Editor’s Note: In a revival of a previous NPN Magazine feature area, we will again be regularly asking industry experts for feedback in their areas of expertise. In this column, James Fisher of IMST Corp. addresses the challenges facing marketers and retailers today.
James B. Fisher is the CEO and founder of IMST Corp, a national leader in retail sales and fuel forecasting that is headquartered in Houston. For over 19 years, IMST has been a preferred supplier and program partner with major oil companies, retailers and real estate developers. Thousands of projects have been conducted for customers of all sizes throughout the U.S. and Canada. Word of mouth referrals and repeat customers encompass over 90 percent of IMST's business. IMST's full service staff includes professionals with major oil, food service, operations, store layout and design, marketing, car wash and GIS backgrounds. IMST's focus is to provide the data needed to make successful and profitable development decisions.
NPN: What impact have you seen on retailers and marketers relative to the high fuel prices last summer and fall and the current recessionary and credit crunches?
Fisher: The tightening of credit has created some difficulty in securing financing for many scattered around the country. However, the leaner, more restrictive financing has proven more difficult for the major acquisitions, projects, etc. The retailer/marketer seeking local financing for a single project within his marketing area is finding financing on a local level. Yes, maybe the terms are not as flexible as in the past, but the financing is available. The large acquisitions are proving more difficult. The impact of the high fuel prices of last year (for all intents and purposes) has faded from memory…We are finding that more companies are retaining earnings to avoid what could be future credit crisis if fuel costs began a significant "run up" once again. Volatility must be financially guarded against. Companies remain wary of incurring business expenses beyond day to day operations.
NPN: Are there any clear regional dynamics at play?
Fisher: Most definitely. Strong activity exists along the Gulf Coast (with the exception of FL), much of the Southwest, Southeast, and parts of the Midwest. Very limited activity (some scattered) in the West, Northwest, Mid-Atlantic, Northeast, and upper Midwest (rustbelt). Regional dynamics are most definitely at play. Now, by the time (this) is published, who knows.
NPN: What types of operations (more the overall business structure) are facing the biggest challenges?
Fisher: Older generational facilities that have limited scope of operations. Those that have not kept pace with a changing industry and have lost touch with a changing marketplace. Out-datedness has now created the inability to compete and to establish a relevant position within a marketplace. Those companies that have many outdated facilities find themselves in the unenviable position of either having to secure massive capitalization through loans (not available) to perform required modernization or sell all the retail assets of the company (there are companies willing to purchase). Retailers/marketers with modern retail assets are maintaining and growing market share. Retailers/marketers without modern retail assets are rapidly losing market share.
NPN: What types of operations are best prepared to meet current challenges?
Fisher: Operations with diverse types of sites and wide-ranging profit centers. Companies that operate retail facilities in diverse trade areas, i.e., urban, suburban, rural, highway, etc. are better positioned to withstand micro-economic pressures. Companies that develop operations in different markets are in a better position to be less impacted due to single market volatility...all eggs in one basket.
NPN: All sites succeed relative to their individual markets and competitors. But in general, what type of retail site/format is best positioned for success?
Fisher: Those that remain focused on the specific trade area served by that one facility. If a company has 40 retail locations, then it has 40 mini-companies serving 40 distinct markets. Sites surrounded by permanent demand or continual sources of traffic are positioned for long-term financial success.
NPN: What profit centers are broadly strong today?
Fisher: I hate the redundancy of what we constantly preach, but this is best answered by saying whatever the most appropriate profit center(s) is for that specific trade area of that specific facility…Of course, a "broadly strong" profit center within the industry today remains foodservice. However, a great many companies are still struggling with finding the right concept(s) for their company. Foodservice will remain a viable profit center alternative, however, companies must remain very open to other opportunities that might be relevant for a specific facility serving a specific trade area.