NEW YORK -- The United States could be poised to see significant growth in the c-store channel, and if Japan serves as a model, there could be a number of implications affecting retailers and their supply-chain partners, RBC Capital Markets analyst Nik Modi wrote in a speculative research note earlier this month.
News of Amazon’s reported foray into the c-store channel, as well as 7-Eleven’s recently announced expansion plans for North America, coupled with the c-store channel’s growth trajectory over recent years, help point to continued expansion going forward.
Similarly, c-stores are outpacing growth compared to other bricks-and-mortar retail channels in Japan. This—and a few corollaries in population patterns between consumers in Japan and the United States—further supports prospects of a growing c-store channel in the United States, Modi said.
Modi cited two signs that point to how the United States could see more demand for c-stores as in Japan. First, the United States has an aging population, while Japan has one of the world’s oldest populations. Second, increased urbanization could alter the footprint and inventory of c-stores.
Essentially, if the United States ages and urbanizes in similar form as Japan has done, there will be increased demand for smaller-footprint c-stores that carry fewer items than today’s larger stores do.
Modi cited two implications for U.S. c-store operators and their supply-chain partners should this occur:
- The proliferation of small stores will require consumer-staples companies to have more sophisticated supply chains that can deliver smaller drop sizes at a healthy margin.
- In-store execution and increasing brand equity will also become more important given the likelihood of slimmer product lineups in a world of SKU proliferation.
The research note does not take into account any comparisons of population density between the United States and Japan, which could also be a key factor. One estimate fits the populations of both greater New York and greater Los Angeles into the greater Tokyo area, for example, and the geographical area of greater Tokyo is one-tenth the size of the two U.S. counterparts put together.
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