Volume 17, Number 4 April 2003 Feature Article Gas Stations: Surviving in the Shadows of the Hypermarkets by Nancy Murdakes Brown, Suntide Commerical Realty n our fast-paced retail industry we all know membership wholesale clubs that have begun sell- that if we cannot adapt to the changing condi- ing petroleum) throughout the country. “Like it or Itions in our world, we might as well just pack not, this phenomenon is part of the petroleum in- up, go home and call it a day! During the past few dustry today, and the indications are that it’s going years, the retail category that has become very to play an even more significant role in the future,” familiar with the word “change” is the petroleum wrote Keith Reid of National Petroleum News. retailer, both the mid-size convenience store How will the emergence of hypermarkets impact (c-store) chains and smaller, local independent the hundreds of convenience stores in our neighbor- c-stores. Over the last ten years, “hypermarkets” hoods and those mid-size c-stores along our main have emerged (mass retailers, big box retailers, and Gas Stations continued on page 2 SHOPPING CENTER SNAPSHOT Champlin Retail Centre Location: Southeast corner of Highway 169 and 120th Street, Champlin, MN Month/Year Opening: GENERAL MERCHANDISE 174,000 SF October 2003 FFE=868.2 Owner/Managing Agent: Ryan Companies US, Inc. 6 . N . Leasing Agent: Chris Simmons D V 3,400 SF L 7 FAST FOOD B 37 and Terese Reiling, Welsh K 24 R A Companies, LLC (952) 897-7700 P S S E RESTAURANT 8 IN 4,738 SF 5 S 82 11 Architect: Ryan Companies U 6 16 16 16 D 12 16 B F 16 20 O 18 9 O 00 S 00 F 10 10 3,4 US, Inc. T 16 10 S 20 A F 48 137 RETAIL 18,000 SF 11 Construction Contractor: 14 7 Ryan Companies US, Inc. GLA: 210,000 sf Construction Style: Steel, brick, rock face, standing seam metal and EIFS Current Occupancy: 83% Additional Facts/Narrative: In addition to SuperTarget, Ryan # of Stores: 5 is proposing three free standing pad sites for sale or lease and one multi-tenant building for lease. This shopping center is the Anchor Tenants: SuperTarget most significant retail development in the city of Champlin and Market Area Served: Champlin will serve basic goods and services to this community. GAS STATIONS continued from page 1 arteries of the Twin Cities? Those who can pendent c-stores going to survive with this hypermarkets fit on every street corner? adapt to change are bound to weather the emerging phenomenon? Most likely, many No! The main goal for the c-store operator storm, however for those who cannot, local independent c-stores will begin clos- is to be visible, make the customer happy the future appears dim. We have not yet ing their doors as it will be difficult to keep and satisfy their needs in a timely and seen the complete impact that these up with this massive competition. The efficient manner. The c-store chains are hypermarkets will have on mid-size news is brighter for the mid-size c-store not making large profits on their petro- c-store chains and local independents, chains. Even with the emerging multitudes leum sales, which is why the inside store since there are not as many hypermarkets of competition over the next several years, merchandise can be priced higher to make in Minnesota as there are nationally. Cer- their goal is to be operating as usual. Many up the difference. High volume is the tainly we will start seeing local changes in states legislatures (including Minnesota) name of the game! This is common in the this industry. Currently in Minnesota, are becoming more cognizant of these local independents c-stores that are trying Rainbow Foods has fuel stations at a num- their best to compete with the mid-size c- ber of their stores in the Twin Cities, Cub People have become increasingly store chains, such as Holiday Stores and Foods has one in Rochester, Costco has Speedway Super America. In fact, at two in St. Louis Park and Coon Rapids, aware that their time is worth Holiday c-stores, you will find that even Sam’s Club has one in Woodbury and more than the money saved by the inside merchandise is priced as com- Wal-Mart intends to add more fuel stations searching through coupons petitively with many supermarkets. “Not throughout the country. Even Target has or going out of their way for the everyone,” comments David Hoeschen, considered entering the gasoline game as Director of Real Estate for Holiday Com- an extra service to their customers. lowest gas price per gallon. panies, “counts every penny to get the lowest cost in gas, eggs, cheese, milk and Retailers such as Wal-Mart, Rainbow hypermarkets selling gasoline at below Foods, and Meijers entered into the Gas Stations continued on page 3 cost and are implementing new laws to petroleum business due to one simple fact: limit or even prevent this occurrence to they want to provide one-stop-shopping control predatory pricing. Upcoming Events for all. In today’s economic conditions, people will find themselves going to these Supply and Demand MSCA programs will be held at 8 a.m. hypermarkets not only for their daily (registration at 7:30 a.m.) at the The demand for gasoline has increased due Radisson South Hotel unless otherwise necessities, but also to fill up their cars to to increased populations in the entire indicated with an asterisk. save a buck or two! Wal-Mart customers United States and in Minnesota. Each Pre-registration ends at noon the day prior. are able to find great deals on merchandise household may easily have more than one Any registrations received after that from clothing to health and beauty, to food will not be guaranteed pre-registration. or two cars. During the last two years both Program topics are subject to change. items, all the way to filling up their tanks the mid-size c-store and the local indepen- with gas. Everyone wants a bargain, right? dent have increased their gasoline prices So why not lure the customer into their due to a decrease in the oil supply, not parking lots by offering low gas prices and because they wanted to gouge their cus- then providing them with all they could tomers. The theory behind raising gas prices ever need at low, low prices. was the hope that fewer people would be Wednesday, May 7 Selling Below Cost filling up their vehicles, so that the gas Headline Speaker supply would not diminish. On a positive Does it matter that many of the hypermar- Wednesday, June 4 note, supply issues for oil are not as con- kets can sell gasoline below their cost? Not Industry Trends cerning due to the strike in Venezuela if it is legal, since they more than make up Monday, June 16* ceasing, where much of the oil was housed. the cost in merchandise sales. Remember, Annual Golf Event the hypermarkets main objective is mass Is there still a need for the mid-size conve- Wednesday, July 9 volume, not margins. How are local inde- nience store? Yes. Can Wal-Mart and other Personal Development Wednesday, August 6 As a member of MSCA, your company is entitled to use Development the “Member of MSCA” artwork while it is an active Wednesday, September 10* (Afternoon) member of the Minnesota Shopping Center Association. Retailer Panel You are encouraged to use the logo on letterhead, Wednesday, October 1* (Afternoon) envelopes, web sites, newsletters and any other Mall Program appropriate print advertising. For your electronic Wednesday, November 5* (Afternoon) copy of the “Member of MSCA” logo and usage rights Retail Report and restrictions, please contact the office at Tuesday, December 9* (Evening) (952) 888-3491. STARR Awards/Year End Ceremonies msca news 2 www.msca-online.com Featured Corporate Sponsors Benson-Orth Associates, Inc. THANK YOU! RLK-Kuusisto Ltd. Industry Focus: Site design and Industry Focus: To be the best shopping Great Clips, Inc. center developers’ general contractor. approval of commercial/retail multi-use Industry Focus: America’s largest and developments. Company Vision: To create loyal customers. fastest growing salon brand. Company Vision: Creating extraordinary “MSCA is important to us for two reasons. communities. First, the organization is growing. Second, I Company Vision: To be the #1 dominant haircare brand. like the commitment MSCA has made to “MSCA brings together the complete give back to the community. This fits with “Retail real estate is all about relationships, team of developers, design professionals our philosophy.” - Michael Monson and nobody delivers retail relationships in and construction experts. It is a great Minnesota like MSCA.” - Dean Wieber opportunity to network with associates Glimcher Properties/ and stay current with trends, public Northtown Mall Park Midwest opinion and physical design.” Commercial Real Estate - John Dietrich Industry Focus: To be a recognized leader in the ownership, management, Industry Focus: Retail property Welsh Companies, LLC acquisition and development of enclosed management, project leasing, land sales regional and super-regional malls and and brokerage. Industry Focus: All facets of commercial community centers. real estate. Welsh is a full-service, multi- Company Vision: To provide customer disciplined real estate service provider and Company Vision: To ensure maximum service, manage and lease like we own it. investor. performance by continuing to provide stores “The relationships built from MSCA are and services that meet the needs of our Company Vision: To be the pre-eminent ‘priceless’.” - Doug Sailor growing trade area.