OK, I’m caught up in the revolution. Trump, Bern, Cruz. Anti-establishment all the way. Power of the people. Down with the pallbearers of political professionalism and paternalism. Up with the message of hope, anger, optimism, angst, freedom and fences.
Our country is bellowing on the fringes, and yet history—if it’s a reliable marker—tells us that structure will bend and yield but not break.
And so it is with you. The convenience industry is changing but within a sufficiently malleable structure. It gives us a certitude that we can walk into our box and, while appreciating change, still recognize that what we run is, indeed, a convenience store.
Recently, I’ve been struck by insights from a number of industry executives and outside equity investors. My take: Be leery of hype and talking points. Specifically:
Thinking small: Look at our popular monthly Grand Opening feature. Each month we spotlight a chain, whether a moderate-size operator in Dubuque, Iowa (p. 50), or a major chain. And with rare exception, most of our new-to-industry units are growing in size, with 4,000 square feet or more the new standard and some comprising a combo c-store/restaurant (e.g., RaceTrac).
Yet the small shop is very much alive.
Kristina Peters’ story about real-estate investors Brookwood Financial (p. 15) behooves us not to get sucked up in the hyperbole that small stores are dead. Brookwood says it plans to acquire 600 to 1,000 c-stores over the next several years and has budgeted $300 million toward its growth strategy.
What kind of stores? Well, says CEO and chairman Thomas Trkla, not the ones we trade magazines typically feature.
“A lot of other operators are building these 5,000-, 6,000-, 7,000-square-foot, beautiful stores,” he told CSP. “But there’s not a lot of value for us there.” Rather, he’s eyeing locations of 1,200 to 2,000 square feet and plans to capitalize on the real estate.
And he’s not alone. Our February exclusive on United Pacific told a similar story on the West Coast, where CEO Joe Juliano, backed by the rich coffers of New York-based Fortress Investment Group, is pursuing a growth strategy centered on smaller sites.
And there’s shocking news in the strategies of both Brookwood and Fortress. How long has it been that we’ve been told that the model of gas and smokes is dead? Well, maybe it’s time to think again, at least in the short run. Both Brookwood and Fortress expect to make lots of money on these iconic drivers whose youthful splendor had turned to wrinkles, only to rediscover their sheen. I’m not suggesting that you drop fresh food or ignore social media. What I’m saying is that neither the pump nor tobacco is the anachronism some may lead you to believe.
Mobile loyalty: This is one that demands we understand the complexity of tomorrow. In recent months, several retailers have shared tales of woe about their mobile apps—notably how they fail to work on certain phones, lack of technical support, headaches with upgrades, and so on.
A few companies in our channel are figuring it out. But before you go there, you need a strategy. As one retailer told me, “People think that if they get a mobile app that customers will automatically download it. Not true. Many users are getting app fatigue and only want apps that offer discounts, games and interaction. If you’re not going to manage your mobile app, then don’t do it. Otherwise, you’re just wasting your money.”
Shifting economy: To state the obvious, the energy boom is dead. Commodity markets for crude oil and domestic production of shale are teetering. When President Obama said “Gas under $2 a gallon ain’t bad” in his State of the Union Address, he was only half right.
An excellent report by Politico details how high-priced oil helped drive America’s shale boom and increased innovation in alternative energy. Ignoring the geopolitics, the depressed oil market has undercut the economies of several states, including North Dakota, Oklahoma, Texas, New Mexico, California, Louisiana and Alaska. Already, budgets in those states are being cut and jobs lost. So while households are enjoying the savings borne from cheap gas, if the situation persists, questions remain how the economic downturn will affect retailers in these oil- and gas-dependent states.
As you read this column, some of the political dust will surely have settled. What won’t be settled is an uncertain economy and consumer demand for change. Take your time, embrace a core strategy and remember that the best business structures are ones that are flexible yet strong.
Mitch Morrison is vice president and group editor of Winsight’s Convenience Group. Reach him at mmorrison@winsightmedia.com.
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