Instinct and Technology Guide Maverik's Site Selection

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Instinct and Technology Guide Maverik's Site Selection


JERSEY CITY, N.J. -- Selecting the best location and proper merchandise mix for a new convenience store can be a daunting challenge even for the most experienced c-store retailer. As Maverik Inc.'s Vice President of Real Estate Dan Murray said during this afternoon's Convenience Store News webinar, entitled "The Right Location, The Right Merchandise, if you just go with your gut [when making a decision on a new c-store], you will be in trouble.

Fortunately, there is help for those seeking to open a new c-store. Maverik relies on instinct as well as technology in form of Buxton's SCOUT software solution, designed to provide scores of data for c-store managers who have an eye on expansion.

Murray said Buxton's program provides the chain of 250 c-stores with tremendous information. But he cautioned the Webinar's listeners that data alone is not enough to successfully select a new store location. "I wish the analytic approach worked perfectly," said Murray. "It does not. But it's a great tool you must use. Even with the analytic model, there's no substitute for having real estate representatives out there."

Murray provided an example to illustrate his point. He said Maverik rates the competition with models, but the c-store chain does not denote if a competitor c-store is tribal owned. "Clearly you just can't match the prices they have for cigarettes because of the way tribes are taxed," he explained.

Therefore, in addition to looking at data, Murray strongly recommends that retailers thoroughly driving around the neighborhood in which they plan to open a new c-store to learn the territory.

While a computer model alone may not be the only way to select a location and merchandise for a new store, it's definitely a key component. Murray recalled a time when Maverik made an error by overlooking some data Buxton provided. The chain opened a new store in Sunnyside, Wash., in 2010 that subsequently underperformed.

"The Buxton program told us the location was not a great match with our customers, but we opened it anyway. We should have communicated before we opened the store to discuss why it wasn't a good match and how to overcome that," he said.

A main reason the store underperformed was because 38 percent of the population located within a six-minute drive of the location was Hispanic. "We needed to tailor our products to the demographics," Murray noted.

Buxton's SCOUT software develops household profiles by matching goods sold in convenience stores to the local households. Jack Hall, vice president of professional services for the customer analytics provider identified six things that must be properly indentified for a new c-store to open successfully: customers, competition, convenience, cars, characteristics and cannibalization.

The SCOUT program delves into more specific topics as well, measuring the likelihood that high-frequency customers -- defined as consumers who visit a c-store 10 or more times a month -- will walk into the store. Also studied is how far a store is located from a lake or other body of water, which can increase the likelihood of neighborhood residents visiting.

According to Hall, SCOUT can also help determine purchasing patterns of workers if a store owner seeks to open a location in a commercial area. In addition, the program can be used for people who wish to open stores abroad.

Although Maverik represents a large c-store chain, Hall said the program can certainly be effective for single-store owners seeking information about opening a second store. "Single-store owners must use analytics to research and determine purchase patterns such as high-concentration households," he said. "We have plenty of research for that."

The webinar was moderated by Don Longo, editor-in-chief of Convenience Store News. The entire webcast will be available beginning tomorrow at this link.

Buxton sponsored the webinar.