CSD: What Walmart’s New C-Stores Mean for the Industry
Through a special arrangement, presented here for discussion
is a summary of an article from Convenience Store Decisions magazine.
that Walmart plans on setting up hundreds of convenience stores in the near
future and many of these will be completed before 2012. Why is Walmart getting
into the c-store business, you wonder? Well, considering many of its superstores
also sell fuel, and more and more patrons are using the Sam’s
Club card and Walmart credit cards to buy fuel, it may as well have a c-store
out front for everybody.
Can Walmart compete in this venue?
Of course, Walmart already has a captured
audience, which will only grow as the price of fuel goes up higher and higher
and consumers are trying to squeeze a few more pennies out of each gallon.
Also, Walmart will be able to sell products in its c-stores at a price point
cheaper than other convenience stores, as it has a big buying advantage with
its vendors. Does this mean other convenience stores will lose business to
Sam’s Club and Walmart c-stores?
Yes, it could throw a loop in the industry, but it probably will not be too
big a deal since Walmart is only planning a few hundred of these stores between
2011 and 2012.
In the future, it could be more devastating to the industry if
Walmart starts throwing up convenience stores all over the place, but I don’t
see that happening.
Still, it could be a challenge for those c-stores in close
proximity. When Walmart entered the oil change industry and started selling
tires, for instance, both tire stores and quick lubes dealers were hurt.
Walmart is known for low-price, high-volume strategies. They do even better
during difficult economies, or when the rest of the industry is either inflating
prices to customers, or the price of those commodities skyrocket. That’s what’s
happening with the price of oil, thus why gasoline is so expensive. Perhaps,
in a way, it will just keep everyone honest and, what the heck, a little competition
is always healthy for an industry.
Indeed, this could very well change the entire
dynamics of the industry, and Walmart may even put these minimart type stores
in locations other than its own current properties at some point in the future
— who knows?
Discussion Questions: What do you think small format Walmarts will mean for the convenience story industry? How should convenience stores respond to Walmart opening its own c-stores?