CSNews Exclusive: Small Formats, Cost Efficiencies Focus of Retail Innovation

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CSNews Exclusive: Small Formats, Cost Efficiencies Focus of Retail Innovation

NEW YORK -- Despite the tough economy, convenience store retailers are putting resources into new store designs as they aim to compete with ever-innovative competitors from all channels.

A real-time poll taken during the Convenience Store News Future Forum Virtual Trade Show's Retail Format Innovation panel found 75 percent of the retailer respondents said they have "launched new store concepts and prototypes" in the last 12 months. The other 25 percent said they had no plans to launch a new format. (None of the respondents said they plan to launch a new prototype in the next six or 12 months.)

During the hour-long session, CSNews' Associate News Editor Mehgan Belanger; Roy Strasburger, president, International Division, Strasburger Enterprises; and Mike Griswold, vice president of retail for AMR Research, presented examples and insights into retail format innovation, including areas such as meeting customer needs, eye-catching curb appeal, cost-effective construction techniques and green initiatives.

Belanger cited examples of c-store operators investing in new prototypes with upscale and "green" touches, including Cumberland Farm's new store, which opened this March. The Cumberland Farms in Farmington, Conn., was built with details such as granite countertops, pendant lighting and decorative vases.

Single-store Cheetah Mart in Fargo, N.D., also features pendant lighting, along with tile flooring in a seating area reminiscent of a coffee shop. The store uses cost-cutting and environmentally friendly LED lighting, radiant floor heating and tankless water heaters.

Greater investments in curb appeal are apparent in the Neighbours store prototype in Canada, which boasts an elevated entry, stonework and accent lighting, and the Redlands Carwash and Circle K store in Redlands, Calif., which features a stone and stucco exterior, lush greenery, tropical bushes, plants near the gas island and a waterfall and fountain near the entrance.

Among the retailers investing in cost-efficient green elements: Rutter's May 2008 prototype, which features recycling bins and computer-controlled refrigeration, and Strasburger Enterprises' Quix store, which has tankless water heaters and a white roof to reflect the sun, and was built off-site.

The 2,000-square-foot Quix store, which won the 2008 CSNews Best New Store Design award, is a unique modular building consisting of four modules put together onsite. "By doing so much preconstruction in a warehouse, there are no weather delays and construction costs are lower, due to centralization," Strasburger said. "Construction can begin before site work is done."

The Mobil-branded store, which is built on a concrete foundation, offers a clean, professional-looking retail format. Among the touches that create an upscale store ambiance out of the modular structure are a wide entrance, glass front, nose-in parking, open ceilings, warm color tones, wood laminate flooring and a beer cave. The store has two pay points and a foodservice area featuring grab-and-go products and a hot dog station. Low-rise gondolas give customers a good view of the entire selling floor.

The store, which opened in March 2008, is a "profitable site, ahead of sales expectations," Strasburger noted.

An instant poll of CSNews Future Forum Virtual Trade Show attendees revealed 60 percent in favor of trying a prefabricated building concept if the costs were lower.

Among the trends influencing retail format decisions today are the economy and the blurring of retail channels, noted Griswold of AMR Research, an independent research company that covers consumer products, life sciences and retailing.

The economy, changing consumer psychology and retail channel blurring are shaping retail decisions on format and investment. "The economy is tightening capital constraints as money to open stores is less and retailers are looking at alternative methods of opening stores and turning to smaller formats," Griswold noted. "With the blurring of channels, the ability to buy similar products from multiple locations has never been greater."

The recessionary economy has forced convenience and price to the forefront of retailers' concerns. "They're addressing this through smaller formats with compelling prices."

Retailers are thinking about three priorities: customer intimacy -- using information and understanding the customer; process improvement; and cost containment. "Retailers focusing only on process and cost will not survive in 2010," Griswold said, " because many others are focusing on shoppers and looking for ways to take market share from the competition."

Indeed, the customer's shopping experience is a key driver in developing new retail formats. "People are looking for small, close and easy on the wallet," Griswold explained, adding they also want a new experience.

In the future, the focus of retailing will be on how products are sold, not what is sold, he said. "Unique formats continue to [emerge]."

View this presentation in its entirety, along with the keynote presentation by Gulf Oil/Cumberland Farms chief, Joe Petrowski, and other sessions on retail format innovation and foodservice.

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