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  • Gas stations line the roads and highways across the United States,

  • fueling the country's cars and trucks.

  • 93% of Americans live within 10 minutes of one.

  • They arguably comprise one of the most important retail businesses in the

  • country. There are 152,000 convenience stores in the US.

  • That's 30% of all stores in the country.

  • Put another way, one out of every three stores in the U.S.

  • is a convenience store.

  • It's a $654 billion industry.

  • But those who follow it say most Americans know very little about it.

  • And it's actually rather misunderstood.

  • While convenience store retailing has so far been spared the sometimes

  • catastrophic disruptions that have hit other segments of retail, the

  • fuel and convenience business is going through some profound changes of

  • its own. For much of their history, gas stations have been, and still

  • are today, small, locally owned businesses.

  • For their owners, they often represent a path toward the American dream.

  • One of the things that a lot of folks don't actually realize is that

  • almost two-thirds of the industry is still single-store owner operated.

  • Meaning that your local gas station may be owned by somebody who lives at

  • the end of your street. But in recent years, the industry has

  • increasingly gone corporate.

  • The smallest companies, those with anywhere from 100-200 stores, are

  • being bought up by bigger chains or are otherwise going out of business.

  • And it is getting harder for the little guy to survive.

  • The first commercial fuel pump in the United States was sold to an

  • Indiana grocery store in 1885.

  • The kerosene pump was invented by a man named Sylvanus

  • Freelove Bowser. He patented his design two years later.

  • The first dedicated gas station opened in Pittsburgh, Pennsylvania within

  • two decades. But it wasn't until the 1970s when modern fuel retailing as

  • we know it today began to emerge.

  • The first oil embargo in the 70s really set the stage for convenience

  • stores to sell fuel. There was technology to sell fuel, but people

  • didn't really consider 'I can pump my own gas and save a cent a gallon'

  • or something like that. But that first oil embargo really changed the

  • philosophy of people, 'I'll pump gas, I'll save a cent.

  • Take the cost out of the system, it goes to the customer.'

  • The second oil embargo in 1979 raised the price of fuel above one dollar

  • for the first time, a huge price hike for the era.

  • Up to that point, fuel stations had been more like service stations, but

  • convenience stores began using a self-serve model that is common in 48

  • out of 50 states today.

  • Only Oregon and New Jersey still require a gas station attendant to pump

  • a customer's gasoline.

  • That brings us to today.

  • There are basically three places a customer buys fuel.

  • 80% of convenience stores have fuel pumps attached and 80% of the gas in

  • the country is sold at convenience stores.

  • The other 20% is sold at standalone gas stations.

  • These are often attached to a traditional service station that does

  • repairs and inspections.

  • The other channel is what is called the hypermarket, a term for big box

  • stores such as Costco, Wal-Mart and Sam's Club.

  • These outlets sell three times the volume of a typical convenience store,

  • but there are only a few of them, so they comprise only about 10-15% in

  • terms of overall fuel sales.

  • As of December 2019, there were 152,720 convenience stores

  • operating in the United States, down less than 1% from the 153,237

  • stores in 2018.

  • I'd say the landscape of ownership and fuel and convenience can be very

  • hard to understand at times, and it can actually get very complicated.

  • There's many different models here.

  • There are more than 100,000 distinct companies in the convenience and

  • fuel retailing industry across the U.S.,

  • more than in any other sector of retail.

  • 62.1% of the market is made up of single-store owners.

  • That is, as it sounds, owners who own just one store.

  • It is somewhat difficult to see this since many, if not most fuel

  • stations often bear some kind of corporate logo, typically from a

  • petroleum company such as Shell or Chevron.

  • Despite the corporate logo, though, these are still independently owned

  • businesses. Owners of these stores often have some kind of franchise

  • deal with the fuel provider to share costs, but the stores are not owned

  • by the oil and gas companies.

  • The other 37.9%

  • of the convenience and gas station market is controlled by larger chains,

  • which includes familiar corporate brands such as 7-Eleven and Circle K.

  • But most of the chains in convenience and fuel retail are regional.

  • WaWa, Sheetz, Race Trac, and Casey's General Store are all brands

  • well-known in different regions of the country.

  • About 15% of the total market is controlled by chains that are 500 stores

  • or more, and most of those are regional chains with a few national

  • brands thrown in. But that share of the market is growing.

  • In 2019, the largest chains added 312 stores over the

  • previous year and the second largest tier of companies in terms of store

  • count added 134 stores.

  • Every other tier lost stores with the biggest losses among independently

  • owned stores.

  • Part of the reason for this change is what the stores are selling and how

  • they look is changing dramatically as well.

  • As these businesses move away from thecokes, smokes, and gasoline

  • model, and more into products like fresh prepared food, some independent

  • and smaller owners are having a hard time keeping up.

  • Right now what we're seeing is some of these one-store operators are

  • finding it a little bit harder to stay in business with some of these

  • companies that are continuing to up the ante on food, because people are

  • time starved. When they come to buy gas, they're often looking to solve

  • other problems. 'Can I get a sandwich?

  • Can I get a drink?

  • Can I get all these other things?'

  • And the the one-store, and the one-stop shopping v

  • alue is just increasing more and more and more.

  • And that puts pressure on the smaller operators that maybe focus more

  • on, 'hey, I have a gas price and a good location.'

  • Convenience stores now also have to worry about competition from

  • retailers in adjacent segments of retail, especially those who might be

  • getting pelted with their own competition.

  • Convenience stores are so named because they offer convenience and they

  • are built around getting customers in and out of the store.

  • The typical visit to a convenience store lasts about three minutes and 30

  • seconds. But the rise of e-commerce, store apps and other technological

  • innovations have left consumers accustomed to a whole new level of

  • convenience that challenges the relevance of the traditional convenience

  • store. Convenience channel is really being influenced by companies

  • outside the convenience channel that are providing more easier ways for

  • consumers to be ordering in advance, to allow them to to walk in and

  • pick-up a product, pre ordered.

  • And so when people think of convenience, that's their new level of

  • convenience. So they're expecting that now.

  • So the convenience channel has to adjust to do that.

  • Amazon Go opened stores in certain cities around the country that you

  • use your app to log in, pick products off a shelf and you leave.

  • The internet and smartphones have also gobbled up whole categories of

  • merchandise that convenience stores once depended on.

  • When you look at stores 20 years ago, some of the top selling items that

  • you saw were film, maps, and a substantial amount of foot

  • traffic, as we all know, with somebody walking in and saying, hey, how

  • do I get to here?

  • And those directions, somebody would also say, hey, let me get a drink

  • while I'm in here. All that's gone.

  • What's the next thing that could be replaced?

  • There are other changes taking place that stand to further alter the

  • landscape. One such switch is the move away from fuel and toward cars

  • with electric power trains.

  • Tesla's CEO, Elon Musk has spoken about the kinds of experiences he

  • envisions for Tesla's Supercharger stations where just mostly filling

  • the battery on a car can take at least 20 to 30 minutes.

  • That stands to change how stores think about how they draw people in and

  • hold their attention. It might require redesigning stores, offering more

  • in-store experiences and so on.

  • So the question is: how does a store survive in this changing landscape?

  • Some are doing it by trying to outwork the problem, by, for example,

  • hiring family to keep the store running, keeping their labor costs low.

  • But whereas convenience stores used to survive by being pretty standard

  • in what they offered.

  • Fuel, of course, is a commodity.

  • But the store offer was almost a commodity and the way it was

  • experienced. The same the same snacks, the same beverages, the same

  • experience, really. It was the same from one store to the other.

  • We're entering an era now, though, where the leading brands are

  • differentiating themselves very strongly.

  • And you see this at the corporate level, but you also see this with the

  • successful independent retailers.

  • Brands that are thriving now are differentiating themselves and many are

  • starting to look more like restaurants.

  • Historically, there is a bit of a bias against food bought at gas

  • stations. Many now well-known regional chains grew out of that initial

  • complex environment where some stores began selling gas and some gas

  • stations began selling food.

  • For example, Wawa has built a reputation for its sandwiches and coffee.

  • Independent stores are carving out their own niches as well.

  • High Country Market and Gastropub is one such business.

  • Located in Round Rock, Texas, the store is a destination for food, craft

  • beer and high-end wine.

  • And it is attached to a gas station.

  • Before it was a gas station, regular convenience store, and people would

  • come in just buy like chocolates and buy little things;

  • if they wanted any medicine, if there weren't any bread, milk, bandages

  • or Band-Aids or whatever.

  • It was...it

  • started as a proper convenience store with a restaurant, a diner and

  • a small beer bar/wine bar.

  • But he found it difficult to distinguish himself from the competition, so

  • he diversified. If you want various kinds of good waters,

  • Kombuchas, at least 10 types of organic sodas, or regular sodas,

  • I will have those.

  • Walji said many other convenience store owners who have sought him out

  • for advice on transforming their own businesses sometimes seem

  • intimidated by the investments and the work involved.

  • Others lack the knowledge for making the transition.

  • Many businesses also simply don't have the space High country has.

  • Maybe I'm maybe a jack-of-all-trades, but it separates me from the guy

  • who's just going in to buy either a lottery ticket, cash a check or buy

  • a Coca-Cola walking out.

  • In a market that is crowded, changing, and like the rest of retail, more

  • than a bit uncertain, it helps to be creative.

Gas stations line the roads and highways across the United States,

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Who Owns America’s Gas Stations?

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    joey joey posted on 2021/04/23
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