By Lance Winslow
It appears that Wal-Mart plans on setting up hundreds of convenience stores in the near future, and many of these will be completed before 2012. Why is Wal-Mart getting into the c-store business, you wonder? Well, consider if you will that at many of its superstores the company also sells fuel, and since more and more patrons are using the Sam’s Club card, and Wal-Mart credit cards to buy fuel, it may as well have a c-store out front for everybody.
Can Wal-Mart compete in this venue?
Of course, Wal-Mart already has a captured audience, which will only grow as the price of fuel goes up higher and higher and consumers are trying to squeeze a few more pennies out of each gallon. Also, Wal-Mart will be able to sell products in its c-stores at a price point cheaper than other convenience stores, as it has a big buying advantage with its vendors. Does this mean other convenience stores will lose business to Sam’s Club and Wal-Mart c-stores? Yes, it could throw a loop in the industry, but it probably will not be too big a deal since Wal-Mart is only planning a few hundred of these stores between 2011 and 2012.
In the future, it could be more devastating to the industry if Wal-Mart starts throwing up convenience stores all over the place, but I don’t see that happening.
Still, it could be a challenge for those c-stores in close proximity, similarly when Wal-Mart entered the oil change industry, and started selling tires, that hurt both tire stores and quick lubes. And Wal-Mart is known for low-price, high-volume strategies. They do even better during difficult economies, or when the rest of the industry is either inflating prices to customers, or the price of those commodities skyrocket, which is what’s happening with the price of oil, thus why gasoline is so expensive. Perhaps, in a way, it will just keep everyone honest and, what the heck, a little competition is always healthy for an industry.
Indeed, this could very well change the entire dynamics of the industry, and Wal-Mart may even put these minimart type stores in locations other than its own current properties at some point in the future—who knows?
Should the industry be alarmed?
Yes, I think so, and I think the car wash industry may be next, as I believe that Procter & Gamble, which is already one of Wal-Mart’s very big suppliers, and a company which has already entered the car wash industry, could easily get together and put car washes on all the Wal-Mart parking lots as well. Of course, like anything, that too is merely speculation, but I wouldn’t be surprised. In fact, that’s what I’d do if I were Wal-Mart. Any time a large company of this size attempts to enter a new sector, the industry involved should take notice and be concerned. The dynamics of the c-store sector will change. Please consider all this, and think on it.
By Lance Winslow