Pay Dirt

Explosion of new builds ushers in era of the big format.

By  Abbey Lewis, Executive Editor

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Where Specifically

For Kum & Go, two areas in particularhave been catalysts for growth: northwestArkansas and Colorado Springs,Colo. As of two years ago, they werebrand new markets, but both fit Kum& Go’s criteria in terms of population,demographics and a “welcoming businessenvironment.”

Today the company has 10 new storesin the state of Arkansas, and nine inColorado, with eight of those new sitesin Colorado Springs.

Part of QuikTrip’s expansion intothe Carolinas was based on how manymiles people drive on a daily basis.“Miles driven per day equates to howmuch gas you burn,” says Chet Cadieux,chairman, president and CEO of Quik-Trip [CSP—March ’13, p. 79]. With thechain’s business model so dependent onhow much gasoline volume a locationcan draw, gasoline demand, howevergauged, is critical to site selection.

As Wawa and other chains can attest,growing markets are another majordraw. For Steve DeSutter, presidentand CEO of Stripes LLC, the retail armof Corpus Christi, Texas-based SusserHoldings, that demographic pull meansstaying put—and building new.

Being located in a growing statemakes all the difference. “For me thisis really a Texas issue,” says DeSutter.“When you’re growing like Texas and itsmajor metropolitan markets and youwant to get into developing marketsearly, you are probably going to want tobuild and take advantage of the developmentactivities and other retail traffic asit develops around your store.”

Still, growth in terms of populationis only one of many factors, accordingto Greg Parker, president of The ParkerCos., Savannah, Ga. “In our part of theworld, everyone knows Parker’s. They’refamiliar with our programs,” he says.“The efficacy of the dollar spent is muchmore robust in the areas that we are in—instead of jumping to Atlanta, Athens orCharleston. And we think the best way todo that is organically.”

For QuikTrip, which in the pastdecade has broken into Arizona and,more recently, the Carolinas, new buildsrepresent the only course. “We’re a veryhigh-cost organization,” Cadieux toldCSP in an exclusive interview. “We paya lot. We pay for really high-quality realestate.

“We spent a lot of money on thefacility, so it’s really got to run a lot ofvolume in order to make money for us.… It’s got to be good for gasoline; it’s gotto be good for food. We can’t go somewherewhere any of those isn’t going tobe great.”

As for bucking the M&A modelembraced by Laval, Quebec-based AlimentationCouche-Tard and, in recentyears, Dallas-based 7-Eleven, Cadieuxtalked about the difficulty of managingan uneven portfolio of store formats andsquare footages and transforming theminto a consistent customer experience.“That’s a talent some organizations haveand we don’t,” he says. “It’s not somethingwe’re good at, and we know it. Sowe don’t do that.”

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