CSD: Cornering the Nontraditional Market

Discussion
May 19, 2010

By John Lofstock

Through a special arrangement, presented here for discussion
is a summary of an article from Convenience Store Decisions magazine.

For
convenience store owners, good corners are much harder to come by, and when
one is available its price is another massive obstacle. Enter Street Corner
Sips, Snax & Stuff, a convenience concept targeting customers across the
country in malls, airports, hospitals, office buildings and college campuses.

Though
smaller in size than a traditional convenience store, Street Corner captures
all of the elements of convenience sans foodservice and gasoline. Each location’s
open-space design is heavy on beverages, sweet and salty snack foods, tobacco
and various in-demand sundry items, such as over-the-counter remedies. There’s
also a selection of office products, and some locations sell lottery tickets.

Unlike
other convenience stores, Street Corner serves two masters — those customers
visiting malls, hospitals and airports, and employees of the venues where the
stores operate.

"Our repeat business from mall employees, hospital workers and students
is off the charts," said La Colla, vice president and chief executive
of McColla Enterprises, which oversees 52 Street Corner convenience stores
in 20 states. "Part of our company strategy is to focus on this captive
audience, and we do that by offering things like free refills at the soda fountain
and our fresh iced tea program, but it’s clearly not the only audience we are
after. That customer shopping at the mall is often looking for a bottle of
water or a bite to eat, and we’ve positioned our stores to meet their needs."

There
was a time when drug stores seemed to rule the mall, but not so much anymore.
Street Corner has muscled its way into key locations to garner a large portion
of the sales drug stores left behind. Just as important is how the company
is able to execute its offering. The Street Corner concept requires only a
small amount of space — 300 to 1,000 square feet for an inline store and as
little as 150 square feet for a freestanding kiosk — making it an ideal option
for property owners looking to optimize high traffic, but are stuck with small
or difficult-to-lease space. A kiosk operator can be up and running in as little
as one or two days after signing on.

Street Corner is now entering a new phase
of development that could see its store size triple in as little as five years.
The company inked a deal in April with Sodexo, one of the largest foodservices
and facilities management companies in the country, to make Street Corner Sodexo’s
sole convenience brand. Aside from colleges and universities, the Sodexo deal
could gain Street Corner entry into 11 different retail environments, including
military bases and local school districts — even offshore oil platforms have
been discussed. What makes the deal even more appealing is that Sodexo will
be a brand franchisee, meaning it will assume responsibility for hiring, training
and prospecting for new locations.

"At this point, I’m still trying to grasp what the opportunity is, but
we expect our growth with Sodexo to far exceed what we’ve done in regional
malls," Mr. McCabe said.

Discussion Questions: What do you think of the growth opportunity for Street
Corner Sips, Snax & Stuff? Of the areas mentioned — malls, airports,
hospitals, office buildings, college campuses, etc. — where do you see the
best opportunities for expansion? What challenges may it face as it expands
to these alternative areas?

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7 Comments on "CSD: Cornering the Nontraditional Market"


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Ryan Mathews
Guest
10 years 11 months ago

Isn’t this just a modern version of the corner candy and tobacco store? The question isn’t will it work. it’s will it work well enough to support a national rollout?

Steve Montgomery
Guest
10 years 11 months ago

Street Corner is a great concept. It takes the top categories and focuses on the top items within each. This allows them to generate healthy sales in a very limited space.

Some of the areas that Sodexo specializes in will offer a challenge. For example, college campuses have a great “captured” customer base but they do incur wide swings in population throughout the year. Many, if not most/all, campuses prohibit the sale of either cigarettes and/or more broadly defined tobacco products. This category typically represents a large portion of any convenience retailer’s sales. However, by franchising the concept to Sodexo, Street Corner limits its risk and Sodexo is familiar with the vagaries of that channel.

I expect it will not be very long before Sodexo operates far more Street Corner locations than does Street Corner itself. When a single franchisee operates more locations than the parent company, it always raises interesting challenges.

Camille P. Schuster, Ph.D.
Guest
10 years 11 months ago

Are there enough people visiting malls (not just one store in a mall) to make this attractive? What will people want to buy from a convenience store in a mall that is not available in other stores? Drug stores were large at malls. What assortment of products at a kiosk will replace what the drug stores sold?

Gene Detroyer
Guest
10 years 11 months ago

Airports? Office buildings? Don’t these exact type of stores already exist? Let’s add to that apartment buildings. That is certainly the way it is in the urban environment.

In the malls? Beverages, snacks, tobacco, sundries, OTC remedies, lottery tickets and a small selection of office products? It sounds like Walgreens, CVS or Rite Aid. And what high school doesn’t have a store like this across the street or down the road?

“Street Corner” has no reason for being. However, the deal with Sodexo to go to places where convenience doesn’t exist has potential. If there is a business in servicing 100 employees on an oil rig, then they have a business.

Chuck Palmer
Guest
10 years 11 months ago

I say “be where they are”! If they can create backroom & operational efficiencies, there is a huge volume opportunity here. Nice niche.

James Tenser
Guest
10 years 11 months ago

Looks like SCSSS has reinvented the news stand–minus the news. A pretty apt concept for a modern Americans who don’t read much besides tweets and texts.

Anne Bieler
Guest
Anne Bieler
10 years 11 months ago

Yes there should be an opportunity in office and apartment buildings as well as some shopping malls that offer no or very limited selections of food/beverage and papers. If the only option is a vending machine, this sounds terrific. As companies downsize, the cafeteria usually goes too.

With solid site assessments and good executions, the concept could work well. The ability to get what one wants/needs in one convenient spot really makes sense.

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