Friday, June 20, 2008

Retail Innovation Memo: The 'Econvenience Store' Will Be the Next New Thing, and is A Convenience Store Industry Green Retailing Trend in the Making

Alvaro Garza of Dallas, Texas is a retailing pioneer in a brand new green-oriented retailing concept which Natural~Specialty Foods Memo predicts will become a convenience store industry retail niche trend in the not to distant future.

Mr. Garza and a partner recently opened an "econvienece store" (the 'e' stands for eco) named the green spot market and fuels in Dallas, Texas, in a converted and remodeled Mobile gas station.

The two retailing eco-entrepreneurs' have turned the traditional convenience store, the product mainstays of which are gasoline, snacks (mostly junk food) and beverages (mostly soda and beer) on its head, creating a format which not only doesn't merchandise junk food but puts an emphasis on selling natural and organic foods, including grab-and-go prepared items, healthy snacks and generally good-for-you beverages that taste good too.

The green spot market and fuels also sells fair trade organic coffee rather than the traditional C-store java, and serves the organic fair trade brew in compostable cups made from corn, which also are used to contain the all-natural soda's from the store's soda taps. No Coke and Pepsi at the green spot.

The Dallas "econvenience store" also offers biodiesel fuel in its fuel pumps and is the only service station or convenience store in Dallas County (which is a huge area) doing so currently, according to co-owner Garza.

Garza has researched the "econvenience store" concept in the United States extensively and says other then his green spot market and fuels, he's found just one other similar comprehensive and fully-integrated "econvenience store" in the U.S. That store is in Portland, Oregon, he says.

Dallas TV station WFAA recently did a report on the Green Spot, which its customers are calling one-part Whole Foods Market, one-part 7-Eleven.

Natural~Specialty Foods Memo believes Garza and company are onto something major with their "econvenience store." The C-store format, which has as its two main product categories fuel and food and drink, offers a perfect concept for green retailing in a niche manner.

We believe this to be particularly true for entrepreneurs who are looking for a way to differentiate themselves in convenience store retailing. Chains control the C-store arena in the main, and it's difficult for independents to compete in the retailing category.

However, the "econvenience store" format offers a real point of differentiation for independents. It also taps into something consumers already spend their money on in the billions of dollars annually in the U.S.--natural, organic and healthy foods and beverages. There's nothing radical anymore about selling these foods and beverages in any type of retail format store.

While its true biodiesel is in its infancy and therefore not a very lucrative proposition, start up "econvenience store" retailers can still offer gasoline alongside the biodiesel at the pump. Additionally, as electric cars become more common, we see a niche for having battery charging kiosks at the stations as well, which can provide an additional revenue stream.

Further, we would suggest having numerous pressurized air hoses (say at 25 cents for a certain period of time) so bicycle riders can fill their bike tires up at the store. Once they learn its availability, they will make it a regular stop, thereby also buying beverages and snacks at the store while filling their bike tires. In fact, anything that's an logical "eco-product niche" makes since for the "econvenience store."

Another idea is to hook up with a local group and hold weekly farmers' markets in the "econvenience store" parking lot. A farmers' market fits the format perfectly, as well as being a great way to introduce consumers to the store, along with generating lots of food traffic, which in-turn will generate even more word of mouth communications.

Today, natural and organic food and beverage items taste as good or better than conventional C-store fair. They also can be sold at a reasonable retail price by "econvenience store" retailers as long as they don't try to make Whole Foods Market gross margins.

Since convenience store format stores have much lower overhead (small and no frills) and have far less operating expenses than say a Whole Foods Market does, doing so is achievable. Further, "econvenience retailers" can make a higher margin on the products than traditional C-store retailers do in many cases and still do well in terms of volume.

Imagine the look on the face of the traditional C-store customer in Dallas when they go into the green spot for a six pack of beer, a pack of cigaretts (which the store doesn't sell at all), a couple of ham sandwiches on white bread, a cheap burrito and a couple of Cokes.

Of course, once they get inside, they will buy despite their startled look because they're hungry and thirsty.

Perhaps after they instead purchase a bottle of Vitamin Water, a delicious sandwich on whole wheat bread, a tasty organic instead of cheap, tasteless burrito, and a six pack of organic craft beer, they just might not only be happy, but also might go out and convert their pickup truck to biodiesel fuel, as well as stopping in every morning at the green spot for a fresh-brewed cup of organic fair trade coffee in a compostable cup made from corn, on their way to work.

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