Even grocery or departmental stores provide convenience to customers. What was the need to have the separate concept of ‘convenience stores’? What is a convenience store? How is it different from departmental stores? Why are convenience stores becoming popular when other formats of stores are already there? These questions are answered in this blog along with getting to know about five leading global brands in this format and their success strategies.
What is a convenience store? Convenience store vs Departmental store
Convenience stores are retail stores that fulfil on-the-move, popping, quick, emergency, and unplanned demand for routine household products. A typical example of this are the retail outlets situated in filling stations. Customers do not visit these stores for planned, routine, and big purchases. These stores are meant to fulfil some of their quick needs like a can of a drink or an OTC medicine. These needs can pop out of nowhere. The decision to make the purchase is quick. You would not find shopping carts in these stores. And because of the desired functionality to be able to fulfil quick and emergency demands, convenience stores remain open for extended hours. And most C Stores provide these flexibilities at higher pricing.
Convenience stores are unlike full-fledged grocery or departmental stores. Customers visit the latter with the elements of certainty and planning. For example, routine household items like rice and pulses are common in grocery or departmental stores. These items are not intended to be sold in convenience stores except maybe in small packages as short-time, urgent solutions.
Why are C Stores becoming popular?
Buy on the move
One of the prime reasons behind C Stores becoming popular by the day is that customers can buy during their commute or travel. Many times we remember things we need in our homes while commuting or travelling. As C Stores are usually located at filling stations, it becomes easier for us to find one en route. This happens to us all the time. From a business viewpoint, it means customers.
Close small shopping needs
People do not always get everything they want even from their favourite departmental stores or supermarkets. Or sometimes they even forget to put things on their shopping list. Convenience stores have become an easy alternative to closing such shopping tasks. These stores are ideal solutions to meet small requirements.
Wide Merchandising
Not finding a particular product is a common experience for customers in departmental stores. From magazines to perfumes, C Stores are good at maintaining a wide merchandising portfolio. You may not be able to buy in bulk or get too many brands or sub-types to choose from but the general product is likely to be there. This works well with customers for uncommon and unique requirements.
Untimely Needs
Has it ever happened to you that you reached home late and realised you have run out of cooking oil or maybe need bread and milk for the early morning? The routine departmental stores close down by 10 PM or 12-midnight max. C Stores come to the rescue in such situations. Even if it happens to 100 people in a locality in a day, it is capable of keeping the footfall coming to the nearest C store.
Tag along with filling stations
A unique competitive advantage for convenience stores is that they could tag along with filling stations. If the law permits, filling stations and convenience stores could join hands for mutual business interests. In such an arrangement, while a C store could save on real estate, filling stations would benefit from the additional customer base attracted by the convenience store.
Customer Experience
Convenience stores are like powerhouses in small packages. These stores are a relatively new concept. They tend to be extremely modernised with attractive visual appearances. The merchandising is wide covering unique brands and products. They reflect the uber, cosmopolitan lifestyle of a budding city.
Spend little on promotions
Unless there is close competition, those who need a convenience store will find one. The reasons why customers would seek out a convenience store are compelling. For example, if you need some snacks and some beverages at 2 AM, you would know where to get them.
If you own a convenience store in a filling station, your brand is getting free visibility. You could think about this as a business idea if you already own a filling station.
Five leading convenience store brands in the world
7-Eleven
7-Eleven is a convenience store chain brand. The parent company, Seven & i Holdings Co Ltd., is based out of Japan. But the subsidiary i.e. 7-Eleven is headquartered in Dallas, United States. The origins of 7-Eleven go back to 1927. According to Statista, as of January 2020, there were more than 70,000 7-Eleven stores around the world. The brand is present in 17 nations.
Despite its massive global stature, the brand is a relatively new name in the Middle East with 12 stores in the UAE. The highest number of stores is in Japan, touching close to the mark of 21,000. The company has made dramatic progress on its revenue charts from 2020 to 2022. The revenues in 2022 so far are estimated at about USD 86 billion.
Lawson
The story of the convenience store brand Lawson is another example of a US-based business shifting its roots to Japan. To cut a long story short, the origins of Lawson are in Ohio, United States. But over a few business interactions, the brand found its stronghold in Japan.
Worldwide, there are about 19,500 Lawson stores with an overwhelming majority of more than 14,500 stores in Japan alone. The brand has a strong presence in China. We could not confirm the presence of any Lawson convenience store in the Middle East market.
The expected revenue of the company for 2022 so far stood at about USD 6.7 billion.
FamilyMart
FamilyMart is yet another convenience store chain brand from the land of the rising sun. Started in 1973, FamilyMart is a household name in Japan. With revenue figures for 2020 touching USD 4.5 billion, it is the second-largest convenience store brand in Japan after 7-Eleven. With close to 25,000 stores in Asia, FamilyMart is one of the biggest convenience store chains in the world. We could not confirm the presence of any FamilyMart convenience store in the Middle East market.
Oxxo
Oxxo is a Mexico-based convenience store chain brand. It has headquarters in Monterrey, Nuevo León, Mexico where the first store was opened in 1978. There are about 21,000 Oxxo convenience stores across the world. It is the largest brand of C store chain in Latin America. Oxxo also has an extensive range of private-label products. The company is owned by FEMSA. We could not confirm the brand’s revenue figures and the presence of any Oxxo convenience store in the Middle East market.
Casey’s
With its history dating back to 1959, Casey’s is a wholly American-owned brand of convenience store chain. It is also the 3rd largest C store brand in the United States. Based out of Iowa, it is also a Fortune 500 company. Casey’s anticipated revenue for 2022 stood at over USD 14 billion with a steep growth curve since 2020. Casey’s has a presence in 16 states in 2400+ locations. We could not confirm the presence of any Casey’s convenience store in the Middle East market.
FAQs
How to start a convenience store in Dubai?
Some of the important steps are business idea validation, formation of the core team, business model development, market research, locational analysis, operational planning, financial and commercial projections, and preparation of the business plan. Whether it is Dubai or Doha, these and other fundamental activities are a must.
What are the challenges in starting a convenience store in the Middle East?
Business competition is intense in cities like Dubai, Abu Dhabi, Riyadh, Muscat, Doha and other big cities in the Middle East. The presence of big brands makes it more difficult for new players. Finding the right value proposition for the right segments assumes greater importance.
On one hand, if there is ease of doing business, there is strict law enforcement on the other. Also, outsiders cannot afford to ignore linguistic, social and cultural values.
Can I start a convenience store with a small space?
The answer to this question depends on how the available space is utilised. With good layout planning for convenience stores, any space is great space.
How to do market research for convenience store business?
This is a detailed topic. We can help you with our market research services.
How to achieve scale and growth in convenience store business?
More customers. This simple-looking answer has many facets. The first concern is the business model from which value propositions and revenue streams are derived. The second is operational planning. If operations are weak, handling more business is not feasible. The third is promotional outreach. If customers do not get to know and feel the resonance, they may not visit as well. Please visit our blog section for more on this topic.
How to develop a business plan for convenience store business?
Developing a convenience store business plan involves a certain degree of expertise and experience. This is especially true for making financial and commercial assessments and projections. We assist our clients in business plan development and can do the same for your dream project.
About YRC
Your Retail Coach is a decade-old retail and eCommerce consulting brand with a scaling global presence. We have delivered business solutions to more than 500 clients in 25+ verticals. Our projects are supervised by experienced retail consultants.
For any service-related queries or to speak to one of our retail consulting experts, please visit our website.
Drop by our blog section and follow us on our YouTube channel for regular updates on the retail & eCommerce industry.