How to Open a Convenience Store
Opening an independent convenience store is like most other businesses, it requires money and planning. You need any licensing and permits required in your area, insurance, startup budget, equipment, reliable suppliers and employees. However, if you find the right location and stock the items your customers want, you can begin to turn a profit quickly after you open your store.
The Importance of Site Selection
The first thing to do when planning your store is one of the most important, which is selecting the store site. Ideally, you want a site for your store on a street with a lot of traffic, a minimum of competing convenience stores nearby, and with the lowest rent possible. Scout out possible locations with these criteria in mind, and then find the best matches using a Geographic Information Systems report that establishes the comparative feasibility of the sites you select for analysis.
You can order the report from one of the many companies that specialize in this kind of data service, or you can get a report without any cost through the Small Business Administration’s Small Business Development Corporation, which provides no-cost support and expert advice.
Anticipate the Needs of Consumer Groups
Convenience store customers fall into one of four groups:
- Regulars who rely on your store for everyday purposes. They are notably brand loyal.
- Neighbors who want recognition as well as convenience store items. They come to your store to experience friendship and community.
- Last-minute shoppers who want a specific item. They need to get in and out.
- Thrill-seekers look for items that demonstrate their uniqueness and that provide some excitement.
Each of these customer classes provides opportunities for store owners who cater to them. For example, regulars need their brands kept in stock; neighbors appreciate being greeted and treated as a friend; last-minute shoppers want last-minute food items stocked toward the front of the store and clearly identified so they can quickly get in and out; thrill-seekers want something unusual, perhaps something they can buy and then talk about, like flavored beers or unusually flavored ice creams and specialty desserts.
Match the Store to the Ideal Demographic
Use the GIS report to further identify your potential customers. A convenience store next to a public golf course might stock a few of the more popular golf balls and golfing magazines. Another store situated near a racetrack might stock a plentiful supply of energy drinks and race car magazines. Every location as a unique population, and your job is to match your store to that population’s needs and desires.
Differing Demographics and Needs
While every store serves a unique population, that population may have several kinds of customers within it: those that live in the immediate neighborhood and walk to the store, others that commute past your store driving to and from work, and others that transfer from one bus or train to another at a point near your store. Each of these groups has different needs, and you can increase your profits by stocking preferred items for each group. In addition to using information from the GIS report, keep track of customer requests and respond to repeated requests by stocking the requested items.
Follow Relevant Business Trends
Store owners sometimes limit their profits by failing to follow trends related to the convenience store business. For example, a recent study found that most convenience stores understock items of particular interest in women. This is understandable because historically more men use convenience stores than women, but this has changed. Stores can increase profitability by better serving the buying preferences of women.
Setting Up Relationships with Vendors
A key element in opening a convenience store is setting up satisfactory business relationships with your vendors. You need wholesalers to deliver the goods you will sell in your store. You may choose to work with a full-service vendor who provides most of the items you plan to sell, or with several vendors who specialize in specific areas such as food and drink, paper products, cigarettes, alcohol and household goods. A convenience store typically sells about 3,000 separate items from several different vendors.
Each vendor does a credit check before qualifying you. Most will require you to pay for your first delivery in advance, one of the several reasons that starting an independent convenience store requires both good credit and a minimum of $50,000 to $100,000 in startup capital.
Management and Staff
Depending on the size of your c-store, you might decide to start with a small number of staff members and add to them. As your business grows, you might expand your space or hours. You could also see an increase in business that requires more people to manage. Your involvement with the store can also affect your need for employees. Start with a team based on your expected activity and work from there.
Technology and Equipment
Convenience store equipment allows you to store and prepare food, clean the area and manage sales. Your c-store’s equipment might include:
- Refrigerators and freezers
- Drink dispensers
- Commercial coffee makers
- Hot food displays and hot dog rollers
- Ice machines
- Food warmers
- Cleaning tools and supplies
POS (point of sale) systems are vital and have everything you need to manage your convenience store’s sales. The powerful equipment and software help you organize vendors, calculate profits, and more. Without a proper POS system, your convenience store will be limited in managing incoming profit, daily sales of product, and incoming count of customers. Buying a state-of-the-art system is crucial and a wise investment for your convenience store and will facilitate business transactions.