7-Eleven is tapping into consumers’ desire for quick, convenient shopping with the acquisition of 1,108 convenience stores from Sunoco for $3.3 billion. When the deal is final, 7-Eleven will operate 9,815 stores in the U.S. and Canada.
“This acquisition supports our growth strategy in key geographic areas including Florida, mid-Atlantic states, Northeast states, and Central Texas,” said Joe DePinto, President and CEO of 7-Eleven Inc., in a statement. “It also provides 7-Eleven entry into Houston, the fourth largest city in the United States, and a strong presence in Corpus Christi and across South Texas.
The decision to acquire these stores comes at a time when many consumers prefer quick, immediate purchases. As larger, big box retailers and apparel brands continue to struggle and major grocers prepare to fight off incoming competition from Lidl, convenience stores are in a great spot to generate foot traffic and sales. Without online competition, 7-Eleven’s massive expansion plans don’t come with the same risk that many brick-and-mortar companies face when planning growth.
Part Of A Greater 7-Eleven Expansion Plan
Acquisitions appear to be a significant part of 7-Eleven’s expansion plans. In June 2016, 7-Eleven purchased 79 gas stations and convenience stores in California and Wyoming from CST Brands. The company aims to increase its number of stores to 10,000 by 2019.
While declining fuel sales due to low gas prices have delivered a blow to profits at C-stores, in-store sales are better than ever. U.S. convenience stores generated $233 billion in in-store sales in 2016, a 3.3% bump from 2015. Prepared and commissary food, as well as hot, cold and dispensed beverages, comprised 21% of that total and generated a 35% profit, according to the National Association of Convenience Stores.
As part of the agreement, Sunoco will enter a 15-year fuel supply agreement with a 7-Eleven subsidiary, under which Sunoco will supply approximately 2.2 billion gallons of fuel annually.
Upon selling the stores, Sunoco is planning to shift away from company-operated convenience stores to focus on its wholesale fuel supply business. The company will supply fuel to a network of more than 8,900 locations of third-party dealers.