Bright Lights, Big Convenience by Alison Embrey, Convenience Store News
City Stop continues building local market presence with nine stores throughout the Las Vegas area.
It’s not always easy to expand a small start-up convenience business into a profitable chain of successfully run c-stores, especially in a town that never sleeps. But Las Vegas-based City Stop Inc. has grown at an average rate of two stores a year since opening its first store in October 1998, and now operates nine full-size convenience stores in the booming Las Vegas market.
Jon Athey, general manager and owner/partner of the chain, has spent his last 35 years working in the convenience business, including a stint at Dallas-based 7-Eleven Inc. in the early 1970s. Learning from his tenure in the industry, Athey maintains that the basics of a good c-store will ensure that his customers - not the tourists, but the residents - will want to come back.
“I’ve operated all over this country, and there’s no difference in my customer base here," said Athey. “We’re 99 percent local. We are in the rural residential component of town— we’re not on the Strip, we’re not on the resort corridor— so our customer demographic is a good mix and just like any other c-store.”
The chain’s nine stores are spread evenly throughout the valley from Henderson in the South to North Las Vegas, and from east to west in between, Athey said. Adding services like car wash, pay-at-the-pump, food partnerships, slot machines and even postal service, City Stop is doing whatever it can to make a name for itself amid the bright lights of Las Vegas.
Convenience at its Best
Each of the chain’s 3,500-square-foot stores struggles with the same space constraints plaguing all convenience retailers, but Athey didn’t let that stop him from continuing with ideas for innovation. When the need for foodservice at his establishments became an issue, rather than take away existing product in the store, the company built a 2,000-square-foot restaurant with a drive-through attached to each store. City Stop partnered with Jack-in-the-Box at four locations, Domino’s Pizza at two, an All-American Deli in one and a local Mexican restaurant in one.
“I tried to get the fast-food kiosk out of the store, because I didn’t think that that was working,” Athey said.
“Basically, we designed a free-standing restaurant and joined it at the hip with the convenience store, and wrapped the drive-through all around. That gave the fast-food space its own identity, and it gives the convenience store its separate identity, but we share parking, we share restrooms, and we have common entrances between the store and the restaurant.”
Operating in the Las Vegas market, it is unfathomable not to have slot machines in the store if you want to stay in business, Athey said. “We’re allowed seven slot machines per store, and they take up another 100 square feet of space, ” he said. “It’s tough to compete without them; they’re very productive.”
Greatest Hits
In the hot Las Vegas sun, beverages are consistent high performers. Athey said beer runs at about 20 percent of his business, and water and juices another 8 percent. “The waters and juice category has jumped lately, as has the energy drinks,” Athey said. “ All of my beer and soda sales are showing very, very strong increases, so I kind of temper the interest with juices and water. We’re just in a very good market right now that’s showing double-digit growth. ” The stores are equipped with one oversized walk-in cooler to stock additional beverages, as well as 13 cooler doors for beer, soda, milk and water “and I wish I had 16,” Athey said. “Beverages are a big part of our business because of the heat.”
Tobacco is also big business for the Las Vegas retailer. “Tobacco is surviving, quite surprisingly, after all the doom and gloom of everything. It’s still running 28 percent of my business,” Athey said. “Unit sales may be down a little bit and I know my profits are down a bit, but the retail sales because of the cost of the product now are very strong. I’m not worried about tobacco going away on its own. It’s going to take an act beyond what the retailers are doing to Put it to sleep.”
Based on the success of others in the c-store industry, City Stop introduced a new prepaid card program about five months ago that is still testing, but Athey predicts that business will grow. The company also owns and operates its own ATMs, and is considering the installation of online computer workstations, where customers can log onto the Internet while in-store. “We’re toying with the idea of a coin sorter in the store as a possibility, but I’m not really sure that the expense of the machine warrants the revenue,” Athey said. “Again, space becomes an issue. If space weren’t an issue, I would certainly put it in.”
On the gas side of the business, the company runs four Texaco stations, three Exxon stations and two unbranded stations, all of which have pay-at-the-pump. Because gas prices in Las Vegas are among the highest in the nation, one would assume customer dissatisfaction would have an impact. “It’s been kind of negative, but we’re a little island out here in the desert and get all of our gas from Los Angeles - the pricing doesn’t seem to bother people too much, ” Athey said. “My gallons are not down. My profit margins have been eroded a little bit, because everybody tries to stay under $2 a gallon when possible, but it’s just an ongoing process. l would call it business as usual— it’s just 50 cents a gallon higher than it used to be."
City Stop also runs state-of-the-art high-volume, high-speed, tunnel conveyor car washes at four of its locations, each of which services about 150 cars a day. Water conservation is a hot topic in Las Vegas, so the car washes are encouraged because all the water is captured and returned to the sewer.
“The water shortage in Las Vegas is a major concern, and the Southern Nevada Water Conservation District is working with us to encourage people to stop watering cars in their driveways,” said Athey. “Rather, let’s go to City Stop or a car wash so the water doesn’t just go away. I have four car washes, and I’ll put car washes in every store that makes sense.”
Special Delivery
Not many c-store chains boast an in-store U.S. Postal Service unit within one of its stores, much less in all of its locations. City Stop has a contract postal unit in every store it operates and has been extremely pleased with their success. The window units take up about 110 square feet of space in each store and provide all the same services as the U.S. Post Office, as well as the same prices.
“The growth in Las Vegas has outstripped the ability of the U.S. Postal Service to build brick-and-mortar units, so they’ve had extremely long lines and have had to commission outside locations," Athey said. “What we offer is just another post-office location with shorter lines.”
Because the postal units are contracted, City Stop negotiates a small contract commission for the services it provides. And while the Postal Service provides training assistance, Athey’s team trains its own associates and provides its own employees for the unit. Currently, the unit can be run by one associate at a time, because the lines don't tend to get long - a convenience factor that is possible because the service, unlike a typical U.S. post office, stays open 24 hours a day.
The major challenge of running a post office, Athey said, is rather than the typical 25-second transaction time, there is usually a three to four-minute transaction time. “People have lots of questions for the post office, and those things take customer time, ” Athey said. “We actually installed and designed our own software equipment to mimic the post-office equipment. You don't have to use books and look things up, you just use the touch-screen monitor and it prompts you through the total postal regimen.”
The in-store unit also has a 70 pound scale and a POS system that records and tracks all sales. The Postal Service comes by every day and picks up the mail, picks up the cash and brings stamps. “I also put stamps in every cash register, so if all you need is stamps you don't have to wait,” Athey said.
The chain has seen such success with the postal units, it has recently contracted with a manufacturer to supply packing and wrapping supplies for retail sale - another oddity for traditional convenience retail. “We're far ahead of our expectations and far ahead of the Postal Service's expectations, which is a good thing because it relieves some of the strain on their main locations here, ” Athey said.
Onward and Upward
The company has three more stores on the drawing board set to open in the next year, according to Athey, and he believes that the strengths of the business he has built in his existing sites will carryon into the new locales.
“Low-profile gondolas, neat, clean displays and controlled signage are important,” Athey said. “I don't build massive displays, because 1 don't like the store product in the aisles. 1 keep it clean and open so people can walk around without bumping into something. 1 keep my sales area open - you can still see my clerks. When you walk into the store, you know who's talking to you.”
