The convenience store and discount store chains are, traditionally, less affected by economic downturn than their bigger, fancier and more expensive peers in the retail industry. For the last few years, the discounters and c-stores have proven this old adage and there were no signs of them slowing down their growth.
Until now, when the stories about massive store sales started popping up.
Shell's announcement of plans to sell 1,000 stores globally by the end of 2025 contrasts sharply with its ongoing expansion of company-owned c-store footprints in the U.S. Meanwhile, Dollar Tree, a symbol of the discount store industry, is set to shutter approximately 600 Family Dollar branded stores in the first half of fiscal 2024.
Rick Dreiling, chairman and CEO of Dollar Tree, said that lower income consumers continue to be very deliberate about their spending, blaming “persistent inflation and reduced government benefits” on their primary customer base’s eroded buying ability.
Despite closures, Dollar Tree remains active in its growth strategy, opening 219 new stores in the fourth quarter of fiscal 2023, bringing full-year new store openings to 641. Similarly, we see a lot of positive signs like increasing M&A activity and expansion of chains into new regions, indicating the industry’s steady health.
Thus, reforming of retail networks, with simultaneous opening and closing the stores, is a constant process. We can expect that with the change of retail landscape under digital influence this process shall only intensify.
Taking a holistic look at the state of the industry, what we’d like to offer for our readers’ consideration is the fact that sometimes a store chain operator has to make tough decisions on the closure of certain stores. While the store operations data is available to the management, at Ticon we are accustomed to treat any data with a certain degree of suspicion. The completeness and correctness of such information should always be verified.
As Ticon’s CEO Dr. Gregory Brodski likes to say, “We live in the age of information. But it’s also the age of misinformation.” In an environment where data can be both abundant and misleading, we believe that it’s necessary to study the situation deeper. This includes that the selection of the candidates for the store closures should be deeply data driven.
Ticon’s commitment to rigorous data consolidation, cross-verification, and filtration serves as a bulwark against uncertainty. By providing the retail decision-makers with a reliable foundation, we empower them to navigate the tumultuous waters of change.
When it comes to stores slated for closure, we provide our customers with the detailed analysis of 24/7/365 traffic flow fluctuations and their impact on quarterly and yearly visitor numbers. Our goal is to differentiate between the objective reasons contributing to revenue decline, such as decreases in traffic flow, and subjective – which are beyond our control – but completely under the control of the company management. Besides, subjective reasons may include poor store management, resulting, for example, in mismatch between product offerings and evolving target audience’s preferences.
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In our previous study, we revealed the retail network restructuring analysis based on the changes in traffic flow patterns together with demographic trends and target audiences specifics.
We've enhanced our approach by incorporating high-resolution and more extensive demographic data, along with additional insights on customer traffic. This enables us to offer our clients an objective assessment of the retail site's visitor potential. Essentially, we can help estimate the maximum number of visitors the store can attract based on real traffic patterns on the adjacent roads. With knowledge of the store's average transaction value, operations executives can easily project expected revenue by multiplying these figures. If actual revenue falls short of this calculated value, it's time for a big heart-to-heart conversation with the store manager. Stores of concern are typically marked with red (and possibly yellow) tags on the map below.
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However, if the numbers indicate that the revenue is falling for objective reasons, then this location may be indeed destined for the chopping block.
In either scenario, whether it involves having frank discussions with store managers or contemplating the possibility of closure, Ticon's site operations report will assist you in making act-based, optimal decisions. Our aim remains unwavering: to equip retailers with the tools needed to navigate the complexities of the retail landscape with clarity, confidence, and foresight.
