CSD: Reshaping the Convenience Landscape
Through a special arrangement, presented here for discussion is an excerpt of a current article from Convenience Store Decisions magazine.
For some, Exxon’s decision to sell its corporate stores presents the chance of a lifetime to acquire the rights to stores for an entire market, maybe more. For others, the announcement caused immediate fear and panic concerning the long-term viability of their operations and, in some cases, several generations of the family business.
In mid-June, Exxon announced its plan to exit direct-store operations and sell 825 company-owned and -operated stations as well as 1,400 stations leased to dealers, following the path forged by Shell and BP. The 2,225 stations make up about one-fifth of the Exxon and Mobil stations in the U.S.
“I am extremely disappointed that I’m not going to be ExxonMobil’s first option to buy the site that has been in my family for 51 years,” said Tommy Todisco, president of Todisco Inc. in Boston, which operates a Mobil station with an annual volume of 1.5 million gallons. “I’ve been working at this store since I was 12 years old. Now the game is changing and I don’t know what to expect. We’ll have a new landlord, new lease requirements and who knows what else?”
A couple hundred miles south, Levent Sertbas, president and CEO of Sertbas Inc., a Paramus, N.J.-based operator of two Exxon On the Run locations, said he has invested six years building brand equity with ExxonMobil and was devastated to learn of the refiner’s decision.
“I don’t think we have any chance now of purchasing our property from Exxon, which was part of my long-term business plan,” Mr. Sertbas said. “Right now margins are down and credit card costs are killing our profitability, and now I have to deal with this uncertainty. It’s frustrating and in all the scenarios I can come up with in my head, my business is on the short end.”
Beth Snyder, a spokeswoman for ExxonMobil’s downstream operations, said the company is sensitive to its dealers’ concerns, but urged patience as the company transitions its assets.
“We are still putting the specifics together,” Ms. Schneider said. “This is a direction strategically that we are determined to go in and as opportunities become available, either for distributors that want to expand in certain markets, or others, we will make them known to the industry.”
But larger regional players have an awful lot to gain. Wallis Cos., in Cuba, Mo., and Boston-based Verc Enterprises Inc., are two companies that expressed a serious interest in vying for ExxonMobil’s divested sites.
“For wealthy, financially qualified jobbers, this is a fantastic opportunity,” said Tom Kelso, managing director of Matrix Capital, an investment group that provides merger and acquisition advisory services to convenience store and petroleum companies. “Since these are company-owned properties, we’re looking at good stores in good markets, and, in most cases, Exxon owns the underlying real estate. It adds up to a once in a lifetime opportunity. Once these units are sold it would be almost impossible to duplicate another sale of this size.”
Discussion Questions: How do you think the move by petroleum companies to shed their retail operations will reshape convenience store retailing? Who benefits and who loses? Do you think the sales will ultimately improve the retail customer experience at gas stations?