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DALLAS -- Convenience store chain 7-Eleven Inc. will embark on an aggressive growth path in Southern California, with plans to open more than 100 new stores across the region over the next three years, and roughly 500 stores over the next five to seven years, the company stated Friday. Helping it in its mission is CB Richard Ellis Group Inc., which will serve as the c-store chain's exclusive brokerage firm in the region and focus on assisting 7-Eleven in expanding its market share.
"We are committed to investing in Southern California through new store development, remodeling existing locations and creating more franchise and other business opportunities," Dan Porter, 7-Eleven vice president of real estate and new store development, said in a statement. "7-Eleven wants to quickly identify new locations and take advantage of opportunities throughout the region. CB Richard Ellis' extensive network and broker contacts will be important to our success as we enter a period of rapid, new-store expansion."
Store expansion will be located in seven counties -- Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura and Santa Barbara -- with new store investment totaling approximately $50 million in 2009 and more than $60 million for 2010, according to the company.
Currently, 7-Eleven has roughly 800 stores in the SoCal market, and anticipates opening nearly 50 this year. Last year, 20 7-Eleven stores were added to the region, the company stated.
The expansion is expected to save the convenience store retailer millions in rent expenses, according to a report in The Los Angeles Times. But analysts contacted by the paper were unsure if the market could support hundreds more stores. At its peak in the 1980s, 7-Eleven had roughly 1,500 stores in California, according to the report.
"It is difficult to see that there is a screaming need for more convenience stores," analyst Richard Giss, a partner in Deloitte & Touche's consumer business division, said in the report.
But with landlords struggling to find reliable tenants, 7-Eleven may be able to make favorable deals that may have not been possible in previous years, according to sources cited by the newspaper.
"Clearly, the change in the economy has made space available that wasn't once available to 7-Eleven," Naveen Jaggi, senior managing director at real estate brokerage CB Richard Ellis, told the Times. "The opportunities exist today because a number of retailers have gone out of business." Jaggi added: "A lot of landlords are looking for credible national tenants to elevate their retail shopping center."
The c-store retailer is banking on consumers trading down from going out to lunch to stopping by its 7-Eleven stores for chicken wings and prepackaged fresh foods, the Times reported.
To succeed the company needs to continue attracting customers and reach out to those who might become regulars -- people gassing up at the locations that offer fuel and grabbing a Big Bite hot dog or a cup of coffee with breakfast or lunch, analysts said in the report.
Flexibility is a significant component in the convenience chain's growth strategy, the company stated, and as previously reported, 7-Eleven said it is looking at in-line, end-cap space in shopping centers as well as freestanding stores and downtown, urban locations.
The company also looks to enter neighborhoods that are undergoing revitalization, where it can help re-gentrification efforts.
Also helping 7-Eleven grow is its Business Conversion Program, where existing independent retail stores can convert to the 7-Eleven brand and become part of 7-Eleven's franchise system.
Outside of the Southern California region, 7-Eleven operates, franchises and licenses more than 6,400 stores in the U.S., and expects to open more than 200 new stores in the U.S. this year, up from the 170 opened in 2008, the company stated.
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