Retail Powerhouse

There used to be a convenience store called ‘Store 24’ in the corner right in front of the apartment building where I currently live. For those of you who live in the East coast, you might have seen a few of them, but if you’re not familiar, just think of your typical mid-sized chain of convenience stores (c-stores).

They had a good operation, as far as I was concerned, and their store was just a good old regular c-store. One day though, they put up a sign saying they were going out of business and were closing their operations within the next few weeks. Fast forward a few weeks and Store 24 was gone. Few weeks went by, and much to my surprise, a new store settled in…

…It was a 7-Eleven!

This leads me to my topic and original thought: What does it take to run a successful business?

Store 24 had, at least in the front-end, what seemed like a solid running operation. They had 1, every so often 2 employees, running the store. It was clean. It had foot traffic. It was in-stock. They had an ATM. They had coolers, soda, chips and cigarettes… but it went out of business.

Why would a different convenience store open in the same spot where the old one was? Do they really believe they can do a better job operationally than Store 24? I could understand if it was a mom-and-pops c-store, but this is a mid-sized c-store chain we’re talking about. I can understand 7-Eleven might have a bigger sourcing scale. But when we’re talking about Twinkies that sell for $1 dollar, out of which you make $0.10 cents, buying a million can only get you so far at increasing your gross margins.

Was 7-Eleven being naïve by opening their store? Do they even care when they store being opened is a franchised store? If it’s a franchised store, not only does 7-Eleven get the fee for letting the owner of the store use their name, they also get to distribute some of the products sold inside the store, which means they make money on two ends, regardless of how well the owner of the franchise performs!

To date, the store seems to be doing fine. On a scale of 1 to 10, I would probably give it a 5.5 or a 6. I barely see any people in there, arguably even less than Store 24. I also believe that the impact of having the Store 24 c-store closed for a few weeks shifted a lot of the people in the neighborhood’s expectations and they learned how to live without ‘convenience’

It will probably take a few months for this 7-Eleven to ramp up to a decent operation, but in the meantime, I’ll keep wondering why they opened a convenience store on top a of a convenience store.

Technorati Tags: Running a business, retail, convenience stores