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Moving Beyond Petroleum

By James B Fisher

The title of this month’s column does not relate to the “sheek, politically correct” advertising series that one of the oil companies has been running for the last year. Rather, it refers to the systematic transformation into diversified retail that is being experienced by many marketers within this industry………..moving from being known as marketers to becoming retailers.

As I write, the annual SOI (State of the Industry) is being convened to discuss where the industry is at this moment in time. What I always find interesting and curious about this event is that the 2006 SOI is presenting, analyzing, interpreting, and discussing the performance of the industry that took place a year ago. And the figures and data being used represent a very small sample of the reported 140,000 plus convenience stores that exist within this industry. It becomes extremely difficult to extrapolate data and expand the conclusions to encompass the entire industry based on a very small sample size. With that aside, what is most important is the fact is the majority of the two-day SOI meeting will be dwelling on “what was and what is” and not on what will be. The dynamics of the industry are determined by what will be happening and by whom.

The industry media of late has been engaged with the action of two international companies that have created a development strategy to enter the U.S. market. One is from the U.K. and the other from Japan; both have decided to fire their initial volley at this huge and untapped (in their eyes) market through the bulls eye of the southern California market, i.e., one of those really, really easy geographic areas to commercially develop anything (I hope everyone knows I say this in total jest). So, if this is the “first invasion” then how do we define Couche-Tard, Irving Oil, British Petroleum, Royal Dutch Shell? What company now owns 7-11? What is it about the announced action by the two new kids on the block that is focus of so much attention? It is not attention or action by such companies that register at the street level with the independent retailers, such action only creates buzz and attention by the media and large, similar corporate players that must take note.

The independent retailer remains focused on how to create individual retail entities that will positively and profitably serve diverse, individual targeted trade areas. It is the progressive independent retailer who can correctly identify the possibilities that can be created by taking specific actions in terms of facility development that does not necessarily fit the “traditional industry” mode; meaning, a retail entity that does not consist of convenience store and fuel offering (with an occasional car wash thrown in the mix).

Because of the vision and acceptance of companies that envision themselves as aptly capable to responding to a retail opportunity that presents itself (perhaps disguised in different clothing), the strategic and significant players within this industry are advancing and building without worrying about the action of others; rather, focusing on the actions they must take in order to continually advance the development of their own business culture. It is because of the ability of some to recognize opportunity when it presents itself that companies within this industry are now operating retail facilities in regional malls, lifestyle centers, hospitals, colleges and universities, hi-rise office and apartment buildings, store fronts in urban/downtown areas, airports, and so many other individual markets that hold potential for the visionary players. Simply noting that none of these highly profitable undertakings include fuel.

One such visionary is a strong, progressive, independent, risk- taker, who we are proud to be able to say has been a customer of ours for a long time. The company brings very interesting opportunities to us to analyze and assist in determining what is the correct actions to take in terms of overall retail development. Within the last two months it brought just such a challenge to us. The challenge being: does it move forward on the purchase of a land parcel consisting of less than 10,000 square feet with a selling price of approximately one third million dollars on which no more than a 2800 square feet specialty retail store could be built? And if it does, then what products and services should be offered? Knowing the one product category that will not be offered is fuel.

This opportunity was presented in a densely populated, highly traveled trade area within a large West Coast metropolitan area. A trade area that has unbelievable restrictions, mandates, etc. that preclude anyone other than the most committed from undertaking development of any kind. I guess I did not mention the site is right across the street from the main entrance to one of the largest universities in this country, has vehicular volume through the studied intersection of nearly 40,000 cars per day, pedestrian movement through the same interchange of nearly 9,000 per day, virtually no competitors within this retail sector, and can specifically address the needs of the student population as well as the requirements of this dense, core, urban population base. Yes, it is going to come with a price tag of over 1.5 million dollars, however, with that price tag comes forecasted annual sales for the first year of nearly 2.5 million dollars.

So, it does appear that great opportunities exist when one does Move Beyond Petroleum by looking to see what action can be taken.

James B. Fisher, is a monthly columnist (the “Last Word”) for National Petroleum News (NPN) magazine.  He is a source on NPN’s website “Ask the Expert” column that fields industry questions.  He is also a member of the Supplier Board of the National Association of Convenience Stores as well as an informative popular speaker for industry meetings.

To contact Jim:
IMST Corp.

16360 Park Ten Place, Suite 102

Houston, Texas 77084
281.398.0321 – Phone

800.231.4678 – Toll Free

281.398.0679 – Fax

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