Urban markets have less competition and more demand than suburban stores, but it also comes with some risks, says Brian Strickland, senior director, account management, for Kalibrate, a Manchester, U.K.-based retail consulting and analytics firm that works with 7-Eleven, Circle K and others.
“In urban markets, there tends to be higher levels of crimes. And so you just have to weigh that into the decision-making process and think through ways to minimize shrink, but also more importantly, protect the team members that are working in those locations,” he says.
Security is always a concern, says Jonathan Polonsky, CEO of Plaid Pantry, a Portland, Oregon-based chain of 106 c-stores that saw a rise in shoplifting and robberies during COVID-19.
A robust surveillance camera system helps law enforcement, he says. “I think it is somewhat of a deterrent. It helps with petty shoplifting,” he says. “We make sure to keep cash low so at night, there’s never more than $50 in the till.”
Employees receive training in security every six months. “We train our folks to deescalate an issue. We preach there’s nothing in the store worth anybody getting hurt over,” he says. “We pay a price for that from the standpoint of shrink, but I’m willing to take that as opposed to someone getting hurt.”
Urban markets often cost more to operate because they require additional labor, according to consultant Polly Flinn of Flinnstone Strategies. She estimates urban locations spend 15% more in labor costs than suburban or rural locations. With higher security and shrinkage costs, break-even sales for urban locations are at least 20% higher than suburban locations without taking into account real estate leasing costs, she says. They need more sales volume to offset these higher costs.
The best way to prevent theft and other crime is to hire security guards for Thursday through Sunday, she says. Urban stores should have at least two regular employees on duty, so one is always on the floor.
“You can certainly use electronics and cameras, but that’s going to help you after the fact,” to show what occurred, Flinn says.
Some c-store operators are following Walgreens and CVS’ lead in keeping certain merchandise under lock and key, she says. In these
locations, consumers have to ask a store clerk for certain products. Many convenience stores keep cigarettes behind the counter and out of consumers’ reach to prevent theft.