Gas stations/convenience stores for sale

What is a Convenience Store?

Convenience Stores - Overview

In the not too distant past, every convenience store looked about the same -- 2,400 square feet of packaged consumer items. Today, companies in the industry are approaching markets with different types of stores and different product offerings. There are mini-convenience stores under canopies, conventional size stores with expanded food service, and even hyper-convenience stores with the extensive variety of product offerings and in-store seating for food service. The fastest growing segments of the convenience store market are considered by many to be 'nontraditional' stores. That is, store formats other than 2, 400 square feet, either larger or smaller.

The changes in store formats have implications for all elements of the industry. Retailing executives are concerned with competitive impact and their marketing strategies and niches. Product suppliers want to be aware of format variations as they dictate requirements for appropriate product packaging, promotion and distribution for the stores. Equipment and systems vendors want to design their equipment and systems to fit the various types of store formats. Investors and financial analysts want to understand the economics of the changes taking place and the likely impact on the convenience store industry. Finally, the various governmental agencies--local, state and federal--need to understand the various store formats.

Based on this research, six formats were identified as representing trends in the convenience store industry. The six convenience store formats are:

A general description of each type is provided below

Kiosk

This format is less than 800 square feet and is intended to provide some additional revenue beyond gasoline sales. Gasoline is always the focus of this operation with the owner usually being an oil company or petroleum marketer. The store sells only the fast-moving items found in traditional convenience stores (tobacco, beverages, snacks, and confectioneries). Grocery items are conspicuously absent, as is any sort of food service. Store sales may be only about ten percent of revenues in such locations. Parking is usually only at the pumps. Hours vary widely depending on the location and the inclinations of the owner. Typical customers are transients and locals stopping in to buy gasoline.

Mini Convenience Store

This store format, usually 800 to 1,200 square feet in size is extremely popular with the oil companies and the emphasis is on gasoline sales. However, in such locations, the owners view store sales as an important part of of the revenue and margin picture. Grocery selection is usually very thin and food service beyond prepared sandwiches. There usually is not any parking other than that at the pumps, although some locations do have modest striped parking. Open hours usually range from 18 to 24 hours. Customers are usually people buying gasoline. However, there are stores of this size in urban areas which may or may not sell gasoline.

Limited Selection Convenience Store

These stores, which range from 1,500 to 2,200 square feet, are becoming more numerous. They are often affiliated with oil companies and are in the size range of a converted two-bay service station. Both gasoline and store sales are generally important parts of profitability. They differ from the "mini convenience store" in a broader product mix and grocery offering (although still somewhat limited by traditional convenience store standards). Also, simple food service (hot dogs, nachos, popcorn, etc.) may be offered. Although gasoline buyers are normally still the main part of the customer base, traditional convenience store patrons are important. Striped parking and extended hours are common.

Traditional Convenience Store

Most of the original convenience stores fall into this category. They are about 2,400 to 2,500 square feet in size and offer a product mix which includes dairy, bakery, snack foods, beverages, tobacco, grocery, health and beauty aids, confectionery, and perhaps prepared foods to go, fresh or frozen meats, gasoline, various services, and limited produce items. Most stores of this size have 6 to 12 striped parking spaces or some form of convenient pedestrian access. Hours are extended compared to average retailers with a large percentage open 24 hours per day. Such operations are normally owned by convenience store chains, but oil companies have also built or acquired stores of this size.

Expanded Convenience Store

Growth is occurring in the number of stores in the 2,800 to 3,600 square feet range. Such stores can accommodate more shelving for additional grocery products or room for significant fast food operations and seating. Stores using the space for more grocery items are taking advantage of the niche which has developed as supermarkets increasingly move above the 40,000 square foot range. A few large chains are using this "superette" approach. A greater percentage are using the space to take advantage of the high profit margins in fast foods. As the number of smaller operations proliferates (largely as a result of the oil companies), many convenience store chains apparently view the move towards increased fast foods as essential. In terms of other products and services, such stores usually carry the traditional convenience store items. Parking is important with most having about 10 to 20 marked spaces. Hours are extended. Such operations not only attract the typical convenience store customer but also more families, women, and senior citizens.

Hyper Convenience Store

These very large stores (4,000 to 5,000 square feet) usually offer an array of products and services arranged in departments. For example, such stores may offer variations such as a bakery, a sit-down restaurant area, or a pharmacy. Many of these locations do sell gasoline. The number of employees per shift can be large, particularly if a small restaurant is present. The number of parking spaces is substantial, especially since the amount of time the average customer spends in such an establishment can be significant. Hours are extended. Here again, as in the case of the Expanded Convenience Store, families and senior citizens as well as traditional convenience store customers are patrons. In some locations, such stores are mini-truck stops which obviously affects product mix and the customer base.

The NACS Definition of a Convenience Store is:

"...a retail business with primary emphasis placed on providing the public a convenient location to quickly purchase from a wide array of consumable products (predominantly food or food and gasoline) and services. While such operating features are not a required condition of membership, convenience stores have the following characteristics":

° While building size may vary significantly, typically the size will be less than 5,000 square feet

° Off-street parking and/or convenient pedestrian access

° Extended hours of operation with many open 24 hours, seven days a week

° Convenience stores stock at least 500 SKUs....

° ... and Product mix includes grocery type items, and also includes items from the following groups: beverages, snacks (including confectionery) and tobacco

Gasoline Marketing in the USA

Here are the basics

Gasoline has powered America's love affair with the automobile for the last one hundred years.  Despite the promise of such alternative fuels as hydrogen, natural gas, and electricity; gasoline is likely to continue as America's predominant motor fuel during the twenty-first century.

Every day 360,000,000 gallons of gasoline are sold to the motoring public at nearly 200,000 service stations, convenience stores and other petroleum facilities scattered throughout the country.  The path gasoline follows from the oil field to the refinery, and then onto the neighborhood fueling station represents a complex logistical system involving economic players ranging from the world's largest industrial corporations to single-station dealer-owners.

Crude Oil is the "raw material" of gasoline.  Crude is converted into gasoline in a complex, catalytic refining process that breaks the oil down into useful constituents including gasoline, diesel fuel, kerosene, jet fuel, asphalt and home heating oil. On the map below each red square represents a refinery.  A quick study of the map reveals the scale and breadth of the refining industry as well as its obvious concentration in the Gulf Coast region of Texas and Louisiana.  While major integrated oil companies with names most Americans recognize (Exxon, Shell, Chevron) dominate the refining industry, a large portion of the industry is controlled by independent or "merchant" refiners such as Valero, Tosco and Koch Industries. 

Linking the refineries to markets is a dense network of product pipelines, which run from the Gulf Coast and Southwest regions to the densely populated Northeast and Midwest.  Gasoline is also delivered to some areas of the country by rail or barge traffic; note the absence of pipelines serving Florida.

The next stop on gasoline's path to your car is the product terminal.  Fed by pipelines, barges or rail traffic, these terminals collect and store gasoline in large tank farms.  Most major metro areas have several terminals serving the market.  Frequently major oil companies share the use of a single terminal with each other via exchange agreements.  Consequently your Shell gasoline may have originated from an Exxon terminal.

At the terminal gasoline is loaded onto transporters at a rack loading facility.  It is at this point that oil companies typically add their proprietary additives such as Techron for Chevron or special detergents for Mobil brand gasoline.  A transporter can carry between eight and nine thousand gallons of gasoline. The tanker is divided into a series of compartments which prevents the different octane ratings (93-89-87) of gasoline from mixing.

The gasoline is then delivered to a service station or convenience store and dropped into a series of underground storage tanks.  Advances in technology allow station operators to monitor the tanks for leaks.  Multiple containment barriers to prevent catastrophic or persistent leaks of fuel from the tanks or lines into the groundwater.  Gasoline is next pumped into your car's fuel tank via dispensers which today may host such useful conveniences as credit card acceptors and video screens.

The legal and financial relationships involved in this process are as complex and varied as the physical path gasoline takes from the oil well to your tank.  Its not uncommon for a given lot of gasoline to be bought and sold dozens of times during its two to six month journey from the ground to your car.  Such complex financial instruments as derivatives, futures and swaps speed the buying and selling of gasoline around the clock in such global finance centers as New York, Chicago, London and Singapore.  Although market-driven supply and demand largely determines the price of gasoline on a daily basis; governmental action plays a significant role as well in the form of excise and sales taxes, environmental regulations and the actions of the world's most influential cartel - OPEC or the Organization of Petroleum Exporting Countries.

On a local level the service station or convenience store may be owned by a major oil company, a large distributor or jobber or an independent marketer or dealer.  Consequently, the price of the gasoline you buy may have been set by an Chevron official in Houston, Texas, a jobber based in the next town, or the dealer who owns and operates the station.

Most dealers that sell gasoline under a major oil brand set their retail price based on what their supplier charges them.  When your neighborhood dealer raises his price, its usually the result of his cost supplier increasing his buying price.  The price the dealer pays for the fuel may be set by his seller; either the oil company or the oil company's jobber.  In such a case his or her's buying price is known as a dealer tank wagon price or DTW.  Such a dealer is commonly referred to as a DTW Dealer.  A second, and equally common, means of setting the dealer's buying price is by basing it on a fixed interval over a "rack" or terminal price set by a party other than the supplier .  This rack plus pricing is commonly employed when a dealer is purchasing gasoline from a branded distributor or jobber.  Finally some dealers do not set the retail price of fuel at all, but rather they are paid a fixed amount on each gallon sold.  In this case the dealer is commonly referred to as a Commission Agent Dealer.  The commission such dealers earn varies but typically ranges from two to five cents per gallon.

Finally, dealers who sell unbranded gasoline purchase motor fuel from any number of jobbers, refiners or resellers.  Because they are not affiliated with a major oil company they can solicit bids from different suppliers on a delivery-by-delivery basis.  Such arrangements can enable the independent to purchase gasoline much more cheaply than their branded dealer competitors.  On the downside, during periods of supply shortage the unbranded buyer is sometimes left without product or is forced to pay prices in excess of his branded competitor's cost or even their posted retail price.

Finally, the purchase of gasoline is one of the most common transactions a consumer will enter into on any given day. This transaction is usually conducted close to one's home or work.  Despite the local nature of this business, events overseas have a dramatic impact on the price and supply of this everyday, essential commodity.

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