Small independent convenience store retailers are not only grappling with the same inflation, supply chain issues and labor shortages as the rest of the industry, but they’re also having to compete against larger chains with fewer resources. Still, small family chains are the backbone of this industry and many independent c-stores are succeeding today despite these obstacles.
Anthony Duran owns and operates two stores in New Jersey: Anthony’s Supermarket, a 4,000-square-foot grocery store featuring produce, a meat department, a deli counter, frozen food, groceries and hot food; and International Super Mini Market, a 1,200-square-foot traditional convenience store.
Duran got his start in convenience stores when he was just 13 years old helping his uncle, who owned Los Kenton Supermarket in Perth Amboy, N.J.
“I started with him working weekends, and I learned a lot from him,” Duran said. “In (2009) he helped me buy a grocery store, and I started from there. From there I got a loan, and then two years after that I bought Anthony’s Supermarket in Kearny, N.J. Then I sold the first store, and I stayed with Anthony’s Supermarket.”
In 2020, Duran was ready to grow again and acquired International Super Mini Market in Belleville, N.J.
The stores don’t offer fuel, but they do provide foodservice options for customers. International Super Mini Market features a deli program with fresh-prepared cold sandwiches made to order.
“Customers say, ‘I want a sandwich,’ and employees ask how they want it. We make anything,” Duran said.
Duran sources the sandwich ingredients directly from his Anthony’s Supermarket location, which eliminates the need for additional partnerships to obtain products. “I buy a large quantity for the other store, and so I get it cheaper. Then I bring some to that store,” he said. “We have everything there, so it’s really easy.”
Anthony’s Supermarket has been offering hot ready-to-eat food for two years. The addition of hot food provided another in-demand service for the store’s customer base. Among the chain’s large grocery selection are sections of international foods including Ecuadorian, Peruvian and Portuguese options.
Despite being a small operator, Duran is staying on the cusp of recent trends including order ahead and delivery. Customers can call to order ahead, so their sandwich is ready when they arrive. He also offers grocery and sandwich delivery through Grubhub.
Duran partners with National Retail Solutions (NRS), a point-of-sale (POS) system provider, and through the partnership is able to offer incentives to guests at both locations. “They put out a special every week,” he said. For example, past specials have included two-for deals on items like candy or sports drinks.
As a small business owner, Duran said his biggest challenge right now is sourcing products.
“Because we’re smaller, we don’t buy every week. We buy every two weeks, and sometimes every three weeks,” he noted. “Some items — the best items that we need — they don’t offer to us because we don’t buy as much as the big chains.”
In the midst of the ongoing baby formula shortage, one of Duran’s suppliers has formula available. “But they won’t sell it to me; because I don’t buy every week is what they told me,” he said.
He’s also struggled to source other specialty items. Sourcing products never used to be an issue as a small operator. Then the COVID-19 pandemic created supply chain issues. Now, with suppliers dealing with product scarcity in some areas, small retailers have a harder time sourcing some items.
“They’re giving them to the people that buy much more often,” he said.
Negotiating with vendors can also be more challenging for small, independent c-store operators.
“It’s hard because it’s not the same. When you buy a whole truck of one item, you get it cheaper. When you buy one case, it’s way too much,” Duran said. What’s more, large chains can buy for 10 or more stores at a time, resulting in less expense and allowing them to sell products at a better price point or obtain a stronger margin, a luxury that eludes small operators.
With today’s inflation added to that reality the challenge grows for small operators. “Right now, they’re exaggerating prices per case. We have seen even $10 more per case or $15 more,” he said.
Duran’s top recommendation for other independents is to launch a food program.
“Small business owners that don’t sell food should try to put in an area to sell hot food. I think that would help the business a lot,” he said. “If they have the space — even a small space, it doesn’t have to be something big — to cook or fry and make sandwiches (it) would have a lot of benefits. It would help a lot.”
Duran warned it can take time and patience to build a small business that is profitable in today’s market.
“At first, when we started, it was really hard because we had a lot of debt. The store wasn’t selling much, the supermarket. … But now we are doing much better,” Duran explained. “It takes time. It takes time for a business to develop.”
Duran’s father, Tony Duran, and his brother Jeffrey Duran, also work at Anthony’s Supermarket. “My father is in charge. He’s always on the register. He’s always making people laugh,” Duran said. “My brother is a manager, so he’s also in charge there.”
Two of Duran’s uncles also operate convenience stores in New Jersey. Having multiple relatives involved in the convenience store business is helpful because they can offer support.
“If we have any questions, we call each other,” he said. “If we have any concerns, we call each other. We’re like a team.”
Lou Perrine’s Gas and Grocery
Anthony Perrine, owner of Lou Perrine’s Gas and Grocery, which operates two locations in Kenosha, Wis., said that even being an established third-generation business doesn’t give a small independent c-store chain much of a leg up in today’s inflationary environment.
Perrine’s grandfather, Lou Perrine Sr., started Lou Perrine’s Gas and Grocery in 1954. Perrine’s father, Lou Perrine Jr., entered the business in high school, taking the helm in 1985. Perrine took over the business from his father in 2010 and opened his second store this past spring. Both locations offer gas.
After Perrine acquired his second location, he set plans for a raze and rebuild, but sourcing materials to build a store in the middle of the ongoing pandemic and supply chain disruption was “a nightmare,” Perrine said.
“We were supposed to open in October and didn’t get open until April 6,” Perrine said.
Challenges affecting the timeline included labor shortages, contractors out with COVID, and delays on key items including HVAC equipment, coolers, compressors and a panel for the side of the building.
“It was one thing after another,” he said. “And then because I have an Einstein Bros. Bagels in here that I own the license for, we were delayed on getting the toasters and ovens that we needed. We actually had to use rental ones just to get open because we didn’t get our official ones until May,” he said.
While even large chains have reported difficulties with equipment and material delays when opening stores, it’s an even bigger headache for a small operator without the same infrastructure and staff to offset the issues, he pointed out.
“As a small guy, you’re operating another store while trying to get this all done, so you can’t even compare apples to oranges,” Perrine said. “Yes, we all have the same issues, but it’s way different when you’ve got a business to run, a brand to maintain and employees to manage on top of trying to build. It massively makes it much harder for the little guy.”
Perrine has seen out-of-stocks in his area on items including various drinks, beers and foodservice items. “It’s pretty standard,” he said. “There are times where items or deals are getting reserved just for the big boys, and we’re just left holding the bag.”
He credits the long relationships he’s had with his vendors in helping him get the products he needs. “But that’s because we’ve been around so long,” he said.
But as far as being a third-generation business giving him an edge overall, Perrine said he doesn’t think it helps much unless you have the kind of scale that allows for better pricing and prioritization from suppliers.
One of the biggest issues with supply right now is that distributors are dealing with labor shortages that are impacting their ability to make product deliveries, he said. In those situations, smaller chains can end up on the backburner as distributors prioritize larger businesses.
Perrine has found third-party wholesalers to partner with to work around the issue.
Delays on orders are also common in today’s environment. “You’re seeing a lot of that, a lot of delayed orders where it was supposed to come on Wednesday, but it comes on Thursday. … As a little guy, we staff everything accordingly to be efficient.”
If he has extra staff in place to handle the delivery and the order is five hours late, he’s stuck paying for labor he doesn’t need and out the extra cost, he said.
Perrine has been able to recoup some of the losses from vendors through coupons and free goods to make up for some of the problems he’s experienced.
Before the pandemic hit, operating as a small business was a lot simpler, Perrine noted. “You didn’t have to jump through these hoops. You could negotiate. You could do certain things.”
While some of the supply issues started during the height of COVID, Perrine noted, “it’s massively worse than what it was. For us it was much easier during COVID than it is now.”
When it comes to breaking into foodservice as a small chain, Perrine said he thinks it depends on location and staffing capabilities as to whether it makes sense. Lou Perrine’s features a separate kitchen and food area. It also offers a roller grill, Tyson’s chicken breast sandwiches, chicken tenders and hot pizza puffs as well as mini pizzas from a local pizza company.
“We’ve had the Einstein’s employees at my one location handle not just Einstein’s, but all of our food. They’re foodservice trained, so they specialize in this. … At my other location, it’s just the gas station employees, but we designated specific ones that get foodservice (training), so that they know to take care of it the proper way.”
His advice to other small independent c-stores is to operate very lean and build a powerful brand to withstand the current economic landscape.
“If they don’t have a brand, they’re not going to make it out of this,” he said.
Perrine predicts that supply chain issues will be fixed in a year or two and that gas prices will eventually level out, but he thinks inflation is here to stay.
“Inflation isn’t going anywhere as long as people are working at a gas station making $18 an hour,” he said.
Perrine has crossed-trained employees, so he can justify pay increases. Currently about 75% of his staff is trained to handle foodservice and work both on the c-store side and the Einstein’s counter.
“Unless you’re a real small operator and manning the register yourself, you’ve got to get the most you can out of everybody,” he said.
Looking ahead, Perrine sees more obstacles on the horizon that could make life harder for small businesses. He’s concerned that potential gas shortages in Europe this winter could further drive up gas prices here in the U.S. and lead to food shortages or massive spikes in food costs.
“Nobody’s really talking about the fact that the breadbasket of Europe is on fire right now,” he said, referring to the war in Ukraine. “If you saw what just shutting off a little gas to Russia did, imagine what that does to food.”
The shift toward electric vehicles (EVs) and away from gasoline is yet another headwind he’s watching with trepidation. Not only is he concerned about the price of conversion to EV chargers, but he also doesn’t expect EV chargers to bring in the same kind of traffic as gas pumps unless a store is located off a highway.
“My stores are in neighborhoods where these people are literally going to go back home at the end of the night to plug in their car,” he said. “Charging stations will never replace gas pumps. Nobody goes to a gas station to charge unless you’ve got a five-minute charger, and we’re not there yet technology-wise. Everybody’s going to plug these in at home, like their iPhone. So what are you doing to prepare?”
Nepthli Aldo Herrera, owner of El Super in Brooklyn, a borough of New York City, grew up in Mexico where he learned the c-store business from his parents who owned small shops. When he moved to the U.S., he worked long hours and saved in order to follow in his parents’ footsteps and open his own business.
In 2020, about six months after the COVID-19 pandemic began, he opened El Super, selling his house to support his dream of creating the business.
El Super measures 2,300 square feet. In front of the store customers are greeted by fruit and vegetable stands with an array of fresh produce. Inside, in addition to traditional c-store fare, the store offers a variety of meats, cheeses, spices and candy from Mexico, as well as products from Latin America, Guatemala and El Salvador.
“The purpose of this is to have things that other stores don’t have,” he explained.
El Super also offers fresh homemade salsas and guacamole, as well as fresh hot tortillas for customers on the go. “They can buy a pack of hot tortillas by themselves. They come wrapped. They’re hot and ready to eat,” he said.
Herrera has also found that sourcing products in today’s environment is becoming increasingly challenging. As prices have risen due to inflation, it’s difficult to find good rates on key items. Some companies that sell to supermarkets won’t sell to him because his business is small. Others charge him 30-40% more than they charge the supermarkets, leading to smaller profit margins, all of which can make it more challenging for independent stores to get ahead.
“They don’t want to sell to us because (of) the supply issues. They don’t want to sell to the small stores. They only sell to the bigger stores. Basically, small businesses cannot compete with these big businesses because (of) the price,” he said.
While suppliers have long given better discounts to supermarkets because they buy more, Herrera has seen the pandemic exacerbate the issue.
At the same time, employee wages are also growing, requiring more financial resources for labor.
“We have to work harder for a smaller profit to compete with the big markets,” he said.
On top of that, competition from local stores is fierce. He also finds that the city is quick to target small businesses with fines without offering advice or information so they can correct the issue.
His advice to others opening a c-store is to first gain experience and learn the industry, including where to buy products. “If you don’t know where to buy, you hurt your budget and then you don’t last long, you know?” he said.
Despite the challenges he’s faced, Herrera is hopeful for the future. “Everybody’s dream is to have a nicer, bigger store, serve the customers much better and serve them what they need … The point is to grow and give people jobs,” he said.
He noted some big companies don’t hire immigrants, so as a first-generation American himself, being able to provide jobs as well as quality goods to that community is a valuable service that he can be proud of.