One c-store’s downfall may offer lessons in innovation and future proofing.

 

By Roy Strasburger

Foxtrot Market suddenly closed all its stores in late April 2024. If you’re not familiar with Foxtrot, it was a chain of 33 convenience stores operating in multiple states. Although it was a small chain, Foxtrot gained attention for being touted as the next wave of urban convenience.

Foxtrot launched in 2013 to deliver beverages to students at the University of Chicago, then expanded into small local markets in gentrified, upscale neighborhoods. It started a more rapid expansion in 2022 which took it into Washington D.C., Dallas and Austin, Texas.

The premise of Foxtrot was to sell a highly curated selection of local products and freshly made-to-order food while at the same time providing a community space for people to meet and hang out. Think of a cross between a Starbucks and a very small Whole Foods—without the vegetables and meat. It did not sell fuel, and many locations were street fronts without dedicated parking.

Foxtrot collaborated with local food providers to create a proprietary food offering featuring a wide range of products. Its target patrons were middle-to-upper income Millennials. Staying true to its origins, it delivered through its in-house service. It had a slick online presence.

Foxtrot was hip, cool and appealed to Millennials and Gen Z consumers. But Foxtrot is no more.

What is there to learn from the demise of Foxtrot? There have been a lot of people saying they knew Foxtrot wasn’t going to make it because it was overpriced and under merchandised. While this may be true, I think that it was onto something important, and that what Foxtrot did well reflects how convenience retailing will need to evolve to survive.

Foxtrot was successful at creating a space where people wanted to be—the most frequent comment that I have read about its demise is along the lines of “How did it go out of business? People were always in there.” Foxtrot positioned itself as a neighborhood hub, offering pastry, snacks, coffee and alcoholic beverages along with a few high-end grocery staples and gourmet take-home meals. The later iterations of the stores that I visited were similar to mini-supermarkets with a wider range of products. This was not the case in its earlier stores where they may have had some issues with sales volumes. (Just to be clear, I have no insider knowledge as to Foxtrot’s financial performance.)

As counterintuitive as this may sound, I think a version of the later Foxtrot format is where retailers need to move to be successful in the future.

Since you are reading this magazine, chances are that you’re in the fuel business and, possibly, are either a retailer or you work with a retailer. Over the next decade, fuel demand is going to go down. Whether it is due to electric cars, more fuel-efficient ICE vehicles or reduced automobile ownership and fewer miles driven because of public transportation or bikes, the total gallons of gasoline sold in the United States will decline. That means that fewer gas customers will be making less frequent visits to your store. You already know this.

So, what to do? The goal, of course, is to attract as many customers to your store as possible. The most sustainable way of doing that is to provide a retail offer that makes the customer want to come to you.

This can be done by taking some of the highlights out of the Foxtrot playbook:

  • The inside of your store needs to be warm and inviting and not cluttered or sterile.
  • There needs to be a place where people can congregate and spend time either working or chatting.
  • You need to be a good host and offer a quality food and beverage program serving bean-to-cup coffee and delicious prepared food in a way that makes it easy for your customer to purchase and enjoy it.
  • Your merchandise mix should be carefully selected and reflect the needs and desires of your customer base.
  • The store should offer items that can’t be found in competing c-stores, such as locally sourced products and artisan goods.
  • You should offer a local delivery service combined with a loyalty program.
  • Your store will need a vibe—either through the architecture, artwork or music—that fits with the aesthetics of your customers.
  • You need to execute your program every minute of every day through staff who are trained in customer service and hospitality.

If your business is currently successful, but you don’t think it encompasses the items mentioned above, invest in your future. By building upon your current business with these strategies, you will help to futureproof your store. When gasoline sales decline, you are not going to replace the lost profits by putting in an EV charging station. You need to be increasing the size of your average purchase and the frequency of those purchases.

Foxtrot saw the future and did a lot of things right. There’s an opportunity to learn from everyone, even if they didn’t make it in the long run. RIP.

 

Roy Strasburger is the CEO of StrasGlobal. For 35 years StrasGlobal has been the choice of global oil brands, distressed assets managers, real-estate lenders and private investors seeking a complete, turnkey retail management solution.