Co-branding posts strong presence for City Stop by Danielle Birkin, In Business Las Vegas
Customers at City Stop convenience stores can do more than merely fuel up and grab some snacks when they shop at any of the store’s nine local locations.
They can also stock up on stamps, post the power bill and mail Aunt Millie’s birthday present — 24 hours a day, seven days a week.
City Stop Inc., founded in 1997 by Bruce Familian and Jon Athey, recently entered into a powerful partnership with the U.S. Postal Service, becoming the first Las Vegas Valley convenience store chain to operate Post Office Contract Units within its stores.
“I read an article in a trade publication about somebody back East who put a post office in a store, and I’m always looking for new ideas,” said Familian, who serves as president of City Stop. “I approached Jon and said ‘What a great idea,’ and we chuckled because we didn’t think we could do it. But we spent a year negotiating (with the U.S. Postal Service) and we pulled it off.”
Because it was such a new concept, the partners had to create their own software and systems, eventually merging three different programs. They also had to train their employees and remodel the stores to meet post office requirements. By chance, they already had the necessary space, as they had originally allotted 100 square feet per store for a check-cashing facility that never got off the ground.
The first post office outlet opened in February 2004 at City Stop VIII, located on North Tenaya Way, with additional contract units following once a week in the remaining stores. All of the traditional post office services are provided except for money orders, and at the same prices.
The only difference? No long lines.
“With the convenience of us being here 24/7, people are able to get in and out quickly,” said Dianne Oder, manager of City Stop III, which is located on West Sunset Road in Henderson. “The response has been great, and people really appreciate not standing in long lines.”
Athey, who serves as president and treasurer of City Stop Inc., estimated the post office outlets average about 400 customers per day.
“We have an arrangement with the U.S. Postal Service that they pay us a commission based on our sales,” Athey said. “That allows us to offer the postal products at the same prices. And it’s less expensive for them rather than trying to build a whole new post office.”
In addition to partnering with the U.S. Postal Service, City Stop has also struck deals with fast-food franchises, including Jack in the Box, which operates outlets at four City Stop locations, and Domino’s Pizza, which has space in two stores. A deli and a Mexican restaurant also share City Stop space.
The owners had originally intended to incorporate a food component, allowing roughly 2,000 square feet per 5,500-square-foot store, but those plans fell through when they couldn’t find any interested takers.
“We were originally going to do Jack in the Box, but it didn’t work out, so we sat with our fast-food sections vacant,” Familian said. “The co-branding concept had not really kicked in — it was still affordable for them to buy pads and do their own thing. Then a broker from Domino’s approached us, and after we made that deal Jack in the Box came back to us, so the concept kind of came full circle.”
In today’s economic environment, he said, fast-food chains can have three co-branded stores compared with one free-standing store and make the same money. Co-branding also brings customers into the attached convenience store.
“I feel that it brings traffic in for both of us,” said Oder of City Stop III, which houses a Jack in the Box. “It also gives people more variety of what they’re coming for, more of a one-stop concept.”
Plans are in the works for additional City Stop locations, with a 10th store slated to open in May 2005 in Aliante. Sites for two additional stores have been identified and the owners are currently in negotiations.
“Since Las Vegas is small geographically, we placed the stores strategically throughout the valley from north to south, east to west to the middle,” Athey said. “This allows us to take advantage of television advertising because we don’t have to give addresses. Everybody knows us.”
Athey, who has been in the convenience store business for 35 years, met Familian, a real estate broker, general contractor and licensed property manager, through a mutual acquaintance in 1997. The two raised $1.7 million to purchase two parcels, a 1-acre lot and a 5-acre tract.
“To help us compete, we were buying larger pieces of land we could subdivide and develop,” Familian said. “We’d keep the corner for City Stop and sell off the rest. It’s turnkey, because we buy the land, sell the land and manage the land all in-house. We control the building part of it, so we can build more economically than our competitors. The more control you have over anything, the better off you are.”
City Stop I opened in October of 1998 on South Decatur Boulevard in Las Vegas, with a second location debuting on South Boulder Highway in Henderson in March of 1999. Each of the nine locations averages about 1,200 customers per day, Familian said, not including restaurant business. Four of the facilities also have car washes.
Is the City Stop chain making money?
“I’m very happy with the business,” Familian said. “So that’s a ‘yes’ for profitability.”
According to the National Association of Convenience Stores, a trade organization based in Virginia, the more than 130,000 convenience stores in the United States posted a record $337 billion in revenue in 2003, rebounding from a three-year slump. The typical convenience store posted $3 million in sales last year, including $2.1 million in fuel sales.
