Year in Review: Retailers Share Their Highs & Lows
JERSEY CITY, N.J. -- As the year comes to a close, the general assessment from convenience store retailers that recently spoke to CSNews Online is that there was more good news than bad in 2013. And there is cautious optimism for a slightly better year in 2014.
Here are four individual viewpoints from c-store retailers that range in size from 30 stores to more than 1,700.
Bob Myers, CEO of Casey’s General Stores Inc., Ankeny, Iowa
The Good News: “This year was just an excellent year for us — the evolving initiatives we have in place, the fruits of all of that effort, have been significant,” said Myers, whose chain operates more than 1,700 locations. “All of these things together really drove revenue for 2013.”
Specifically, he referred to the conversion of more than 660 stores to 24-hour sites, as well as the completion of major remodeling in many stores to include more kitchen space for a sub sandwich program and more cooler space for beer caves. “I was one of those skeptical about the performance of that concept [beer caves], but it has gone way beyond what I could have imagined at best,” Myers stated.
Casey’s is also learning from its pizza delivery initiative. “It works well in large communities. We’re still figuring out the large metro areas and getting the communication necessary funneled to the right store,” he noted.
The Bad News: “We’re struggling here in the Midwest with having to market an E87 ethanol blended product, but at least all of us retailers are faced with that same exact challenge,” Myers said. “It’s a very expensive product and we’re doing the best we can to explain the situation to consumers.”
Beyond that regional challenge, Myers is also concerned about a shared industrywide black cloud — regulatory oversight, particularly in the tobacco category. “The propensity to really regulate that part of our business is a continuing concern,” he said.
The Outlook for 2014: “With the way our business is growing this year and with same-store sales increasing, we anticipate the continuation of another good year, pretty much in the same way it grew this year,” Myers said.
Beyond that, he reported that the chain will likely begin construction on a new distribution operation within the next 18 months to accommodate the opening of new stores in such states as Kentucky, Tennessee and Indiana, which he says “might give you an idea of where it will be, although we don’t know for sure yet.”
Overall, Myers said he is “excited about 2014 and the future. We look at challenges in our industry also as opportunities. It’s a joy to wake up in the morning because we have such a great team here.”
Jack Kofdarali, president of J&T Management Co. Inc., Corona, Calif.
The Good News: The best piece of news in 2013 for Kofdarali and his company, which currently manages 30-plus stations throughout California, was that “lenders are starting to lend more, specifically on construction,” he said. “The year before, that did not exist.”
From an operational standpoint, meanwhile, the price reduction of fuel on the West Coast was a huge plus. “Our business is very cutthroat and everyone was competing for pennies before,” he explained. “We used to beat each other up for 2 [cents], 3 cents, but nowadays people are not going below a 10-cent margin and we need that. We need to see our fuel margins in the double digits to survive.”
Inside the store, gross profits have registered higher, too. “We used to see our customers buying whatever was on sale, but that’s no longer the case. With fuel prices being lower, it leaves more money in consumers’ hands to buy treats. Our c-store volume is up as is our gross profit and that’s great.”
The Bad News: Kofdarali cited the environmental regulations in California as his biggest challenge. “It’s horrendous just to stay in compliance. Just to keep up, it’s thousands of dollars per month per store,” he said. As an example, he cited that if a fuel hose is nicked just in the plastic, the entire $400 hose has to be replaced, whereas it used to be a fine at most.
“We have a lot of those happening and it costs more than just the hose,” he explained. “We used to be able to have our store manager replace those. Now, it has to be by someone certified, so we’re not only paying more, [but also] that pump is down for a longer time waiting for the right person to come and change it out.”
The Outlook for 2014: Kofdarali is “very optimistic” about 2014, both because New American and first-time business buyers are more able to get loans and because fuel prices will go even lower or “at least remain the same, which will enable consumers to spend more in c-stores.”
Tom Robinson, president of Robinson Oil Corp., Santa Clara, Calif.
The Good News: “The economy, in general, is getting more solid. Certainly in our area of Northern California, it’s better,” said Robinson, whose company operates 34 Rotten Robbie convenience stores. “We’ve gained a few fuel sales -- there were more gallons sold in 2013 -- and that’s good. The positive is it wasn’t a negative.”
The chain has also experienced increasing electronic cigarette sales. “Although they are significantly up, I’m not sure what good is in this exploding category,” he said. “But it looks promising and we’re definitely seeing growth there.”
The Bad News: In general, sales at Rotten Robbie stores this year were flatter than Robinson would have liked, “and certainly, the tobacco category was even more so,” he reported.
The Outlook for 2014: “I’m always optimistic by nature and so, I’m always assuming it’s going to be better,” he said. “We’re not unhappy with the year we had. It was a solid year; not necessarily spectacular, but I’d take it again given the choice.”
That said, the chain is in the process of getting permits in order to upgrade its stores in the near future. “It’s exciting, but it’s a very slow process; a slow grind to get the permits in our area,” he said. His feeling is that the chain will “overcome inertia” starting in 2014.
Chris Girard, president of Plaid Pantries Inc., Beaverton, Ore.
The Good News: “We had a very good year, but competition is fierce, particularly [from] cross-channel players,” said Girard of Plaid Pantries, which has more than 100 Plaid Pantry convenience stores. “Portland is a relatively small market and competitors already watch and try to copy what Tim Cote [our vice president of marketing] does, so he works really hard to keep ahead of them.”
The Outlook for 2014: “Profits are still steadily growing and we expect the same trend in 2014, but it will be a stretch again given the competitive landscape,” Girard continued. “And in that regard, we want our competitors blind-sided and caught off-guard, continuing to play catch-up.”