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7-Eleven Exercises the Principles of Smart Growth

7-Eleven Exercises the Principles of Smart Growth

In a market where only select tenants are undertaking rapid expansions, convenience store chain 7-Eleven has been one of the stand-outs. Last year, the chain opened more than 600 stores in U.S. and Canada. This year, it plans to achieve a new opening target of 630 stores, most of it on the U.S. side of the border.

But the company does have very specific preferences about where it would like to put new 7-Eleven stores.

“We really aren’t just taking over locations that are available,” says Dan Porter, vice president of real estate. “We are following our defined network plan that clearly articulates where we want to be and then we will wait for that location to be available. We are a very patient, disciplined retailer as we make prudent decisions to make sure we have high-quality stores.”

Bright lights, big city

The chain will only go after sites that offer high population and office worker density within less than a mile of its stores, that are located near high traffic-generating facilities such as hospitals and universities, and that boast easy access, either through a highway or a mass transit system.

What’s more, 7-Eleven prefers to open new locations in or near markets where it already has a product distribution system in place, to ensure that its fresh foods can get to the stores in time. In the coming year, for example, it will be opening stores in the five boroughs of New York City, Westchester County, Western New York State and Northern New Jersey, as well as in Philadelphia, Boston, Baltimore, Richmond, Va., Charlotte, N.C., Miami, Orlando and Jacksonville, Fla., Chicago, Detroit, Kansas City, Dallas-Fort Worth, Denver and Salt Lake City, among other large metropolitan areas.

On the micro scale, the retailer wants to stay away from shopping centers that house many stores that sell the same products as it does, to cut down on competition. 7-Eleven sells a variety of foods and beverages and features in-store video rental kiosks. So while it will occasionally go into the same properties as, say, a Starbucks, it will probably nix locations where it will be positioned next to a coffee shop, a frozen drink shop and a sandwich shop at the same time.

Fitting in

On the flip side, the retailer takes extra pains to remain flexible when it comes to store layout and transaction type. When possible 7-Eleven prefers to buy its buildings—just last week, for example, the company bought 23 former Quix stores in north and central Texas from Strasburger Enterprises.

But it can also lease stores or develop build-to-suit properties. Incidentally, while 7-Eleven is largely a franchise operation (today, 80 percent of its stores are run by franchisees), all real estate documents are backed by the corporation, according to Porter.

“We never defaulted on a lease,” he notes. “We are an investment grade tenant.”

7-Eleven stores average between 2,000 sq. ft. to 3,000 sq. ft. in size. The chain does have a strong preference for corner locations, parking availability (or high pedestrian traffic in urban centers) and the option to operate 24 hours a day. In the past few years, 7-Eleven has been able to take over some vacant video stores and former Payless Shoe Source stores.

But Porter reiterates that the retailers’ expansion program is site-specific, rather than opportunistic.

“We target those locations [that are] best for a 7-Eleven store,” he says.

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