Staten Island Microcosm
More SI stations opening ancillary profit centers to offset margin squeeze
STATEN ISLAND, N.Y. -- Recent changes in the convenience store marketplace in the Staten Island area of New York, as reported by The Staten Island Advance, represent a microcosm of the evolution that has been sweeping through the entire c-store industry.
On Staten Island, more gas stations are opening up secondary businesses such as Dunkin' Donuts shops, car washes and convenience stores to make up for a shrinking profit in gasoline sales, the report said.
With an average markup of 12 to 15 cents a gallon, the meager profits from fuel sales are quickly eaten up by customers who pay [image-nocss] with credit cards, which hit the dealer with processing charges as high as nine-cents per gallon, added the report.
"The gas doesn't make it for you no more. The gas is like milk. Give it away for free to get the customers in," Ash Gaied, owner of a Staten Island BP station told the newspaper, explaining the business model of offering steep discounts on staple items to lure shoppers in to buy impulse items.
More station owners are adding amenities like car washes or c-stores, Ralph Bombardiere, executive director of the New York State Association of Service Stations & Repair Shops, also told the paper. He said that in addition to the donut shops and delis opening in this borough, he said he has even seen other shops like UPS Stores or Subway restaurants being opened upstate and on Long Island.
It's all about the alternative profit center, Bombardiere said.
Some station owners have decided to cut their losses entirely, shuttering their pumps in favor of opening a completely different type of business with a higher value, he added.
"Staten Island is particularly vulnerable because of its proximity to New Jersey," Bombardiere said. Drivers might stop into a Staten Island station to fill up on the bare minimum it will take to get across the bridge for a cheaper fillup.
And with newer cars manufactured with high-tech computer diagnostic systems, and parts designed for higher efficiency, "we're starting to see the demise of the traditional service station," which, historically, has been the major source of non-gasoline revenue, he said. Today, mechanics require far more training in the complicated electronic systems, he said.
Gaied, who has been in the automotive station business for about 20 years, said a lot has changed over the past two decades. It used to be that his shop replaced 20 exhaust systems a month. "Now, if you do one, you're lucky," he said, explaining that newer cars are made with less corrosive stainless steel systems requiring less maintenance.
"It's not a business that can make you rich no more," Gaied said. But, he said, like death and taxes, car repairs are still a necessity of life, even if they may come less frequently. And building up a loyal customer base when work is needed can help stations stay afloat. "If you have a good repair shop and you have a good reputation, you can survive," he told the Advance.