Problems Associated with Owning and Operating a Convenience Store

Table of Content

Convenience stores have become very popular in this new era. Individuals rely a lot on convenience stores because they live in a world where everyone works, or has something going on in their lives all the time. For this reason, they sometimes don’t have the time to stop at a bigger store and get what they can get at a convenience store and not spare much of their busy time.

Convenience stores are major contributors to the economy of the United States and they make different skill-leveled jobs to different people of the United States. Just as convenience stores have become very popular, there are also several problems affecting them. Some people argue that convenience stores contribute to more crimes and accidents; for example, robberies and pedestrians and children being run over while walking to a convenience store. Some also argue that they promote tobacco usage in minors. Besides these problems, convenience store owners also have to be very careful as to how they plan to operate their business.

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Poor technology, poor inventory control, poor management, poor business planning, poor customer service, poor location, and the high costs of franchising are among the other problems associated with owning and operating a convenience store. In order to succeed in a convenience store you need to pay close attention to all of these problems associated with owning a convenience store. Introduction and Background Convenience stores contribute a lot to the economy of the United States. They make a lot of jobs available for a large number of people.

Each store focuses on meeting the needs of busy customers by providing a variety of goods for every kind of individual, just to name a few, they have milk, eggs, cooking oil, candy bars, laundry detergent, children’s toys, motor oil, ice, fountain drinks, ready-to-eat food. They also offer high-quality products and services at everyday fair prices, as well as speedy transactions with a clean, safe, friendly shopping environment. Convenience stores evolved from a variety of sources early in the twentieth century. They started from characteristics of many types of retail establishments in existence at the time.

One of the stores that have been credited for giving birth to the convenience store is a store located in Dallas, Texas, which is The Southland Ice Company that opened its doors in 1927. A man named Jefferson Green ran that store and one day he realized that individuals might want to buy something else other than ice at his store. He came up with the idea of selling things like bread and milk and started opening his store when the local grocery stores were already closed. Today, there are over 135,000 convenience stores operating in the United States, and the number continues to grow.

An estimated 100 million Americans visit a convenience store on any given day; each convenience store might serve hundreds, even thousands, of customers daily. Over 80 percent of all Americans, because of their busy schedules, prefer convenience stores to supermarkets (www. cops. usdoj. gov). Despite the fact that they provide all these conveniences to a large number of individuals, convenience stores face several problems which do not allow the stores to be successful in the marketplace. My paper will be address to these problems, and how these problems affect store owners and the way they operate their stores.

One of the problems that critics argue is that convenience stores contribute to more crimes, like robbery and shoplifting. As was stated in www. cops. usdoj. gov, although all robbery types share some common features, convenience stores have special characteristics. Some of these characteristics are: having large amounts of cash, low security, and few employees on a shift. This characteristics draw attention to criminals because it is more easy for them to commit a crime in that store when it has those characteristics.

Some critics think there is a connection between tobacco usage in minors and convenience store advertisements in regards to tobacco products, which creates another problem for convenience store owners. They argue that because convenience stores have a lot of posters of tobacco products, this attracts minors to consider buying tobacco products. Also they articulate that the fact that convenience stores are located on corners and there is a lot of traffic entering and exiting convenience stores parking lots; this allows for accidents to occur more ften, because most of the time the reason people stop at convenience stores is because they are in a hurry and want to do what they need to do without spending a lot of time.

For this reason, they do not pay close attention to automobiles that are entering and exiting the parking lots of the stores. Another problem is that nowadays, some convenience stores offer the service of playing video games on the premises of the store; this service has attracted many children because they can be playing video games at the same time that they can be enjoying a soft drink.

There is a problem with this because beer is also sold in the majority of convenience stores and some individuals who go to purchase a beer already had a couple at home and are already intoxicated when they arrive at the store. This incapacitates them from driving a motor vehicle in the right manner and makes them more vulnerable to pay close attention to how they are driving. Children who are entering and exiting the convenience store after playing their video game, because of the fact they are children, do not pay attention like they should to cars entering and exiting the parking lots.

Because of the lack of attention from pedestrians, customers, and children in convenience store parking lots, each year more than 10,000 pedestrians are killed by automobiles. Pedestrian deaths account for 20 to 30 percent of all motor vehicle fatality statistics. Many happen when cars override the curb and hit customers at convenience stores (www. safety-engeneer. com). Besides the problems I have just mentioned, there are also some other problems associated with owning and operating a convenience store in regards to how owners handle the operations of the store.

Some convenience stores don’t do so well in the market for several reasons. One of those reasons is poor business planning of the store; some individuals that make the choice to open up a convenience store think that it is a very simple process, so they don’t have the correct planning strategy to get it up and running. When they are encountered with a problem, they are not well prepared to handle the problem in the most suitable manner because of the lack of planning. Choosing a good location for a convenience store is very critical when planning on opening one also.

If you choose a bad location, this will not attract as many customers like if the owners had planned the location ahead and chosen the most suitable one. This problem sometimes also brings more robberies because of the poor location. A location that is near a franchised convenience store might not be the most suitable one because of the competition and the well known names of franchised stores. This will make customers go to their stores instead of your privately owned store. Owners of convenience stores might want to franchise their stores, but the costs of franchising are so high, that this is another problem for them.

Having a good knowledge and education in management is a very important factor when individuals decide to open and operate a convenience store on their own. Without good management knowledge, any business will fail, even a business that is considered necessary for all individuals, and a lot of newly opened convenience stores lack that knowledge and education in management that is why they have a poor management environment in their stores. Poor management in stores creates bad customer service, which is one more problem associated with owning and operating a convenience store.

Bad customer service is being seen more and more in convenience stores; this is because employees think that since they are working at a convenience store and customers need that commodity, they don’t have to give the customer the good service and attention the customer needs. Technology, which is another problem, has to be a main concern for convenience stores, but many lack this characteristic. Without the proper technology, convenience stores fall behind in respects to the competition, which is another problem associated with owning and operating a convenience store.

Because of the lack of technology, some stores have a very poor inventory system. The problem of having poor inventory systems is that it will eventually drive away customers to the competition, which is something that owners of convenience stores do not want. Current Discussion of Problems Criminal Activity Every place is vulnerable to some degree of unlawful entry. In the retail industry for example, convenience stores, there has been a great deal of crimes committed.

One of the main crimes is robbery, or burglary. As stated by Fisher, J. 1979), essentially, all commercial, manufacturing, and institutional facilities are vulnerable to the same kinds of crimes and disasters. Certain enterprises, however, by virtue of their operation, are vulnerable to particular types of crimes and criminals. For example, a service station that operates all night assumes the risk of being victimized by an armed robber; one that is closed all night is vulnerable to burglary. Convenience stores have become the center attraction for criminals because of various factors. Having large amounts of money on hand is one factor that makes them more vulnerable to robbery.

Convenience stores need to have cash-control procedures, because the handling and storage of cash is of major importance when trying to avoid robberies. Another factor is the staff number that stores have at the work place at times when criminal activity is more likely to happen. If a criminal sees that there is only one clerk during night hours, for example, the criminal will be more likely to rob that store. Because there are far less people on the streets at night than at daytime, the hours that the store operates influences on how a criminal targets a convenience store.

As stated in www. cops. usdoj. gov, operational hours are by far the strongest factor contributing to convenience store robbery, particularly for stores open 24 hours a day. The layout of the store is also a big factor in robberies. Criminals tend to like stores that are not very well lit because this allows them to hide themselves and clerks can’t very easily identify them. They also like stores that don’t have a lot of windows so that people driving by aren’t able to see that a robbery is taking place inside the store.

When a convenience store has one or more of these factors present, it is vulnerable to robbery, and they can be repeatedly robbed, either by the same offender or different offenders. There are different kinds of harm resulting from convenience store robbery. Individuals that are victims of convenience store robberies may suffer physical, economic, or even psychological harm. Employees are at more risk of suffering all three of these harms; either they will suffer from one only, or even all three together.

Customers can also get physically injured while they are shopping at a convenience store that is being robbed, and some of them even suffer from psychological harm as well. There are several ways in which a stored that has been the victim of a robbery can suffer from economic harm. One way is by losing customers, because if a customer knows that a store has been robbed, that customer if less likely to visit that store again. This leads to loss of revenue to the owner of the store.

Stores can also experience an increase in orkers’ compensation, and those stores that do not have insurance might be forced to raise their prices in order to pay their losses. According to www. cops. usdoj. gov, the average cost to employers of a single episode of workplace violence can amount to $250,000 in lost work time and legal expenses, and workplace victimizations reportedly contribute to a loss of 3. 5 days per employee per crime. Criminals do not stop and think about other individuals, and the harm they will cause them, their families, and friends. Problems for Pedestrians and Children According to www. safety-engineer. om, each year more than 10,000 pedestrians are killed by automobiles.

Pedestrian deaths account for 20 to 30 percent of all motor vehicle fatality statistics. Many happen when cars override the curb and hit customers at convenience stores. This has become a major problem for convenience stores and there have been many law suits against them for this reason. Joe Pony v. Southland Corp is one of the cases about an eight year old boy that rode his bicycle to a near-by Seven Eleven store and while entering the store, a vehicle lost control and drove the boy into a plate glass window.

The glass severely inured the boy’s spine. The plaintiff contended that Southland had the duty to protect patrons from this foreseeable hazard with the use of vertical bollards or similar devices (www. safety-engineer. com). Accidents at convenience store parking lots can be predictable; this is why it is very important for owners, when planning on building their stores, to design them so that they will have some kind of pedestrian protection. One of the reasons they have this problem is because of the large number of customers they have in a given day.

Because there is much traffic in the parking lots of convenience stores, this leads for more accidents to happen. We know that people do unexpected and destructive things with their cars. For example, a foot can slip off the clutch. Vehicles slip into gear and overshoot parking places, and one of the biggest mistakes is when drivers hit the gas when they expect to hit the brake (www. safety-engineer. com). Some convenience stores now offer the service of video game playing to children in their stores; this brings more children to the stores.

Children sometimes play games inside the stores while enjoying a soft drink. But convenience store owners need to think about the safety of those children because at the same place that these children are playing video games and enjoying a soft drink, there is also beer being sold. As stated in www. safety-enfineer. com, store designers should consider the special behaviors of children and the anticipated behaviors of adults when they share a facility. Tobacco Usage to Minors Tobacco usage is linked to many health conditions, like cancer and heart disease.

As stated in www. tobaccofreenurses. org, tobacco related illness is one of the leading causes of death, taking more lives than AIDS, car crashes, suicide, alcohol, murder, drug addictions, and fires combined, according to the CDC. For this reason, and some others, individuals are starting to react more negatively towards the usage of tobacco than before. But this is not the biggest concern they gave against tobacco usage, the main concern is when minors start using tobacco products.

It was stated in www. obaccofreenurses. org, that every day more than 3000 young people decide to start smoking, and a third of those young smokers will ultimately die from a tobacco related illness. The usage of tobacco in minors has become a major problem for the United States. One of the reasons that minors start smoking is peer pressure, but the main one is advertisements in convenience stores, and this has been one of the major obstacles in preventing underage smoking. Youths are more likely to respond to advertisements than adults.

Knowing this, tobacco industries have inclined to some kind of marketing strategy where advertisements are placed in places where youth are more likely to see them and react to those advertisements. Some tobacco industries have even placed tobacco advertisements besides the candy shelves. According to www. tobaccofreenurses. org, tobacco industries spend four to six billion dollars every year targeting the youth of America into using their products, and all states prohibit sale and distribution of tobacco products to minors, but only 9 states restrict advertising of tobacco products.

It has been previously discovered that 3 out of 4 teenagers walk into a convenience store containing a high amount of tobacco marketing at least once a week. This kind of advertising is called point-of-purchase. The tobacco companies try to hide this malicious marketing strategy by helping community organization and donating money to sporting events, but the money that they donate comes from all those sales of tobacco products in convenience stores. Several organizations have joined together and they will not accept donations from tobacco companies.

This kind of advertisement has become a major concern for all Americans, and for this reason, several organizations have joined together in an effort to completely ban, or at least set up some kinds of policies that can regulate the way advertisements are being placed in convenience stores and other public places. Poor Technology Convenience stores sometimes lack the technology needed in order to be successful and avoid failure. Today businesses require a wide variety of software and modern communication technologies to operate efficiently and solve several business problems that arise during the normal course of business.

One example of a convenience store that had to implement a good technology system is Seven-Eleven. Seven-Eleven is the number one convenience store chain in the United States, with 3,300 franchise-owned stores and 2,500 company-owned stores. This company started out about 75 years ago as an ice-dock operator. When refrigerators started replacing iceboxes, the manager of each store asked customers one by one what items they’d like to stock in their new appliances. By asking customers directly and stocking only the items customers most wanted, the company grew and prospered (Laudon, K. & Laudon, J. (2007).

Seven-Eleven was fine with that strategy of knowing what the customers wanted by asking them face to face, but when it expanded and grew, it was impossible to continue with this strategy. According to Laudon, K. & Laudon, J. (2007), before the company implemented its Retail Information System it could not determine which items were selling well, or which items were most profitable to sell in the first place. This made a difference to the company’s bottom line because of missed sales opportunities, lower profits, and excess store inventory, some of which consisted of perishable goods that had a very short shelf live.

This is why technology is very important to convenience stores, because if they don’t carry the things that customers want, they will run out of business. Not all convenience stores should carry the same things because an individual in one location might want something different than an individual in another location. With good technology, convenience stores are able to predict what customers want in that particular area where the store is located. Good technology will also help a store keep their shelves well stocked without ever running out of something.

It will also help them identify what kinds of people come and shop at their stores. Implementing technology is not easy for convenience store owners because it is very expensive and there are other related costs when you implement a new system. The owner and all the employees must understand it well in order for it to be effective. As stated by Graham, G. (1980), nothing happens just because you now use a computer. Zero benefits accrue “automatically” as the big machine starts removing the burden from your paperwork processing, data gathering, and fact reporting.

If improvements do come; if the money invested in sophisticated equipment, training, and programs is justified; if the customers (and more of them) decide to do business with you rather than your competitor; if profits increase to the level they should-it will be because workers learn what their job really is, learn how to do it properly, know when each step should be taken, and determine to apply the self-discipline necessary to accomplish the best job possible. Poor Inventory Control

How many times have you walked into a convenience store looking for a particular item, and the store is sold out, but there seems to be stacks of other items that you are not willing to buy? This has happened to almost everyone, and it has become a problem for convenience stores. These two cases are a problem to convenience stores, because having too much of an item that is not being sold is a cost to the stores and makes your income statement suffer in two ways—a lower gross margin and increased operating expenses.

Both of these lower your operating profit. Also not having what customers are looking for is essential for convenience stores because this will drive customers away as stated by Love, S. (1979), there is a risk of running out of stock and suffering the associated customer strife, disruption of operations, and expediting costs. This is why good inventory management is essential to producing profits and bad inventory management can cause big problems with profit because of the costs associated with them.

As stated by Love, S. 1979, the costs of carrying inventory begin with the investment. Money tied up in the acquisition of stock is prevented from earning a return elsewhere. For this reason, sound inventory purchasing is crucial for the survival and prosperity of your retail business. Sometimes owners of convenience stores lack that knowledge about inventory control and have their inventory just sitting at the shelves or in storages, and according to Love, S. (1979), higher inventory levels may create additional warehouse ownership or rental costs.

Materials handling efforts are likely to increase, either because more shuffling is necessary or because goods must be stored at a greater distance from their points of use. Higher stock levels usually increase either the risks of deterioration (unless the stock is cheese or wine), obsolescence, and pilferage or the costs of reducing these risks. Property taxes are frequently levied on inventories on hand on a given date or on the average over a time period. Poor Management Convenience store owners jump into the conclusion that they know what is best for their business just because they have some knowledge about that field.

They lack the education and knowledge about the real meaning of good management and they think they can do everything by themselves without any education or advice from a professional expert. As stated by Jones, G. & George, J. (2007), there is also an interesting dynamic between entrepreneurship and management. Very often, it turns out that the entrepreneur who initially founded the business does not have the management skills to successfully control and change the business over time. Jones, G. & George, J. 2007), also states that frequently a founding entrepreneur lacks the skills, patience, or experience to engage in the difficult and challenging work of management.

Some entrepreneurs find it difficult to delegate authority because they are afraid to risk letting others manage their company. As a result, founding entrepreneurs can become overloaded, and the quality of their decision making declines. Other entrepreneurs lack the detailed knowledge necessary to establish state-of-the-art control systems or to create the operations management procedures that are vital to increase the efficiency of their organizations’ production systems.

Convenience store owners frequently lack the four most important functions of management, which are planning, organizing, leading, and controlling, which leads them to fail in their business. Owners need to stop and look at their stores from a customer’s point of view, not from an owners’ point of view because this might make them overlook many problems. Having a good management strategy is very important for a convenience store owner. Poor Business Planning Starting a business with a good plan in advance can avoid having to devote time to solving issues when they arise and not knowing what to do.

As stated by Corman, J. & Lussier, R. (1996), the fact that over 62 percent of all new businesses fail in the first five years of operation and that almost 95 percent of the 400,000 annual small business failures can be attributed to poor management underscores the need to develop a formal business plan. You should not think of starting a new business without one. Owners of convenience stores might think that having the money to open a store and knowing what they are going to sell is the only thing necessary to open up a new business and be successful.

A business plan is very important for any business, as stated by Corman, J. & Lussier, R. (1996), planning is fundamental to all endeavors. You may be able to improvise and succeed, but you’ll never know why, nor will you be able to reproduce profit-making decisions or adjust to new situations without an adequate plan. Unfortunately many convenience store owners do not take this crucial step for their business when they first think about opening up a convenience store.

Most convenience store owners do not recognize that keeping customers happy is a key factor in being successful in their business. As stated by Lele, M. & Sheth, J. (1987), if customers are happy with the value delivered by the firm’s products, if they feel they are valued and treated fairly, they will stay loyal to the firm for a long time. Otherwise, they’ll switch at the first opportunity. Convenience store owners sometimes think that because they are offering a convenience to individuals, that it doesn’t matter whether they are giving the customer the service they deserve.

They are very wrong about that thinking in that way. Many convenience store owners forget that profit comes from making their customers happy in order for them to be willing to return to their store and buy their products and services. As stated by Lele, M. & Sheth, J. (1987), keeping customers happy is the best defense against competition. The firm that keeps its customers happy is virtually unbeatable. Its customers are more loyal. They buy more, more often. They’re willing to pay more for the firm’s products, and they stick with the firm through difficult periods, allowing it time to adapt to change.

Convenience store owners come to a conclusion that their profits might come from other things like lower labor costs, using newer technology, selling new products, or even being a bigger size convenience store than others. In truth, this has nothing to do with the prosperity of a convenience store. All these examples only offer a short-term effect on profits because as soon as customers recognize that they are not being treated the way they should, they will not return to your store.

Another problem that arises when planning on opening and operating a convenience store is that owners don’t think that the location is much of importance. Location is very important as far as profits and success or failure to your business. As stated by Stevenson, W. (2007), a poor choice of location might result in excessive transportation costs, a shortage of qualified labor, loss of competitive advantage, inadequate supplies of raw materials, or some similar condition that is detrimental to operations. For services, a poor location could result in lack of customers and/or high operating costs.

For both manufacturing and services, location decisions can have a significant impact on competitive advantage. Another reason for the importance of location decisions is their strategic importance to supply chains. Because convenience stores’ main focus is on providing convenience, Stevenson, W. (2007) also stated that a strategy that emphasizes convenience for the customer might result in having many locations where customers can transact their business or make purchases. Cost of Franchising There are many franchised convenience stores in the world.

For convenience store owners that own their own businesses, in other words, those that are not franchised, this creates a problem because of all the competition. If there is a well known franchised convenience store one block away from a personally owned convenience store, individuals are more likely to stop at the well known store, and this creates a problem for convenience store owners that do not franchise their stores. Convenience store owners could purchase a franchise for their stores, but we need to remember that franchising is not for everyone.

It can make you a lot of money, but it can also be frustrating and difficult if you aren’t prepared for it. You need to have plenty of money to invest in order to even think about franchising, or have very good credit. There are many fees associated with franchising and also many compromises that you have to carry out when you start a franchise. According to Meldelsohn, M. (1970), clearly a franchisor expects to receive payment for the package that he is selling to the franchisee and for the continuing service that is to be provided.

Meldelsohn, M. (1970) also stated that there are a number of different ways in which a franchise fee may be charged. Various methods are; an initial franchise fee, sale of equipment or franchise package, leasing of premises, financing arrangements, leasing of equipment, and continuing fees. These fees are a problem for convenience store owners because all these fees will be taken off of their profit and this might lead them to not be successful. Being the owner of a franchise isn’t easy.

The other problem for convenience store owners when it comes to franchising, are the compromises they have to carry out for the franchisor. Sometimes they may have to attend meetings and might even have to go all over the world in order to attend seminars that the parent company sets up. They may not have a boss that is hanging over your shoulder all the time, but they have corporate management and they are watching to make certain that the owners of the store they are franchising is making them money.

As stated in www. cops. usdoj. gov, Seven-Eleven, Inc. implemented many of these measures, maintaining that their implementation contributed to a 70 percent reduction in robberies over 20 years. There are several different measures a convenience store owner can take, such as maximizing the natural surveillance of the store. Having adequate interior and exterior lighting of the store might help prevent robberies. Having multiple employees on duty during high risk hours is also essential for convenience stores, because when robbers see more than one person inside the store, he is more likely to turn to another store to rob.

Bullet-resistant glass is also very helpful. Maintaining a good store appearance is also a measure to avoid robberies. Some of the problems that convenience stores create for pedestrians and children can be reduced, or completely avoided in several ways. One way is installing barriers where large numbers of pedestrians and vehicles interact on private property. These barriers could be installed in front of convenience stores to avoid those accidents where drivers don’t stop at the right time and hit people entering the store.

Convenience stores that have very limited parking lot space should do something to make it more adequate for the amount of traffic entering and exiting the store. Convenience store owners also need to think about the danger they are posing to children when they interact with adults that are buying beer. The government should do more about enforcing some kind of regulation on tobacco industries in order to stop them from advertising tobacco the way they are. According to www. tobaccofreenurses. org, all states prohibit sale and distribution of tobacco products to minors, but only 9 states restrict advertising of tobacco products.

Government should restrict the advertising of tobacco in all states. With this restriction there would be less temptation on minors to try out tobacco products. This would make a significant impact on the total number of deaths related to tobacco usage in minor

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