What Does Wal-Mart’s New C-Stores Mean for the Industry?

It appears that Wal-Mart plans on setting up hundreds of C-Stores (convenience stores) in the near future, and many of these will be completed before 2012. Why is Wal-Mart getting into the C-Store business you wonder? Well, and many of their superstores also sell fuel, and since more and more patrons are using the Sam’s Club card, and Wal-Mart credit cards to buy fuel, they may as well have a C-Store out front for everybody. Can Wal-Mart compete in this venue?

Of course, they already have a captured audience which will only grow as the price of fuel goes up higher and higher and consumers are trying to squeeze a few more pennies out of each gallon. Also Walmart will be able to sell its products in its C-Store even cheaper than other convenience stores, as they have a big buying advantage with their vendors. Does this mean that other convenience stores will lose business to Sam’s Club and Walmart? Yes it could throw a loop in the industry, and it probably will not be too big of a deal since they are only planning a few hundred of these stores between 2011 and 2012.

In the future it could be more devastating to the industry, similarly when Walmart entered the oil change industry, and started selling tires, that hurt both tire stores and quick lubes. And Walmart is known for low-price, high-volume strategies. They do even better during difficult economies, or when the rest of the industry is either gouging their customers, or the price of those commodities go skyrocketing. And that’s what’s happening with the price of oil, that’s why the gasoline is so expensive.

Indeed this could change the entire dynamics of the industry, and Walmart may even put these minimart type stores in locations other than their own current properties.

Should the industry be alarmed?

Yes, I think so, and I think the carwash industry may be next, as I believe that Procter & Gamble which is already one of Walmart’s very big suppliers, and a company which has already entered the carwash industry could easily get together and put carwashes on all the Walmart parking lots. Any time a large company of this size attempts to enter a new sector the industry involved should take notice and be concerned. The dynamics of the C-Store sector will change. Please consider all this, and think on it, because things are going to change soon.