Colorado Springs Seeing Lots of C-store Growth

COLORADO SPRINGS, Colo. -- The Pikes Peak region of Colorado has been a hot spot for convenience stores lately and the trend does not look like it will be cooling down anytime soon.

Dotting the c-store landscape in the region today are 7-Eleven Inc., with dozens of stores; Loaf 'N Jug; and Circle K among the chains with several locations. And as The Gazette reported, the convenience store chains continue to see opportunity in the Colorado Springs market. For example, Dallas-based 7-Eleven, which has roughly 50 area stores, said three to four more are planned this year and another five to six are slated for 2013. Loaf 'N Jug, a division of The Kroger Co., has about 20 stores and another one is planned southeast of Northgate Boulevard and Voyager Parkway. Similarly, Circle K, based in suburban Phoenix and with about 20 locations in the area, plans one more store on the city's northeast side, at Tutt Boulevard and North Carefree, the news outlet added.

In addition, Midwest-based Kum & Go has made a splash in the Colorado Springs market with plans to build 20 to 25 stores over five years. Its first location opened in May and several other locations are under construction. San Antonio-based Valero counts about 30 area locations and a spokesman said that although the company plans no additional stores in the area, it occasionally looks to remodel and expand existing locations.

"They sell time," said Jeff Lenard, vice president of industry advocacy at NACS, the Association for Convenience & Fuel Retailing."When [convenience stores] started back in the 1920s, they sold staple items like milk and bread and eggs after the groceries closed at 5. Over time, what they have sold has changed, but they (continue) to sell time. It's get them in, get them out, get them on their way, and do it without a hassle. "We are becoming more time-stressed and time is money," he added. "And people will give you money if you give them time."

States such as Colorado and cities such as Colorado Springs, with rising populations of young people and outdoor enthusiasts, are prime targets for convenience store chains, Lenard told the newspaper.

"We've had decent growth in our city, and there are areas of the city that haven't seen the expansion or growth of these convenience stores in the last four or five years because of the slowdown of our economy," said Mark Useman, a retail specialist with Sierra Commercial Real Estate in Colorado Springs who has represented Kum & Go in its local land acquisitions.

But convenience store operators face some obstacles on their road to expansion. C-stores fight a perception that their prices are much higher than their rivals. Lenard acknowledged that prices can be higher, but he told the news outlet that convenience stores have high real estate costs to go along with big electricity bills that result from coolers and freezers for cold foods and drinks. Also, because their stores are smaller, they can't buy products as cheaply as larger groceries, Lenard said.

On the other hand, milk, soda fountain drinks and other items are competitively priced when compared with other retailers, he said. And price isn't as much of an issue for some customers -- even in a slumping economy -- if they have a need they want to fill in a hurry.

The c-store industry also faces competition from grocery and drug stores, as well as changes in consumer buying habits -- notably when it comes to gas and tobacco, he added.

Despite those challenges, the overall state of the convenience store industry has been healthy; three of the last four years have been the most profitable on record for the industry as a whole, Lenard said.