Editor's Note: This is the first of a two-part series on how retailers can and are battling Wal-Mart as the big-box moves into town.
BERLIN, Wis. -- In a rapidly changing business climate, one-store owner and operator Berlin Oil Products Inc., Berlin, Wis., has stayed afloat by leaping from automotive service and gasoline into convenience retail, foodservice, car wash and some unusual services.
The time-tested, family-owned store is in a town going through a great transition. Mirroring the nationwide trend, local farming has gone [image-nocss] corporate, and many of the small farms have folded. A failing foundry that employs about 300 people is one of the town's main industries, along with a few factories. Plus, Berlin has already suffered the fallout created by the arrival of Wal-Mart, which has all but killed the local downtown.
Kim Lehr, general manager of Berlin Oil, expresses frustration with the community in its struggle for survival. We have a restoration committee that's trying hard. But in a small community, people want to keep things the same, but they want to see us grow, she says. You can't have both. So it's a struggle. Everybody comes in with hopes of trying to make something different, but you don't see a whole lot of change real fast.
Oddly enough, Wal-Mart's proximity has worked in Lehr's favor, because Wal-Mart is now one of the main reasons people come to Berlin Oil's part of town. But the second wave of the invasion is imminent Berlin Oil's store will soon be in the shadow of a new Wal-Mart Supercenter, possibly one with gasoline. But Lehr's group is in the dark until the big-box retailer goes public with its full intentions.
Berlin Oil's property includes a 3,000-square-foot convenience store with gasoline, which opened in 1997; a separate auto-repair facility that was the original station; a car wash; and several retail self-storage buildings. The company owns and operates a bulk fuel delivery truck.
The auto-repair bay and customer-waiting area are housed in the company's original station, which it now shares with the company's office. The current store was built on the lot next door, the freestanding rollover car wash was added behind the store, and the storage sheds were placed behind that. Lehr's brother, Barry Rodensal, owns the storage sheds and car wash. He also runs the auto-repair business.
The entire enterprise, in fact, reflects a very strong sense of family. Her father has had a business on site since 1955, and his father had it since 1930. Lehr's mother ran the office for years, taking over for her Lehr's grandmother. Lehr started working for the company when she got out of high school in 1978. Through all its additions and transformations, Lehr and her family still refer to the store as our little chicken coop.
The car wash is fairly old, circa early 1980s, and Lehr admits that it's more of a hassle than it's worth. When the wash first opened, it made a little money because it was the only one in town. Then a second car wash opened in town. We still did OK, she says, and Barry thought about making [our car wash] bigger, making it different. He had a [consultant] in, and he said This town isn't big enough for two. I wouldn't suggest putting any more money into it.'
Last year, a third car wash came in, right across the street from Berlin Oil. [The owner has invested] $1 million in it, because he owns that whole mall, with a cellular store and a laundromat, Lehr says. We don't see a lot of people moving through there for the investment. And our sales are down, too. So all it did was spread the money out. It didn't do anything good for the community.
Berlin Oil started the storage business about 10 years ago. We started out with one, then another, then another, says Lehr, putting the company's total number of shed units at 80. We thought about adding another, but now we've had a couple people in town add them. We're always full, with maybe one or two people on the list. So if we built another $20,000 shed, would it be full? Half full?
While a fountain program has not prospered for Berlin OilWe figured we need to make $170 a month off of that machine just to break even, and I don't think we're doing that, Lehr saysa local coffee program through Berres Brothers has yielded dividends. As for other profit centers, the store also handles renewals of license plates for the Wisconsin Department of Transportation.
An in-store ATM is well used, but Berlin Oil has resisted the temptation to follow a nearby competitor down the no fee route. We bought our own ATM a few years ago, Lehr says. It was about $6,000a good piece of change, and you have to make that back. You hope what they get out of there they spend a piece of in your store. It makes us maybe $300 a month. When Kwik Trip went to the no-charge ATM, we wondered if we had to follow suit. We didn't, and we haven't seen any big change in usage.
So what does the future hold for Berlin Oil? Expansion is probably not in the cards. Much like the farmers that make up its customer base, Berlin Oil is assessing whether it can survive as a small player trying to grow in a world overcome by larger, more powerful, better-capitalized giants.
In addition to Wal-Mart, Berlin Oil's competitive picture includes a store run by La Crosse, Wis.-based Kwik Tripwhich is also on the east side of town with Berlin Oil, but closer to downtownand a BP station run by Condon Oil, Ripon, Wis., which has approximately 35 stores.
People have asked us, Why don't you build [a store] on the other side of town and have two?' Lehr says. But we just have our hands full. Barry's 50 and I'm 48, and I really am getting really quite burned out with this business. If we didn't have this auto repair shop, maybe, but that's been here forever and it does a good business.
I'd love to see our store make some changes and prosperbut all that takes money, she said.
[To read more about Berlin Oil, watch for the December issue of CSP Independent magazine.]
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