Getty Bets on C-Stores Amid Industry Evolution
Getty Realty committed $100 million in convenience stores and carwash properties throughout 2022.
The real estate company shared this figure Tuesday (Jan. 10) in reporting its fourth-quarter and full-year 2022 financial results, noting the acquisition of nine convenience stores for $44 million.
“We are excited about the strength of our investment pipeline, and are pleased that our team continues to source new opportunities to acquire convenience and automotive retail real estate located in major metropolitan markets and leased to growing, institutional quality operators,” Getty President and CEO Christopher Constant said in a statement.
The news comes at a time when the role of the convenience store is changing, especially when it comes to consumers at home, such that investing in the category demands a willingness to be innovative and flexible. Where once it was enough for these retailers to simply be conveniently located, and able to charge a markup on items available at other retailers in exchange for saving shoppers time, the rise of on-demand delivery is challenging this part of c-stores’ value proposition.
Take, for instance, New York City. A year ago, reports circulated of bodegas rising up against the ultrafast delivery services that were then taking over the city, with consumers turning to these options rather than making the trip to the corner store. While some of the leading players in the space have since bowed out, on-demand options such as Gopuff, DoorDash’s digital convenience store DashMart, and Grubhub’s Grubhub Goods remain.
Convenience stores looking to remain competitive have had to take an “if you can’t beat ‘em, join ‘em” approach, launching their own digital businesses offering on-demand delivery. For instance, convenience retail giant 7-Eleven has been building out its own on-demand delivery infrastructure with its 7NOW delivery app and its 7NOW Gold Pass free delivery subscription. Plus, Couche-Tard’s Circle K brand has been getting into quick commerce in partnership with ultrafast grocer Food Rocket.
As convenience stores lose share to on-demand deliver apps, however, they are looking to gain share from other categories — namely, restaurant and grocery. Leading players have been expanding their selection of prepared, hot food, with the National Association of Convenience Stores noting that nearly 1 in 4 sales in the industry come via retailers’ food service businesses. That share has risen dramatically in the past decade, up from 16.8%. Plus, major convenience store chains have also been touting the strength and growth of their grocery businesses.
Additionally, convenience stores are also being increasingly called upon to digitize the in-store experience. Research from “The Instant Payments Transformation Guide: Grocery, Pharmacy And Convenience Retailers,” a PYMNTS and ACI Worldwide collaboration, which draws from a survey of 300 U.S. and U.K. retailers, finds that 81% view access to mobile apps as key to in-store customer loyalty. Plus, 77% say the same of digital rewards and coupons.
Where c-stores continue to be able to rely on their historical value proposition is in the on-the-go occasion — stores at gas stations and rest stops continue to be more or less the only option for road trippers, making convenience stores indispensable.
In fact, these retailers may even be taking over from quick-service restaurants (QSRs) for these occasions. A recent report from Central New York news publication The Citizen, for instance, notes that McDonald’s on the New York State Thruway are being replaced by convenience stores. Still, with all the changes in the convenience store industry, those who are betting on its growth should expect change and unpredictability ahead.