Over the past summer you worked for your uncle’s convenience store in your hometown. As you prepared to return to school, your uncle asked for a report with your impression of the c-store business.
After thinking about it for a couple of days, you were apprehensive to report to your uncle what you really thought of the business. Did you really want to tell him that as you saw it, c-stores have seven big revenue-generating product categories: prepared food, beer, cigarettes, packaged beverages, fountain drinks, and lottery tickets. However, cigarettes are now too politically incorrect and unhealthy to continue to grow in sales and may even start to decline over the next couple of years. Also, gasoline, which accounts for nearly half of his sales, is under pressure from the likes of Wal-Mart and Costco, which are using fuel as a traffic generator. In addition, the other categories are now seeing low-to-no growth.
You realize that if you tell him this bad news, you need to tell him what to do: sell out or change the business model. What would you tell him to do?
July 26th, 2009 at 17:03
These are things he already knows. It is not up to you to determine what is politically correct. He wants to know if you find his store clean, well stocked, happy employees that treat his customers well.
You may add your suggestions for any new merchandise that may help his sales. Also, could his store need a facelift? Maybe new paint, a new sign, etc.
July 28th, 2009 at 01:21
Change the business model.
Just as Wal-mart uses gas draw people in to shop, a convince shop can draw people in who will then spend money on gas. (Listen and watch Gas Stations here in the real world — suddenly buying a car wash will give the consumer a discount on their gas — suddenly advertisements focus on drawing people’s attention away from gas price and focus on other services offered)
Your uncle’s shop is part of the community. (Again, look at real world examples… once you have made a logo and a core group of clients, you can expand into new areas because people are following your name)
Speaking of community, cigarettes may not be PC but supporting local businesses is all the rage. (for real world resources to back up this claim, look into the growth of “rebel” consumer trends where people are bucking the big guy and going with community shops)
Finally, if 1/2 of sales are coming from gas that means the other 1/2 of the business’ sales are over factors your uncle can control and even dominate in the market — offering service, fresh/ good food, fun, etc. (Real world — well, people may not be able to treat themselves to that new TV but they can still afford to get the car washed; society isn’t going to suddenly give up on prepackaged food needs — offering healthy, cheap, and tasty alternatives will always produce sales; many consumers are loyal — if paying a few extra cents at the pump ensures friendly and helpful service, it’s worth it)