A Promising Investment Opportunity?
Here is a viable scenario that is based on recent trends (e.g., Macro Demographic Changes, Lifestyle Shifts, Technological Tends, New Business Models, and Intensified Competitive Dynamics):
Reimagining the convenience store. C-stores are uniquely positioned to exploit new demands for convenience and increasing urbanization. They’re already closer to consumers than any other type of physical store, but there are still opportunities to improve the experience and assortment.
First, margins and consumer loyalty can be improved by growing private-label offerings beyond packaged goods. C-stores are already starting to more closely resemble quick-serve restaurants in their offerings. For example, Casey’s General Stores recently started offering fresh pizza.
But there is still tremendous opportunity to expand c-store private-label offerings to include more general merchandise, transforming c-stores into one-stop shops for modern urban consumers. For example, 7-Select at 7-Eleven in the U.S. includes more than 250 food items from donuts to frozen pizza. But in Taiwan, 7-Select also includes a much wider assortment of general merchandise, including clothing, laundry detergent and light bulbs. And the strategy is paying off, with 7-Eleven’s operator in Taiwan reporting a 27% increase in net income in the third quarter.
And new technologies can also help make the c-store shopping experience easier and faster. For example, retailers could deploy RFID tags to let consumers check themselves out. Or, U.S. c-stores could take a page from Tesco’s book and build virtual stores. Finally, online ordering and in-store pickup would help make the experience even easier and give first adopters an incredible competitive advantage. Retailers to watch: 7-Eleven, Alimentation Couche-Tard, Pantry, Casey’s General Stores and Wawa.
We have worked with all of these players, and know them intimately.