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Tuesday, September 7, 2010 |
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| Supersized Circle K could herald era of new 'maxi-marts' |
By Josh Brodesky |
ARIZONA DAILY STAR |
March 5, 2009
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Tucson, Arizona | Published: 03.01.2009
Tucson's minimart landscape is probably in for a big change this summer.
Those more observant drivers out there — is there such a thing in the Old Pueblo? — may have noticed that Circle K is building a much larger incarnation on South Sixth Avenue just south of Interstate 10.
Unlike its smaller predecessors, which several brokers said tend to be about 2,600 square feet, this new supersized Circle K probably will be in the range of 4,400 square feet with a large number of gas pumps.
It's hard to say for sure what Circle K is up to with the bigger and better stores, because management wouldn't comment, but the prevailing thought is the convenience store behemoth is bracing for some hefty competition from Tulsa, Okla.-based QuikTrip.
"Competitors fear them," said Greg Furrier, a principal with Picor Commercial Real Estate Services.
That's probably because the Midwestern convenience-store chain has made a name for itself with 5,000-square-foot shops, 18 to 24 gas pumps, high-quality gas and food such as egg rolls and breakfast sandwiches that are prepared in-house. The company pays well, offers health benefits, a 401(k) match and even profit sharing and an employee stock option, so customer service tends to be pretty good, too.
Furrier has been working with QuikTrip to help the oversized convenience store find space in the Tucson market. QuikTrip has 63 locations in the Phoenix area.
When convenience competitors like Circle K — or other minimart chains — get wind that QuikTrip is moving into the area, they sometimes try to beat QuikTrip to the punch by building bigger and better stores themselves.
"People hear they are going into the market, and they will sometimes go in and try to compete with them with sites, or bulk up with their existing locations," Furrier said.
So is that what Circle K is doing?
"We don't discuss our business strategies, and we respectfully decline to comment," Circle K spokeswoman Diane Ketterhagen said.
Well, at least they were respectful.
QuikTrip spokesman Mike Thornbrugh said the company "will start turning ground" on future Tucson sites this summer, but he wouldn't say where exactly. Thornbrugh wasn't surprised to hear that Circle K was building bigger and better versions, but he wasn't giving it much thought.
"That's healthy for the marketplace, in our opinion," he said of the new Circle K sites. "Honestly, we are just going to concentrate on what QuikTrip does. We are concentrating on what we can do in our marketplace. We are going to have locations that in our opinion are going to be great. Nice stores. People will feel safe."
Time will tell how the market responds, but the trend in the convenience-store world is to get bigger and bigger.
"What's happening is these minimarts or c-stores are starting to fill in those gaps that are left by those grocery stores that are also getting larger," said Scott Testa, a marketing professor at St. Joseph's University in Philadelphia. "It's the traditional-grocery-store concept that is actually getting larger, and the minimarts are growing into that kind of void that is left by these supermarkets. It seems like everything is getting larger."
So, is this just the beginning of new supersized Circle K's?
Maybe. While Circle K is obviously the dominant player in Tucson's convenience-store landscape, it's also burdened with older stores that have limited space and little uniformity. For example, some stores have lots of gas pumps while other stores have none. Perhaps the new competition will force Circle K to make its stores more uniform and expansive.
But then again, maybe they will just sell Thirst Busters for even less.
Real estate reporter Josh Brodesky
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