Retailer Plans Aggressive Expansion
Despite the fact that a number of retailers are contracting or limiting expansion, 7-Eleven, Inc. announced plans to focus on growing its store base to expand its convenience offerings in the U.S. and Canada, and expects to add more than 200 new stores this year. Plans call for the company to accelerate its store development over the next several years through organic growth, acquisitions, and its “business conversion program.”
7-Eleven has a multi-pronged approach to growth that includes in-line and end-cap space in shopping centers, freestanding stores, urban locations in light industrial sites, city residential areas, and suburbia. The company, which operates and franchises more than 6,200 stores in the U.S. and Canada, opened 170 stores in 2008.
7-Eleven’s latest growth vehicle is its “business conversion program,” where the company looks for existing independent retail store operators who want to convert to the national chain and become a part of its franchise system. The convenience retailer has invested an average of $280,000 into these conversions. If the existing owner holds the lease or owns the building, they retain the responsibility for the real estate. There are now 110 outlets that have been converted to 7-Eleven stores since the program started in 2006.
Typical 7-Eleven stores have 1,800 to 2,200 square feet of selling space in densely inhabited areas that show strong daytime traffic. The company also wants to be part of re-gentrification in its U.S. growth markets, which include: New York, New Jersey, Baltimore, Washington, D.C., Tidewater, Virginia, Miami, Orlando, Tampa, Ft. Myers, Dallas-Ft. Worth, Chicago, Denver, Salt Lake City, the San Francisco Bay area, Seattle, Los Angeles, and San Diego.
“There is opportunity for our company to fill the void at once-vibrant locations that are going vacant,” said Dan Porter, 7-Eleven’s vice president of real estate. “We are flexible in that we will buy a site and remodel, sign 10-year shopping center, building, or ground leases with options to renew, or purchase a site at the right location and build a ground-up store.”
To support its growth plans, the convenience retailer is reviewing its portfolio of leased stores and their rental rates, to make sure they are in line with current market values. The real estate development team will identify opportunities to work with landlords who may be experiencing lease defaults or retail flight by their current tenants. “By moving rents to market values, we will further support our efforts to develop new locations,” Porter added.