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The c-store paradox

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Articles - October 2013
Monday, September 30, 2013
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The c-store paradox
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Lisa Sedlar stands in front of the under-construction location of her new convenience store chain, Green Zebra. Each store will create about 40 jobs, Sedlar says.
// Photos by Adam Wickham
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Lisa Sedlar is running a few minutes behind. The diminutive short-haired woman hurries into her makeshift office apologizing, explaining she slept through her alarm. She’s easy to forgive; the former New Seasons CEO has been working 15-hour days as she prepares to launch her new grocery chain, Green Zebra. She looks a little tired, naturally. But fortified by coffee, Sedlar seems remarkably unstressed: She’s been sleeping the deep sleep of someone who knows she has a good idea.

Sedlar’s elevator speech for Green Zebra goes like this: It’s a mash-up between a 7-Eleven and a Whole Foods. The stores will sell convenience-store fare such as candy and soda, and, at approximately 6,000 square feet, they’ll be closer in size to a Plaid Pantry than New Seasons. But Green Zebra will also sell organic and local products, and will feature a produce section and a deli. If the concept sounds familiar, it’s because the idea is a time-tested one: the corner store. “This is how people used to shop,” Sedlar says.

Sedlar got the idea for Green Zebra before she was headhunted by New Seasons in 2005. During her seven-year tenure as CEO, the grocery chain opened eight stores, added about 1,650 employees and tripled its revenue. But the much-lauded executive still had a “burning desire” to open a small-format grocery store.

“I could see there was a market need,” she says, “and I could see that if I didn’t do it now, someone else was going to do it.” Sedlar left New Seasons last fall; her former employer is a minority investor in her new venture. The first Green Zebra, located in Portland’s Kenton neighborhood, opened in September, with two more stores, in Woodstock and Richmond, to follow next year.

Sedlar projects sales of $5 million to $6 million per store in year one. She calls that forecast “robust,” but when she needs a confidence boost, she looks to convenience-industry trends. “Their growth is coming in large part from expanding their food offerings,” she says.

In stocking her stores, Sedlar says she’ll follow an 80/20 guideline: 80% Whole Foods-style products, 20% 7-Eleven-style. Her concept reinforces what the strong performance of Oregon’s convenience industry suggests — that Oregonians want health and convenience. They want to have their gluten-free cake and eat it too.

“To us, convenience means not sending you to more than one store,” Sedlar says. “Natural-food stores: All they do is natural food. So if you drink Diet Coke — which a lot of people do — you have to go to another store to get it. We don’t see ourselves as the food police; we do carry Diet Coke and Coke and Cheerios. We just don’t carry a lot of that stuff.”

Green Zebra may be a whole different animal than your average convenience store. And, though Sedlar says she’d like to eventually open stores beyond Portland, the concept may be too crunchy for most of the country. Even so, this contemporary corner store does take convenience-industry trends to their logical conclusion. If Sedlar is successful, Green Zebra could offer a model for the less gas- and cigarette-dependent and more health-focused convenience store of the future.

As the markup on mini-mart products indicates, convenience itself is a commodity, and these days, it’s a hot one. Supermarkets, with the introduction of self-checkout stands, are trying to become more convenient. Starbucks and Subway have turned coffee and sub shops into convenience-based businesses. Even retailers that don’t sell food, such as Best Buy and Old Navy, are hawking convenience products like soda and candy at their registers.

This convenience creep means that for actual c-stores, differentiation is more important than ever. “Those are the same products you sell, so how do you add that ‘wow factor’?” Lenard says. “You’re seeing an evolution away from packaged items toward something else.”

Lenard was in Oregon recently to shoot a video featuring a local convenience store that exemplifies that evolution: Bend’s Stop and Go Mini Mart. The store’s “wow factor?” Beer on draft. The Stop and Go boasts 30 beer taps, not to mention six cider and wine taps, 11 kombucha taps and one root beer tap, selling the beverages in the large glass jugs known as growlers.

The Stop and Go’s owners, father and son Kent and Kizer Couch, installed the first dozen taps in 2011 after watching demand for craft beer rise throughout the recession. “I think people found craft beer was a way of indulging themselves when they couldn’t afford to go to the movies as often, or whatever it was,” Kizer Couch speculates. “We couldn’t keep enough craft six-packs and 22-ounce bottles in our store to satisfy the demand.”

Beer enthusiasts, excited about being able to take home varieties brewers don’t bottle or can, responded positively to the Stop and Go’s new offerings, and the Couches rapidly expanded their tap selection. Draft-beverage sales now make up roughly 10% to 15% of the business’s total in-store revenue, without affecting sales of packaged beer and wine. “You can’t put a value on differentiation,” Kizer says. “That’s the only reason we dominate in our area. We’re constantly asking, ‘What’s the next thing?’”

Across the state, at his immaculate mini mart in the Coast Range town of Vernonia, Matt Carlough agrees convenience stores must be adaptable. A board member of the Oregon Neighborhood Store Association, a convenience-industry trade group, he also believes the c-store remains a fundamentally sound business.

Whether supermarkets have self-checkout stands or not, he argues, their very size prevents them from truly competing with convenience stores. “At a Safeway, you’ve got to park 50 feet away and hike all the way to the back of the store to get a six-pack,” Carlough says. “That’s not convenient.”

Speed-metrics studies by NACS bear him out: Car door to car door, the average duration of a convenience-store trip is about three minutes. “There are plenty of stores where that’s the time you spend walking from your car to inside — let alone what it takes to navigate the aisles,” Lenard says.

Plaid Pantry’s executives aren’t worried about the industry’s sustainability, either, and not only because of c-stores’ speed advantage. To Girard, the idea behind the convenience store is too simple to fail. “It’s a box,” he says. “Is there a place for a 2,400-square-foot box surrounded by people? Of course.”

Perhaps the Portlandia picture isn’t so complicated. Yes, Oregonians are different. We drink a lot of craft beer, as the flowing taps at the Stop and Go attest. We buy a lot of local and organic goods, a trait Green Zebra’s investors are banking on. Apparently, we smoke a lot of American Spirits.

But maybe we’re not as different as we’d like to believe. Food-conscious Oregonians might not be among convenience stores’ core customers, but that doesn’t mean they never pass through those chiming glass doors. Girard believes Plaid Pantry serves foodies “for their needs other than upscale fresh foods” — and why not? Be it a bottle of microbrewed beer or a can of celebrity-endorsed cream soda, “people are always going to have needs they want filled immediately,” Cote says. “That’s what we do.”



 

Comments   

 
Guest
-1 #1 it takes all kindsGuest 2013-10-02 17:54:59
This is a good object lesson for "progressive" (or substitute your favorite label) thought leaders and media darlings who are just sure everyone really agrees with them. What real diversity actually looks like...
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Guest
0 #2 Happy to See The Growler GuysGuest 2013-10-15 23:43:57
This summer I was reentering the east side of Bend after a camping trip, which is where I discovered the the Growler Guys as nestled inside a gas station. The idea was interesting, despite the questionable pairing of beer and driving. I was delighted to see nods to nondrinkers like myself, in the form of Townshend's Kombucha and Rogue Root Beer, with free samples flowing. The Stop 'n' Go the Growler Guys shop was attached to had an old-timey service station feel, with uniformed employees carefully cleaning windshields wearing fresh uniforms (complete with hats!) and asking to take our trash. Everyone at the shop was really friendly and the whole outfit seemed very service oriented. To me, those aspects are what I'd like to see in the convenience store of the future, more than the ability to get a growler filled.
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