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

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

Exxonmobil secures 7-Eleven fuels supply contract

Mobil Oil Australia Pty Ltd (Mobil) is pleased to announce that it has secured the contract to supply all of 7-Eleven’s petrol and diesel fuel requirements from January 1, 2012.

Mobil currently has a long term agreement to supply the fuel for the service stations 7-Eleven acquired from us last year. The remainder of 7-Eleven’s network is currently supplied under an agreement with another fuel supplier which concludes at the end of 2011. Earlier this year 7-Eleven started to consider their options for future supply and invited Mobil to tender for this part of their business also. Mobil has been successful in what proved to be a very competitive tender process.

The new agreement with 7-Eleven will significantly increase Mobil’s wholesale fuel sales in Australia. It will have flow-on benefits for our Altona refinery and distribution terminals in Melbourne, Sydney and Brisbane and demonstrates that Mobil continues to be a vigorous competitor in the Australian wholesale fuel market.

Mobil looks forward to building a strong alliance with 7-Eleven over time which will provide the opportunity for further business growth for both parties.

%d bloggers like this: