Consumers who purchase gasoline often choose suppliers based on both location and cost. While this combination ensures that many gas stations/convenience stores remain profitable over the long-term, some organizations operating in this industry have significant difficulty maintaining profit margins and profitability. With this in mind, this investigation considers a review of the gas station/convenience store industry.
Objectives
While the central focus of this investigation is to provide an industry analysis of the gas station/convenience store industry, this research also considers companies in this industry that have been successful. In addition, the research addresses the most pervasive threats to success in the industry and recent problems that have prompted concern for investors. Finally, though a synthesis of all the information, this industry report provides clear recommendations for development in this industry.
[...] Summary of Competitors While it is quite evident that there are a number of regional and local organizations involved in the gas station/convenience store industry, with the exception of 7-Eleven, there are few dominant operators in the industry. In addition, research on these organizations shows that there are pervasive threats due to competition in the industry. Spiwak (2004) argues that threats due to competition have only been exacerbated in recent years as more companies—such as grocery stores and warehouse clubs are getting into the industry. [...]
[...] Despite the fact that the gas station/convenience store industry is one that is currently growing, the NACS goes on to note that while sales of motor fuel account for 66.5 percent of the revenues collected by organizations in this industry, low profit margins create a situation in which only 27.5 percent of motor fuel sales contribute to the gross profit of the organization. Given that 93.5 percent of all sales that take place in these organizations come from fuel sales, it is not surprising to find that the profit margins on products sold in the convenience stores must be kept relatively high. [...]
[...] communications or automobile manufacturing—it is evident that the gas station/convenience store industry is still in its infancy when it comes to development. The key in this case is to develop a large organization that has the sheer buying power needed to ensure the profitability of the organization. Business Impact In the short-term most large organizations operating in this industry will be successful in their efforts to increase revenues. However, as competition increases and profits margins decrease, organizations will have to consider mergers in order to remain viable. Without some degree of consolidation the gas station/convenience store industry will not mature. [...]
[...] In 2003, the organization posted total revenues of $2,800 million down from a high of $3,050 million in 2002. The organization's headquarters are located in Tulsa, Oklahoma (QuikTrip, 2004). Although QuikTrip is not the largest gasoline station/convenience store retailer in the United States, the organization has shown promising growth in recent years. The diversity and quality of the company's stores have made it a favorite among repeat customers. Further, the opportunity to expand current operations into northeastern states makes, QuikTrip one of the fastest growing gas stations/convenience stores in the United States. [...]
[...] Among the strengths of the 7-Eleven organization are included: the largest convenience store chain in the world, a strong brand presence and tight supply chain management that helps the organization to further reduce operating costs. Despite these strengths, the organization is prone to competition and volatility in gas prices. In addition, the power of suppliers can make it difficult for the organization to negotiate favorable terms in some instances. At the present time, 7-Eleven is rapidly expanding into existing markets and has added a health food component to attract more customers. [...]
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