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    Sizing Up

    Space may be c-stores' final frontier.

    With its January opening of a 7,400-square-foot convenience store, Wawa Inc. ushered in a new era of development, raising questions about the future of c-store design and merchandising, use of space and optimum store size.

    The 530-unit chain has traditionally built relatively larger stores to accommodate a robust fresh-foods offering — typical Wawa units range between 2,800 and 4,400 square feet. But the new location in Mays Landing, N.J., virtually looms over the average existing c-store, which measures 2,464 square feet, according to the 2002 CSNews Industry Report.

    "The question of what size the box should be is central to the conversations I've had with several large retailers I've worked with recently," noted David Bishop, director, Willard Bishop Consulting Ltd., based in Barrington, Ill. "If you look at what some players in the industry are doing, it may indicate where some others will follow."

    Customer comfort was foremost in the minds of the designers of the Mays Landing Wawa store, which, with 20 fuel positions, will serve as a template for new units in Pennsylvania and New Jersey over the next few years, noted Maureen McFadden, store design project manager for the Wawa, Pa.-based chain.

    "On every level, we constantly strive to anticipate the needs of our customers and to make their lives easier," she said. "Store design is at the core of that promise."

    The open floor plan offers ample customer circulation space. The unit features "sensible displays" of complementary products, with items that are often purchased together grouped throughout the store. The facility also has more storage capacity; cold beverages are housed in a 17-door cold box and fresh foods are in the center of the store.

    Some see the new Wawa store as the first of many very large units to come from c-store operators. "If we look at this as a 10-year trend, we will have a lot of stores in the 7,000-, 7,500- maybe even 10,000-square-foot range," predicted Jim Mitchell, of Mitchell Design Group, based in Irving, Texas. "Not all c-stores will be that way, but you will see 3,000 square feet of branded or other fresh foods added to 4,000-square-foot c-stores."

    Another trend that Wawa is tapping, Mitchell said, is the reemergence of neighborhood markets, in essence large c-stores acting as grocery stores. "The country has been aging for the last 10 years and supermarkets have been getting larger," he said. "Grandma is not going to walk though 100,000 square feet to buy the little bit of food she gets."

    At 7,400 square feet, the Wawa store may be challenging the traditional definition of convenience store, Bishop said, but consumers will still consider the location convenient. "They may be creating a separate store format that is supported in specific markets based on the demographics, geography and neighborhood, similar to Wal-Mart's Neighborhood Market strategy. They are redefining their position relative to a market, then capitalizing on a specific niche and filling it."

    Over the last few years, c-store size in general has been pushed by the growing presence of gasoline, noted Coney Elliott, president of Solutions Inc., a consulting firm based in Midland, Texas. As gasoline facilities stretched from two pump positions to 10 or more, the industry's 2,400-square-foot box has been dwarfed.

    "Even before the introduction of fast food inside the store," he noted, "folks were trying to make stores appear bigger to get a visual impact from the street."

    More Space, Less Product

    The average new c-store (less than a year old) measures 3,225 square feet, according to the 2002 CSNews Industry Report. But from a merchandising standpoint, larger stores today often have fewer products on the floor than older 2,400-square-foot stores.

    "I'd say 3,000 square feet to 3,200 square feet is the minimum for new stores, with even more space added whenever additional services or product categories are added," Elliott noted. "While store size initially increased to add fast food, even retailers still offering the basic selection have increased store size to change the customer's perception.

    "Some stores are designed to be more open, spacious and functional, and potentially accommodate more bulk or free-standing displays. The extra space may be used in the walk-in cooler storage or in the fountain area, but the floor space devoted to basic products hasn't increased over the years."

    Retailers are not trying to fill stores with as many products, according to Bishop, who noted that two things are evident walking into BP plc's newest Connect stores: There are fewer products and most are immediate consumables.

    "We've seen a shift in the industry toward immediate-use products," Bishop said, "which can mean single-serve and smaller containers gaining merchandise space in some categories. For instance, 20-ounce sodas have become more visible than 12-packs of cans."

    The optimal BP Connect store is 4,200 square feet, with 3,000 square feet of merchandisable area, dimensions created after considerable consumer research.

    "The new stores have a wide frontage to optimize front-door parking spaces for our customers and to project street presence, showing we are in the merchandise business," said Michael O'Brien, manager global design, for London-based BP, which has U.S. offices in Chicago and New York.

    "Our strategy is to provide our customers with wide aisles, lower gondolas and clear visibility to give them an easy, pleasant and efficient shopping experience."

    The oil company has specific guidelines for determining the amount of space devoted to merchandising each category, to project a sense of "product authority" to customers, driving sales and margin throughout the store. An emphasis on store-operating skills ensures each unit remains uncluttered, but "it is a continual battle," he noted.

    Smaller stores of 2,400 square feet and less cannot provide the same shopping experience, O'Brien commented. "But we are doing our best to upgrade the retail skills, capabilities and product offering to give the best shopping experience within our smaller stores."

    In some units, this could mean eliminating subcategories to give the customer a clear, uncluttered choice within core categories. "The number of product SKUs is tightly managed within each store size by planograms," explained Richard Griffin, BP's vice president of marketing, Central Business Unit. "We pay a lot of attention to SKU count discipline."

    Returns on site and store investment are carefully managed by BP, he added. "We have a rigorous process and high return expectations. We are continually working at building more efficiently to drive down unnecessary costs and look for new ways of presenting our customers with the same standards. We also are continually looking at ways to drive our merchandise intensity within the store to drive sales and margin efficiencies."

    Bigger Not Always Better

    While operators like Wawa have an established, destination foodservice business or other retail driver, larger formats aren't a guarantee of larger sales or profits, industry players caution. "Some retailers built a few [newly designed, larger] stores and spent $300 per square foot — they were never going to make money off those darn things," said Ian Rattray, vice president, senior project director, for Miller Zell, the Atlanta-based design consulting firm that created Sunoco Inc.'s new, award-winning A-Plus design. "Good design really makes money. It's got to bring a return on investment."

    Redesigns can look better and be more efficient, while costing less than a retailer's current new builds, he noted. "Image does not necessarily mean more money," Rattray said, noting retailers who have larger stores in mind should analyze the costs associated with traditional brick-and-mortar construction; pre-manufactured, modular buildings; and pre-engineered buildings that are put together like giant Erector sets, which may be less costly, especially in union areas.

    "You need to look at the store in totality, making what the customer feels and sees better, at less cost," he said.

    In some instances, c-store operators have tried to compete through their facility, rather than execution, Elliott added. "You can't sell the look of the store. The facility will attract, but not hold the customer. You've got to have the right location, product offering, price and personality to be successful.

    "Some people have invested excessive dollars into building monuments to themselves or the community or for whatever reason. In many cases, those have not succeeded because they were not functional or didn't have the right product offering."

    A number of successful c-store operators, such as QuikTrip Inc. or Love's Country Stores, have not substantially increased the size of their stores, but have continued to modify the basic rectangle, upgrade merchandising and expand their primary offering, such as fountain drinks and coffee, Elliott noted. "They build nice, modern facilities that are appealing, but are not monuments," he said. "They have stayed traditional when it comes to store design, but have enhanced location, overall presentation and product. Some folks are putting dollars in people and location, as well as facility. Others tend to put it only in facility."

    At Oak Brook, Ill.-based Clark Retail Enterprises Inc., which operates units from 300 to more than 3,000 square feet, as well as a 7,500-square-foot truckstop, facility size is tied to the store brand, the nature of that brand's offerings and the space required to merchandise each item. Clark's Oh Zone! stores are more than 2,800 square feet in size; White Hen stores are 2,000 to 2,400 square feet or greater; On the Go units range from 300 to 3,000 square feet.

    "Location dictates the offering," said John Matthews, vice president marketing and facilities. "Where we have the opportunity to control size, we attempt to do so. We have target spacing for each of the brands, but store size is generally dictated to us, unless we are doing a ground-up.

    "C-stores generally don't offer the luxury of creating vast allotments of space. We find if you design a merchandising set for the smallest stores, you can enlarge the set or add incremental sets to your large stores in a modular fashion. There is a tendency to squeeze as much in as possible, while allowing for all of the necessary ADA [Americans with Disabilities Act] requirements. If space were not as much of a constraint, we would instill customer queuing and resting areas in the store to enhance the overall experience."

    While others are sizing up, one of Clark's newest store concepts — for office buildings — requires only 2,000 square feet. "We would like to have more, but where we put this concept — generally high-rise buildings — it becomes cost-prohibitive to go much larger due to rents. Therefore, we make 2,000 work."

    Making Over the Small Box

    Regardless of how many retailers start building 3,500- or 4,500- or even 10,000-square-foot stores, the majority of c-store locations are still in the area of 2,400 square feet. While few retailers do wholesale retrofits, many are making changes to present a more spacious feeling, including reducing SKUs and reconfiguring gondola runs.

    "The industry average is 3,200 SKUs [per store]," Bishop said. "But you will see stores today going below 2,000 SKUs and in some cases 1,500. That opens space in smaller stores and begs the question, what do we do with all this free space? It gets to reinventing the store and how some retailers are defining their markets more narrowly."

    Mitchell is involved in a number of remerchandising efforts with retailers looking for ways to open up the traditional c-store. "We reduce shelving, but not product offering," he said. "Many retailers are not paying attention to what is on the shelf. They may have two or three sizes of bleach, two brands of dishwashing fluid, maybe in different sizes. If we reduced some of these to one SKU in a medium size, we won't lose sales, but can reduce the amount of shelving."

    What's more, most retailers usually buy shelving that is too deep and don't use vertical space efficiently, said Mitchell, who recommends a flexible system of wire shelving and slat board, where shelving can be adjusted horizontally and vertically. "Go over to the shelf that holds groceries or paper products, squat down and look at it straight on from the end. You will see about 20 percent of the space is not used, especially height-wise and depth-wise. Retailers are spending money on shelving they don't need. I can go into almost any store in the country and take out 8 feet of shelving, but put 10 percent more product in it."

    A-Plus for Design

    Sunoco's A-Plus design for its new 4,200-square-foot stores was used to retrofit more than 400 smaller existing locations before the first new build broke ground; it has now been used to retrofit more than 500 stores. "You are trying to get an impact in the marketplace with any new brand development," said Miller Zell's Rattray. "To do a new build and expect that to carry the day, just won't happen. The new design acts as a catalyst for the right thing to happen at the 500, 3,000 or 10,000 locations already there. That's when you get the brand into the marketplace and have in impact on sales, margins and profits."

    With the new A-Plus, the designer wasn't looking only to increase the footprint. The total volume of the store — the sense of space, increased height, etc. — was important.

    "Based on our consumer research, we wanted to give the store the feel of a marketplace," Rattray said. "In many ways, people have a negative impression of c-stores. Having the sense of openness and security helps draw people in from the forecourt into the backcourt."

    Added David Kotke, vice president of marketing, for Miller Zell: "There are specific avenues of retailing we think have trailed all of the trends — and any woman would know that. The oil industry is one of those. The majority of stores are cold and industrial looking with a sheet of bulletproof glass. We have to bust a paradigm, and that need to bust out is driving the height and sense of volume in the store."

    Clean and Simple

    The visual clutter in the typical c-store can be broken in a larger store, helping customers focus on specific product segment. "One way to do that is to give a larger volume and to simplify communication in the store. It makes the space feel less cramped and easier to shop," said Rattray.

    In the new A-Plus design, each primary product category — cold beverages, fountain, tobacco, foodservice — has its own "storefront" with a distinct, but complementary feel. The cooler area, for instance, has a lower ceiling and change of color of the tile. "We wanted that area of the store to feel like a traditional c-store," he said. "It makes the foodservice side of the store more unusual and reinforces it."

    Merchandise is raised up off the floor in many cases, thereby cross-merchandised at eye-level. "While getting coffee, a customer will see a Twinkie at eye level," Rattray noted.

    To retrofit this spacious image and "company brand," Sunoco took key parts, refined them and put them in the existing store base. In the tobacco category, for instance, the department is branded and given a defined planogram, making its presence substantial. Then, depending on the size of the store, the department fluctuates from 6 feet to 16 feet. "But the brand image is maintained," he said, adding that "the skillful paring down of SKUs to get to the right level of offering is definitely the trend and will open the store up."

    Cosmetically, simple things can be done to retrofit older stores to make them feel bigger and bring a sense of consistency to newer, larger stores in a chain. "A lot of it has to do with cleaning up the location and doing things as simple as putting in new floor tile," Rattray said. "While the designs are not exactly the same, the general feel is the same."

    Summed up Kotke: "Being able to maintain store imagery is critical. This industry has struggled with that."

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