Iowa Business Council’s Post

I am happy that many 99 cents only stores in So Cal will be saved/rebranded. However, this does raise an interesting land use question I am fascinated by: business concept vs developed land. Most dollar trees in SoCal I see are 5-10k s.f. 99 cents only's are typically 15-20k s.f. approximately. So with Dollar tree acquiring all of these spaces that are rather large, what are they planning to do? Sublease space? Introduce a modified concept to fill the space? Might they make the same mistakes 99 cents only did?

Despite their similarities, a typical Costco will sell nearly twice as much as typical Sam’s Club ($275M/year compared to $145M/year). Why is that? Their buildings and parking lots are about the same size; they carry a similar mix of categories and number of items; they have both been in the wholesale membership warehouse club business for over 35 years; their membership fees are almost the same price; they both operate internationally; and the list could go on. Overall, when these direct competitors go head-to-head, Costco generally wins—in a big way. If Sam Walton were alive today, you can bet he would be on a mission to thoroughly understand the differences in their performance. Sam Walton’s first retail store was not a Walmart or Sam’s Club, it was a Ben Franklin variety store that he franchised. Located in a small town directly across the street from another variety store that sold twice as much as his own store, Sam set aggressive sales goals and, to reach them, he would have to increase market share by gaining customers from other stores—starting with his competitor from across the street. Sam studied his competitor’s business so thoroughly that it was said he knew it better than they did. Sam began sourcing merchandise directly, circumventing the purchasing from Butler Brothers, the franchisor of his store. He would hook up a trailer to his pickup truck and drive to the manufacturers’ facility to pick up the merchandise. The lower acquisition costs allowed him to reduce his prices and attract customers from towns several hours away. After three years Sam’s Ben Franklin store had tripled its sales and was the fastest growing store in the chain. There were many other things Sam did to grow the business, such as offering the store managers equity (in their store) which motivated them by knowing they would have a share of the store’s profits. Sam went on to open another 15 Ben Franklins across three states before opening his first Walmart in 1962 at age 44. 1962 also saw the opening of Kmart and that would become Walmart’s main competitor for the next several decades. Sam studied Kmart with a passion, spending countless hours on Kmart’s sales floor. Sam claimed that he had spent more time in Kmart than any of the Kmart corporate leadership team. How does this tie back to Costco’s sales per club dominance of Sam’s Club? (Continue reading below)

“Ross on Monday announced it has opened 24 new stores in June and July. The retailer said it opened 21 stores under its namesake banner and three DD’s Discount stores in 17 states, according to a company press release.” “The company, which opened 18 new stores overall during Q1, said as of Monday it operated 1,795 Ross locations in 43 states, Washington, D.C. and Guam, and 353 DD’s Discounts in 22 states, giving the retailer a physical presence of 2,148 total stores.” “California-based Ross said it wants to eventually grow its store footprint to over 3,600 locations. During a May earnings call, CEO Barbara Rentler said the retailer expects to open about 90 stores overall this year — 75 Ross and 15 DD’s Discounts, according to a call transcript. She said that count doesn’t reflect plans to close or relocate 10 to 15 older stores.” “Off-price rival TJX also plans to grow its store footprint. Just in the U.S., the company in May said it planned to add 45 net new T.J. Maxx and Marshalls locations, 40 HomeGoods locations and 26 Sierra stores. Overall, TJX says it operates over 4,900 stores under a half dozen banners globally.” “For the company’s second quarter, which ends Aug. 3, Ross said in May it expects comps to rise 2% to 3% year over year on top of a 5% gain during the period last year, while the retailer is maintaining its full-year guidance for comp growth of 2% to 3%.” - Nate Delesline III

This is certainly interesting to see Dollar Tree Stores shuttering 600 Family Dollar stores plus not renewing 370 units and an additional 30 Dollar Tree stores…I guess the $8.5 billion acquisition in 2015 has some residual growing pains. Let's not forget a year ago they announced they were planning to open as many as 650, nearly 200 more than the 455 stores it opened in 2022, while also renovating a significant number of Family Dollar units. #retailrealestate #retail #retailtrends #dollartree #familydollar #stores #consumertrends

Chubbies was acquired for 9 figures and went through a 10 figure IPO. A huge reason for the acquisition was a successful wholesale expansion. This may never have happened without a happenstance conversation with the owner of our earliest major wholesale partner about avoiding the pitfalls of wholesale expansion. At the time, we had just received a massive purchase order that would have 10X'd our small wholesale business...from buyers at his company! Without this conversation, I would have succumbed to all the pitfalls. No brand should have to become yet another cautionary tale, so here are: 1) Three things I learned from the conversation   2) Three ways you can update your thinking on the topic right now 3) Three questions to ponder Let's do it. ** Three things I learned from the conversation ** 1. "The only thing that matters is to make sure you always have more demand than supply," he said.  2. He told us that the best brands he'd worked with were not maximizing "today". They were focused on building a long term relationship with their retail partners. Even if they have the buyer wanting more product, they knew going too fast could compromise the long term relationship. 3. And finally, he told us to always have options when building wholesale partnerships. In the same way we never want to have more supply than demand, we never want to be in a position where we *need* a purchase order, or *need* a particular wholesale partner.  ** Three ways you can update your thinking on the topic and questions to consider ** 1. LVMH CEO Bernard Arnault: "Growth is not, must not, be a goal. The goal is desirability. People must desire the brand." If you're getting into conversations with early wholesale partners, this could mean a huge increase in revenue, basically overnight. The important thing to learn is that's not the main goal.  To ponder: Are we chasing growth at the potential expense of desirability? 2. Warren Buffett: "We always, of course, hope to earn more money in the short-term. But when short-term and long-term conflict, widening the moat must take precedence." To ponder: Is the growth decision (wholesale or otherwise) maximizing my probability of building a long term relationship and widening my moat? Or, do I just want the ego boost from being able to tweet that I'm going to be in 3,000 Walmarts next month? 3. Dave Powers, CEO of UGG's owner: “Unless you just have a brand that also is in wholesale, has the margin structure to be successful at wholesale, and is important enough on its own to sustain the growth versus just digital marketing spend. A great brand, meaningful to consumers, will outlast the marketing spend” Strengthening your brand builds resilience, price insensitivity, and optionality where you don't *need* any particular purchase order, or don't *need* to run your direct response ads perfectly today in order to hit your daily number. To ponder: What can I do today to reduce my brand's "needs"? 

Retail grocery is an insanely competitive business with thin margins and little room for error. I’m not sure anyone would be assured success taking on this many stores in this many markets and in turn competing straight up against Kroger. But is the question “are they fit?” or is it “are they guaranteed success?” C&S is a savvy, top 2, national, long-running, multi-billion-dollar wholesale grocer; albeit with limited retail experience. They are certainly taking a big gamble but not sure depicting them as an unfit “regional grocer” is accurate.

Bob Eddy, chairman and CEO of BJ's Wholesale Club acknowledged in a recent earnings call that he’s “pushing pretty hard” to grow its warehouse club count even faster than in recent times, with more store units in the pipeline than during any other time in the past 20 years. BJ’s opened six new warehouse clubs in the fourth quarter of 2023, and the company plans to open 12 brick-and-mortar clubs in 2024. Opportunities to bring a BJ’s to your market are significant. BJ’s currently operates only 244 clubs in 21 states (average size 113,000 square feet). By contrast, markets with a Costco Wholesale club are more saturated. Costco operates 603 clubs in 47 states and Puerto Rico (average size 147,000 square feet), 108 in Canada, 40 in Mexico and 124 in 10 other countries including 33 in Japan, 29 in the U.K., 18 in South Korea, 15 in Australia, 14 in Taiwan and 6 in the People’s Republic of China.

Casey's General Stores, Inc. , one of the leading convenience store chains in the United States, announced an agreement to acquire Fikes Wholesale, Inc. (“Fikes”), owner of CEFCO Convenience Stores (“CEFCO”), in an all-cash transaction for $1.145 billion. The purchase price includes tax benefits valued at approximately $165 million for a net after-tax purchase price of $980 million. Fikes Wholesale, Inc. and CEFCO Convenience Stores began as a single “filling station” in Cameron, Texas in 1952 and has grown to be a respected operator with stores in multiple states. Casey’s #acquisition of Fikes will include 198 retail stores and a dealer network. The proposed transaction will increase Casey’s footprint to nearly 2,900 stores. The acquisition will bring 148 additional stores to Texas, which is a highly strategic market for Casey’s, as well as 50 stores in the southern states #Alabama, #Florida, and #Mississippi. In addition to the retail stores and dealer locations, the transaction includes a fuel terminal and a commissary to support the Texas stores. Darren Rebelez, Board Chair, President and CEO of Casey’s said, “During our Investor Day presentation in June of 2023, we outlined our business strategy to achieve top-quintile EBITDA growth. One of the core pillars of the plan is to grow the number of units,” “This acquisition will allow Casey’s to accelerate our unit growth plan with high-quality assets that, along with our recent 22 store acquisition in northern Texas, will provide an expanded presence in Texas and allow us to continue to expand in the state and region.” Raymond Smith To share your startup story write us on - contact@startuprise.io #Casey #CEFCO #acquisition #news #startup

For four decades, BJ's Wholesale Club opened stores mostly along the East Coast, but having done well wherever it has opened a store, the chain is embarking on an aggressive expansion that could take it across the country. BJ’s opened its 245th store last week in Palm Coast, Fla., and plans 10 more new stores through the end of its fiscal year in January. At least 10 to 12 are expected next fiscal year. BJ's competes with Costco Wholesale and Sam's Club, but its ultimate aim is to compete for grocery dollars against the traditional supermarkets, not just the other wholesale clubs. The typical BJ’s store carries more than 7,000 different items, including an extensive assortment of groceries, fresh produce and deli compared to around 4,000 SKUs at Costco. BJ's stores range from 60,000 to 160,000 sq. ft. BJ's also operates BJ’s Market, a smaller-format store of roughly 40,000 sq. ft., that’s roughly half the size of a full-sized club location. BJ’s entered Tennessee and Alabama last year, and now plans to open its first store in Kentucky, its 21st state. The Dallas Morning News reported BJ’s is eyeing locations east of Dallas, with possibly two more in Texas. Another new location is in Carmel, north of Indianapolis, BJ’s second location in Indiana.

Next CEO Lord Simon Wolfson was tight-lipped on whether the high street giant would step in with struggling retailers Ted Baker, Superdry and Matches, as it posted “record” results. Find out more below. #Next #retailnews #retailer #highstreet #fashionnews