The beauty of teaching in the field of Marketing is that very little stays the same. There’s never a shortage of trends and data points to talk about. As long as you are comfortable with ambiguity and change, you’ll feel right at home in this field. If not, then other fields with more constancy might be a good choice.
Amid the sea of change we have already discussed this semester comes another emerging force, and that is the convenience store, or c-store if you prefer jargon. No, c-stores themselves are not buzzy and all that, because they have been around since 1927 when the Southland Ice Company opened the first 7-Eleven in Dallas.
The trend does include 7-Eleven, though, and their recent announcements first to close 444 stores by the end of this year, because of slowing sales and changing consumer behavior, but then also to open 600 new stores by 2027.
Huh? What’s going on here?
Actually, the trend to which 7-Eleven is responding has been developing for several years, and some might argue even for a few decades. It is the trend toward ever larger convenience stores, but now with an emphasis on food. In other words, the c-stores are taking on fast food as dining destinations.
I know, I know. It was in the 1990s that the trend of co-branding emerged in c-stores and truck stops, with branded fast food outlets tucked inside these properties. But that was a little different, because the stores were relying on the appeal of the branded food to cause drivers to select one store over another.
The emphasis today is self-branded food with increasingly larger food prep and sales areas. On the east coast, c-store chain Wawa has made a deep dive into food. Here in the middle of the country, QT has done so. Casey’s, a long-time favorite in places like Missouri, Iowa, and Illinois, has extended its reach into Oklahoma and north Texas. They are renown for their pizza.
And now 7-Eleven has entered the chat, bringing its own QSR (Quick Service Restaurant) Laredo Taco Company into its new stores. Like its rivals, the emphasis now is on quality food, not just a 12-inch sandwich thrown together by high school kids.
All of my students have been alive long enough to have noticed the change in c-stores. There are many legacy stores, the kind that 7-Eleven will be closing, typically in older more distressed neighborhoods. The new stores, though, are huge and with their many gas pumps and parking, can easily fill a couple of acres. They are well-lit, you feel safe, and there’s an abundance of shopping options, from snacks, candies, and beverages, and then food to go. I have been in some QT stores in which I had to remind myself this was really a gas station and not a restaurant.
So why the change in consumer behavior? Simple: Convenience. Hence the name convenience store. You can fill up your tank, buy a six pack or bottle of wine, and bring home dinner with one stop. Some of the new generation stores even have seating.
While I don’t think fast food as a category is going to go away anytime soon, they better be paying attention. The emphasis is clear. “Our new stores are food and beverage forward, and our customers appreciate them,” said CEO Joseph DePinto.
As I look back over the history of c-stores, I see a category that demonstrated a lot of willingness to evolve and seize opportunities. Remember, c-stores did not have gas pumps originally. The first c-store to sell gas did not arrive until 1964, and that was because some states were beginning to relax laws governing how gas could be sold. Originally, all gas stations were full-service, meaning you couldn’t just pull up to a pump and do it yourself.
Today, only one state—New Jersey—mandates full-service. This makes life difficult for every c-store chain, because they have to install little shacks among the gas pumps for employees to hang out awaiting customers. And then you have to hand over your credit card for them to process it. That’s OK. I can do this myself.
The bigger challenge for c-stores, even in New Jersey, is getting customers to come in after getting gas. If all you do is fill up and leave, they have not made much money, since gas has very low margins, usually only 2-5%. The high-margin stuff is inside. The lure of the usual snacks and beverages is one thing, but being able to get pretty decent food is quite another. Cha-ching.
Now you see where c-stores are going with this, and why fast food needs to be paying attention. They can’t pivot easily and add gas pumps either. The first of these new 7-Elevens is in Allen Texas, a north suburb of Dallas. I have just added it to my list for December, probably right after I visit that new Sam’s Club in Grapevine.
Change is good, and I’m happy to be along for the ride.
Dr “I’ll Take Two Tacos, Please” Gerlich
