It's a Gas

As the prices at the gas pump rise, your second reaction – every time you pull in to fill up – is that the owner of this station must be raking in a lot of profit at your expense.

(Your first reaction may depend, these days, on whether you own a Republican's or a Democrat's car.)

But the fact is, that individual gas station owner is as much under the gun as you are. His costs are rising, too; he suffers as much from OPEC inflation as you do. His margins have been squeezed so tight that he's not making very much on your $20-$30 gas purchase – especially after he has to cut in the credit card companies for their share of each bill.

Not that he's eager to see you trade in your SUV for a Prius. But what he'd like is that when your SUV cruises into the station, your whole party gets out, moseys on into the attached convenience store and buys some groceries. And that puts him squarely into the retail business – worse than that, the food retail business, where he's squaring off, like everyone else, against Wal-Mart.

(Challenge to self for the rest of 2004: Write a column that does not mention Wal-Mart.)

The c-store is becoming a big opportunity for the gas station operator. But to succeed, he has to make the place attractive to everyone – not just to late-night insomniacs needing milk, or bikers needing a pack of smokes, or happy people looking for munchies.

And that has to do with the whole panoply of a store designer's arsenal: lighting, signage, merchandise placement and adjacencies, architecture, sightlines, traffic flow, fixtures and visual merchandising.

A couple of years ago, after Miller Zell (Atlanta) had completed a series of award-winning c-store prototypes for Sunoco, designers told VM+SD that they were going after the Soccer Mom without losing Joe Six Pack.

Joe Six Pack might be out cruising the roads at night for beer and Slim Jims (ring up $12 on the cash register). But Soccer Mom is the one pulling into the station after school with a wagon full of screaming kids. Every one of those kids wants Fruit Roll-Ups or a bag of Funyuns. And while she's in there, Soccer Mom might as well grab milk, Coke, a package of Oreos, a carton of juice, some Snapple, aspirin, bags of chips, bottles of water, can of coffee and – well, you get the idea. Pretty soon, she's ringing up close to $50 on the register. And, more important, she's retraining herself to think of the c-store as a place where she can shop, confidently, safely and thriftily.

I asked my daughter, who drives an SUV in Chappaqua, N.Y., and will soon be a Soccer Mom, if she ever shops at the gas station c-stores. Her answer was an emphatic “no!” “They're dirty,” she said, “and they never have anything I need.”

As her SUV continues to run her about 10 miles to the gallon, though, she's going to be in the gas station a lot. And as her gallon of gas costs her $2 and rising, she's going to want to cut down on her number of shopping trips.

It's all very logical, if the c-store owner bothers to take the necessary steps.

Makes you wonder, though. Food retailing has always been known for its notoriously narrow margins. If food retailing produces the widest margins you have, you begin to realize just how expensive that barrel of oil has become.