the vicinity, the small vegetable vendor and kirana continue to find a place in the household’s shopping basket. The kirana also continuously morphs, and is already moving to a more specialised and selective portfolio. We will find them variously choosing to become more of a convenience store (7-Eleven-type), or fresh-food store, a home-delivery store, maybe even express-format franchisees of large retail, and so on.

Another reality check: how much consumption capacity do even the top 50 cities have? Seriously, how many more Ikea, Zara, Walmart, Tesco and Best Buy can a Surat, Kanpur or Indore absorb, in addition to more Big Bazaar, Megamart and Croma? Further, foreign specialty retailers targeting the rich consumer will create never-before custom, and not at the expense of existing shops. Two decades ago, we had the same hue and cry that Indian brands would be wiped out; but they got better and bigger than they would have had they been left unchallenged. Now for the suppliers. Large suppliers will lose the pricing power they had with small retailers and nobody on any side of the FDI debate is grieving for them. Small suppliers, even without FDI, are being mercilessly squeezed by middlemen. The hope is that large retail chains, unlike the broker middleman, have more incentive to pay more because they have customer loyalty and a brand to build; in exchange for steady, loyal, consistent quality supply, they will pay more, guarantee offtake, improve product and production efficiency. The FDI norm of at least 30% sourcing from small scale pushes this further. Walmart potentially could kill the small suppliers of anything by importing 70% from China cheaper; but loads of small traders are already doing the same, flooding our markets with Ganesh murtis, chappals, clothes, watches, etc.

The Achilles’ heel for a lot of skilled artisans, specialised producers, grass roots innovators, etc, is market orientation and marketing. Producer collectives have managed to organise themselves on the supply side using government assistance schemes, but they struggle to manage the demand side. That is the missing link that large retailers in vendor development mode can provide, just as the auto industry has done to ancillary suppliers. Both sides agree that customers will gain because large chain retailers can provide better for cheaper, given the discounts they get through buying large quantities and sourcing smartly. Customers will also get a wider range, more innovative products and more comfortable, truthful and informed shopping environment. Poor customers won’t get discriminated against, because the hypermarket is anonymous, transactional, classless and nonjudgemental. They may not get better service because the small Indian retailer is the champion of good service, from atta to electrical, the likes of which we haven’t yet seen any big retailer match, anywhere in the world. That’s another reason why he will always survive.

Before we fight further, consider this. This network of commercially-savvy supplychain linked small retailers is an invaluable asset: as one report said, they are not ‘unorganised’ by any stretch of imagination; we agree and have refrained from using this phrase in this article! It is unlikely that Indian jugaad will let this network disintegrate. Perhaps in rural India, where they would have been more hard hit had the big-box retailers been allowed, they would have been garnered by banks as new extension counters for financial inclusion.

economictimes.com: RAMA BIJAPURKAR INDEPENDENT MARKET STRATEGY CONSULTANT

India Paves Way for Wal-Mart, Tesco to Enter Market

India approved allowing overseas companies to own as much as 51 percent of retailers selling more than one brand, paving the way for global companies such as Wal- Mart Stores Inc. (WMT) and Tesco Plc to own stores.

Overseas companies must invest at least $100 million, half of which has to be spent on developing back-end infrastructure, Commerce Minister Anand Sharma said in a statement presented to parliament today. India’s cabinet yesterday eased retail ownership rules, including permitting 100 percent foreign holding in single brand stores.

India’s decision to allow overseas ownership in retail will create up to 10 million jobs and give farmers better prices, Sharma said. Wal-Mart,Carrefour SA (CA) and Tesco (TSCO) seek to step up their presence in the world’s second-most populous nation to tap a market estimated by Business Monitor International to double to $785 billion by 2015 from $396 billion this year.

“This is possibly the most exciting thing that has happened in retail in India,” said Hemant Kalbag, who heads the consumer and retail practice for Asia at A.T. Kearney in Mumbai. “This is probably the next big wave of change in organized retail in India.”

Overseas retailers will be required to purchase at least 30 percent of goods sold in the ventures from small industries, Sharma said. Stores will be permitted only in 53 cities with a population of 1 million or more, and the government will retain the first right to buy farm products, he said.

‘Important First Step’

The government’s move is “an important first step,” Wal- Mart Asia President Scott Price said in a statement. The retailer looks forward to “playing a key role” in India.

Asia’s third-biggest economy permitted foreign retailers to own wholesale stores in 1997. Policy makers have been debating ownership rules in retail for at least seven years.

Wal-Mart has set up 14 such stores through a joint venture with billionaire Sunil Bharti Mittal’s Bharti Enterprises to gain a foothold in India, while Metro AG operates six wholesale stores. Carrefour opened its first outlet in December.

“This legal evolution should contribute to modernize Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in an e-mailed statement. The Boulogne-Billancourt, France-based retailer will wait for final regulations, it said.

India’s decision may prompt expansion of existing joint ventures and trigger acquisitions, said Bryan Roberts, director of retail research at Kantar Retail in London. Still, the size of the opportunity may be “overstated,” he said.

“A lot of retailers have already expanded and found that there’s not enough middle-class shoppers around at the moment,” said Roberts.

‘Win for Consumers’

India’s retail industry will get $8 billion to $10 billion in fresh investments over the next five to 10 years, Kishore Biyani, managing director ofPantaloon Retail India Ltd. (PF), said in an e-mailed statement yesterday. Pantaloon, which operates more than 150 Big Bazaar supermarketsacross 90 cities and towns, also has apparel and consumer-electronics outlets.

“It is a big win for consumers as they will have more choices,” said Biyani. “It’s a win for small industries as they will have more retailers creating markets for their products” and farmers will benefit from better prices, he said.

Pantaloon climbed 16 percent, the biggest gain since May 2009, to 233.95 rupees at the close in Mumbai trading. Shoppers Stop Ltd. (SHOP)rose 6.2 percent, and Trent Ltd. (TRENT), Tesco’s India partner, advanced 8.6 percent, the most since August 2010.

The decision to permit foreign retailers came as Prime Minister Manmohan Singh’s parliamentary ally the Trinamool Congress opposed the proposal. The main federal opposition Bharatiya Janata Party was also against the move.

Political Opposition

“Small and medium retailers, which employ a large number of people, will be affected,” Arun Jaitley, a BJP leader, said in New Delhi yesterday. “We oppose it completely.”

Overseas investment in the retail industry may help slow the pace of price gains, Reserve Bank of India Governor Duvvuri Subbarao said in the northern city of Chandigarh today. “Its important not only for raising overall growth but also important for containing inflation,” said Subbarao.

India’s food inflation accelerated 9.01 percent in the week ended Nov. 12 from a year earlier, the commerce ministry said yesterday. The rate has stayed above 9 percent for 16 weeks.

‘Licking Their Lips’

Raj Jain, president of Wal-Mart India, said in April 2010 the company can help reduce prices by improving supply chain and infrastructure to cut waste. About 40 percent of fruit and vegetables in the country rot before they are sold because of a lack of cold-storage facilities and poor transport infrastructure, according to government estimates.

Bharti-Walmart, the local venture, buys fresh produce directly from about 1,200 farmers in Punjab, in northern India, Jain said in May.

“Foreign retailers must be licking their lips at this opportunity,” said Narayanan Ramaswamy, executive director at KPMG India, which advises retail companies. “It has to be one of the biggest opportunities in the world right now.”

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Malavika Sharma in New Delhi atmsharma52@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

Circle K adds 7 W.Pa. convenience stores

The Circle K convenience store chain is growing in Western Pennsylvania with the acquisition of seven stores to add to 22 it operates from Erie south to Washington.

The seven stores — including outlets in North Fayette and in Dunbar, Fayette County — were among 26 in three states that Circle K acquired from Chico Enterprises Inc. of Morgantown, W.Va., said Bill Bartolomeo, vice president for Circle K’s Great Lakes Division.

Circle K’s parent is Canadian convenience store giant Alimentation Couche-Tard Inc., which has 5,741 stores operated by 13 business units. Nine of those business units are in the United States, operating in 43 states and the District of Columbia. In Canada, it uses the name Mac’s at its convenience stores.

Alimentation Couche-Tard has expanded its convenience stores rapidly, said Jeff Lenard, spokesman for the National Association of Convenience Stores.

“There are some extraordinary retailers in the Pittsburgh area now,” Lenard said, mentioning Sheetz and Giant Eagle’s GetGo stores. So a new competitor would have to set itself apart, he said.

There are 73 GetGos in Western Pennsylvania, said Dick Roberts, a Giant Eagle spokesman, who declined to comment on the new competition.

Other convenience store chains in the region include 50 Sunoco A Plus stores, said spokesman Joe McGinn. Handee Mart operates 21 7-11 stores, according to its website, while Sheetz list 68 stores, from Erie to New Stanton and east into Indiana County.

The largest is CoGo’s, headquartered in Carrick, which operates more than 78 stores in Western Pennsylvania.

Convenience stores are a unique category in the market, said C. Britt Beemer, of America’s Research Group in Charleston, S.C.

“It all depends on location. If the site is good, then the store has a good chance to succeed,” he said.

Beemer said newer stores with a positive appearance have increased success because they attract women who feel safer frequenting them.

In the Pittsburgh region, Circle K locations include stores on Brighton Road on the North Side, Butler Street in Lawrenceville and in Sharpsburg, Ambridge, Aliquippa and Center.

In 2005, a dozen Dairy Mart stores in the area were converted to the Circle K name as Alimentation Couche-Tard, which had acquired Ohio-based Dairy Mart three years ago, moved to create one national brand.

The recently acquired North Fayette store sold for just less than $1.5 million, while the Fayette County store sold for $1.71 million. The North Fayette store on Market Place Drive operated under the All Star Express name. Bartolomeo wouldn’t give the locations of the others or discuss plans for the stores or other possible sites.

Alimentation Couche-Tard has been making recent acquisitions.

In August, the company signed a deal through subsidiary Circle K Stores Inc. to acquire 33 stores in southern Louisiana from ExxonMobil. The deal for the On the Run-branded stores is expected to close in December. Also in August, the company through its RDK joint venture agreed to buy 27 stores in the Chicago area, 14 of which it plans to run as corporate stores, plus two land parcels. Independent operators are to run the other stores. Also Dead River Co. in Maine is selling 19 stores to Circle K, with the transaction to be complete in December.

The company made a $139.5 million profit in its first quarter ended July, up 9.9 percent from the previous year, on total sales of $5.18 billion. During the quarter, the company acquired 13 stores and opened or expanded 16, but it closed 83 stores.

By Sam Spatter and Kim Leonard

Sam Spatter and Kim Leonard can be reached at sspatter@tribweb.com or 412-320-7843.

FOR THE PITTSBURGH TRIBUNE-REVIEW

New Stop & Shop concept store opens in Chelmsford

New Stop & Shop concept store opens in Chelmsford with following convenience options:

An on-site nutritionist: The company has hired a professional nutritionist who will be available for consultations. The cost, according to Robinson, will be $25 an hour, but the customer will get that $25 back in the form of a gift card.

Day care services: Stop & Shop is introducing “The Tree House” – a room where supervised day care is provided for up to 90 minutes for free, for children ages 3 through 9.

Curbside pickup: Customers will be able to order groceries on a computer and pick them up at the store without leaving their cars. They can pull up to a designated curbside pickup area where a Stop & Shop employee will process the payment and load the shopper’s car.

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