For all the high-level talk about inflation, the federal deficit and political unrest, the true driver of retail chain selloffs comes down to the state of the retailer’s business and its leadership’s place in life. That was the consensus of a retailer panel discussing “Strategic Planning and M&A in a Slow to No-Growth Environment” during a 2023 NACS Show education session led by Jeff Kramer, managing director of NRC Realty.
“For a seller, it comes down to more about what they’re business conditions are,” said Bill Kent, owner and CEO of Midland, Texas-based Kent Cos., which does business as Kent Kwik convenience stores. Citing whether a family-owned chain has a next generation coming up or if a family leader gets sick, Kent says a more likely driver of selling a business are “the factors they have around the kitchen table.”
Travis Smith, chief development officer for the Refuel chain based in Mount Pleasant, South Carolina, agreed. C-stores are “still in the business of convenience,” he said. Regardless of the geopolitical climate, “as long as a store owner evolves along with [the industry], we’ll be fine.”
As an acquirer, Smith said Refuel looks at a wide variety of factors when considering expanding into a new market. “And it’s not all one way of another,” he said. “There are high-growth markets and there are low-growth markets. We have a presence in both of those because each as distinct advantages and disadvantages.”
Kent outlined a few factors Kent Cos. considers:
- What’s the overall economy of the market? That is, where do people work and what’s give the market its livelihood?
- What is the competition in the market? Is it best-of-best retailers? And if it is, can we find a niche operating along side them?
- What’s the quality of the assets? Even if the stores aren’t that great, can we work with the footprint to turn them into something profitable?
"We've turned down some nice acquisitions because the lots weren't big enough or the stores weren't big enough for what we want to do there," he said.
NACS was founded in 1961 as the National Association of Convenience Stores. The NACS Show runs through Friday, Oct. 5, in Atlanta.