CSD: Cornering the Nontraditional Market

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?

• Cornering The Nontraditional Market – Convenience
  Store Decisions