NEW YORK -- Computer giant Apple was recently annointed the retailer that squeezes the most profit out of its stores per square foot. With its lofty prices and, in many cases, small products (iPods, iPhones, etc.), it’s not surprising.
But more surprisingly, close behind was Murphy USA, a convenience store chain that, according to the study from eMarketer, wrings a remarkable $4,221 per square foot out of its c-stores, which average 440 square feet. That’s more money per square foot than watch-maker Movado! More than purse-seller Coach! More than jewelry retailer Tiffany’s!!
How does Murphy USA do it?
“Murphy benefits from Wal-Mart's customer traffic and also offers a discount program in partnership with Wal-Mart, which offers cents off per gallon toward fuel,” eMarketer noted. “The main draw for customers is Murphy's industry-leading low-cost gas prices, and its small-format stores offer low-priced convenience items such as single-serve soft drinks, alcoholic beverages, single-unit snack items and tobacco, all of which complement rather than compete with Wal-Mart's product offerings.” The report adds, “Traditionally, tobacco made up the majority of merchandise sales, but nontobacco sales have increased from just 14.8% [of Murphy USA sales] in 2009 to 20.0% in 2013.”
Other convenience store chains in the eMarketer study, which was released in May, lag sorely behind Murphy USA, the closest being CST Brands (Corner Store) at $548 per square foot. Others on the list include Susser Holdings (Stripes Convenience Stores), Casey's General Stores, The Pantry (Kangaroo Express) and Delek US (Mapco). (See chart above.)
The study goes on to say that between the Murphy USA sites’ small size and popular traffic-drivers, the company is booming.
“Stores average just 440 square feet, compared with [a convenience-store] industry average of 2,744 square feet, with 77% of stores just 208 square feet or below,” the report states. “However, over the past few years, the company has rolled out a new 1,200-square-foot prototype, which allows for expanded offerings, such as an in-store ATM and refrigerated units, as well as higher-margin items, such as dispensed coffee and fountain drinks.
“More than 13.1% of stores are now either 1,200 square feet or a large-format store (between 2,000 and 3,500 square feet), up from just 7.7% three years ago.”
Murphy USA opened 39 stores in 2013 and expects to add between 50 and 70 new stores this year, with plans to open an additional 200 new sites at Wal-Mart stores over the next three years, according to the report. “And because of the unique relationship with the world's largest retailer, there's still plenty of room for expansion. Murphy notes that there are still 1,204 Wal-Mart Supercenters in its core markets and another 852 outside of its core markets that don't currently have a Murphy site.”
eMarketer, New York, compiles data on more than 225 retail companies for a range of metrics, including sales, store productivity, earnings, ad spending and employment. The data comes from SEC filings and earnings reports. All figures are net.
Click here to view the full eMarketer report.