Station gentrification brings new expectations for small retail fuel networks.

 

By Joe O’Brien

A new term is circulating in the fueling industry: station gentrification.

When applied to the idea of urban communities, gentrification is the process by which a poor area transforms into a wealthier, more upscale neighborhood. As new commercial and residential opportunities come in, the original residents and businesses are displaced.

In recent years, there have been signs of a similar process occurring in the convenience and fueling industry.

A changing playing field will likely widen performance gaps between larger operators and smaller networks or single-store owners. Amid this environment, smaller operations will be challenged to evolve or risk extinction. Here are some of the factors contributing to this dynamic.

 

New Approach to C-Store Modernization

The prospect of a new owner buying an existing convenience store and basically keeping it the same with a slight remodel is fading into history. Today, new c-stores use sophisticated location analytics to validate a site’s potential, and often new stores are built on property near existing ones.

Additionally, the bar for c-store building designs continues to rise. Although single-story, traditional box-shape stores still exist in many areas across the country, the overall landscape is expanding to include more large-format—sometimes even multistory—c-stores. Rutter’s, for instance, is building locations that are reported to be four times the size of the average c-store.

Inside, the new sites offer all the latest amenities and features to become more inviting and food focused. Quick-service restaurants (QSRs), made-to-order kitchen service, open kitchen layouts, even fireplaces and indoor and outdoor seating, all boost customer appeal. Menus have expanded far beyond doughnuts, coffee and packaged snacks. Fried chicken, wings, pizza, burgers, barbecue, large breakfast menus and take-home meals such as pasta, meatloaf and casseroles draw people to stop in just for the food.

Outside, building facades are more closely resembling the exteriors of restaurants and hotels. Large windows, woodwork and stonework help create a welcoming environment that’s more distinctive than the branded major oil facilities of yore.

One thing’s for certain: These modern offerings change the neighborhood.

 

Expansion, Expansion, Expansion

Hardly a day goes by without an article appearing about a regional operator announcing an expansion.

The rise of regional companies—and their access to investment capital—is changing the competitive landscape in urban and suburban areas. These operators are not only constructing new stores on vacant property, but they are also razing and rebuilding stores outside of their traditional territory.

That being said, two stores in the same brand are often different for a couple of reasons:

  • Feedback drives operators to deliver experiences that address customer expectations in each area. Obtaining insights about newly introduced formats sets continued adjustments for future stores into motion.
  • Updating a large number of locations at the same time is expensive. Return on investment considerations may determine that an existing format, or just minor changes, are justified.

 

Breathing New Life Into Vacant Properties

Vacancies at longtime brick-and-mortar operations are making prime real estate readily available.

If we compare the recent evolution of retail business to the age of the dinosaurs, c-stores may be a subset of creatures that survived the extinction. And the abundance of empty brick-and-mortar businesses would be the fossils.

Meeting the elevated customer experiences that some stores are rolling out can be especially difficult for smaller operations already staring down the expenses of necessary fueling system infrastructure upgrades. But doing nothing is not a viable option. C-store owners need only look at the countless examples of local grocery stores that “used to be” in the neighborhood after the larger supermarket chains arrived.

C-store operators who find themselves in a plight to evolve may want to consider seeking the expertise of a c-store design and consulting firm. While nothing is ever certain, obtaining input on how to compete amid rising customer satisfaction standards may help smaller c-stores continue to thrive in their existing environment.

 

Joe O’Brien is vice president of marketing at Source North America Corporation. He has more than 25 years of experience in the petroleum equipment fuel industry. Contact him at [email protected] or visit sourcena.com to learn more.