New-Build Hot Spots
Retailers hunt for underserved markets amid apparent boom in new c-store construction
CORPUS CHRISTI, Texas -- To hear Sam Susser talk, Texas is on fire. Or at least its potential to sustain new, 5,200 square-foot convenience stores.
In a recent shareholder's meeting, the president and CEO of the Corpus Christi, Texas-based chain of 1,106 stores said it built a record 10 stores in the past quarter, with plans to open between 29 and 35 new stores this year. As of the end of last month, 11 were under construction, with nine more that were scheduled to break ground on or before the end of the quarter.
In recent months, Texas and Florida have emerged as high-growth states for c-store chains building from the ground up. In addition to Susser, chains like Wawa, QuikTrip, RaceTrac and Thorntons are staking claim in these states. But other states are providing opportunity, including Arkansas, Colorado and the Carolinas.
In its April issue, CSP magazine explores the apparent boom in new builds, alluding to the apparent resiliency of the industry despite the country enduring five years of recession.
As chain after chain announces record years of new construction, patterns are emerging as to where these expansions are occurring. For Jim Fisher, CEO and founder of IMST Corp., Houston, the key issue is markets that present opportunity. Fisher told CSP Daily News that markets lacking any significant retail investment in recent years are ripe for expansion-minded chains.
"Florida and Texas have the highest numbers of locations within industry," Fisher said. "But that doesn't mean Florida and Texas are saturated. Yes, they're saturated, but with a lot of old [assets]."
When asked to pinpoint areas that are ripe for expansion, Fisher approached the question from the opposite perspective. It isn't California. It isn't Nevada, they're still on a slow recovery, he said. Some of Arizona is coming back. Areas affected by the energy boom, including areas of Pennsylvania, Ohio and North Dakota are expanding rapidly.
Besides Texas and Florida, areas in the southeast that have been less vibrant are becoming so.
"Aggressive companies are seeing opportunities where trade areas really have been abandoned, not in terms of units but new development," Fisher said. "I'll go back to 98% of all competition is self created. If I constantly fed the goose, and goose was constantly giving me eggs, then a Wawa would never move in. The bar would be raised to where Wawa couldn't afford to come in."
With the emphasis on new-store construction, Susser underscored the importance of the company's real-estate development team and its ability to find good locations.
"Our real-estate team, which is led by my uncle Jerry Susser, uses a handful of tools, works with some excellent real-estate development professionals that we have very strong relationships with," Susser said in its recent earnings call, "but at the end of the day the biggest driver is the view and the feeling in the gut that our team has when we're out looking at a site, assessing its growth potential over time, the competitive advantages or disadvantages that a particular site may have."
Today that team is primarily focused on growing the chain within its existing markets—New Mexico, Oklahoma and Texas--but Susser said it could be entering some new markets in the near future.
"We're blessed to be in many communities that are experiencing strong growth, and we're trying to get out in front of where that growth is going to be three, five and seven years from now," he said. "There are a couple of areas that we're looking at and working on, but for competitive reasons, it would not be appropriate to comment further on that."
For more on the new-build phenomenon within the c-store industry, look for the April issue of CSP magazine.