This paper presents a business proposal for 24/7 Convenience, a chain of organic and heart-healthy convenience stores targeting late-night consumers in major U.S. markets. The proposal outlines a niche market opportunity within the broader convenience store industry, which generated $575.6 billion in revenue in 2010. It covers the company's mission and vision statements, five-year pro-forma financial projections, marketing strategy, and communication needs. The paper also addresses target demographics, supply chain considerations, and operational recommendations, arguing that a focus on organic, hormone-free, and heart-healthy products can capture significant market share from established competitors such as Seven-Eleven.
A niche in the growing market for late-night convenience store options has changed the paradigm for how the late-night convenience consumer shops. The business concept for which investment dollars are sought is the launching of 24/7 Convenience — the convenience store for the 21st century. The identification of this niche market steered the development of this proposal, and it represents a market that should not be ignored.
As a result of the assessment of the target market, a subnational rollout was examined and deemed to be profitable. The underlying assumption that renders this model profitable is the growing market for heart-healthy convenience items. The growing demand for heart-healthy products will be reflected in year-over-year sales growth. Profitability will therefore be a function of controlling costs and maximizing revenue streams.
24/7 Convenience will be unique to the market for the following reasons:
Farm-fresh milk: 24/7 will carry farm-fresh milk delivered from regional farms contracted to supply organic milk. The supply can be shipped from as far as Longmont, CO.
Renewable-energy distribution: Shipping strategies will include the modification of existing gasoline-engine vehicles — such as bread trucks — to run on renewable energy resources, which will reduce the costs associated with product distribution. This method is estimated to be less expensive than contracting a trucking company to manage the supply chain. Additionally, these costs are a tax-deductible business expense.
Fresh organic convenience meals: Organic convenience meals will be stocked fresh daily. A variety of heart-healthy and organic options will range from tofu and bean-curd-based dishes to items made from fruits and vegetables grown without pesticides.
In-store fresh juicer: 24/7 will offer its own juicer machine, enabling consumers to purchase fresh juice from a variety of fresh produce in a custom blend of their choice. This option is expected to be as compelling a draw as Seven-Eleven's Slurpee®.
Target demographic: The target markets also distinguish 24/7 as unique. The company has strategically positioned itself to enter markets with a large demographic of successful female consumers — a segment considered highly profitable given the product mix offered.
Convenience stores have accounted for $575.6 billion in revenue for the year ending 2010 (Industry Research Solutions, 2011). Additionally, the market was expected to reach $856 billion by the year 2014 (Industry Research Solutions, 2011). This exponential growth was projected to continue and even accelerate beyond its initial growth cycle — particularly when considering the niche market for 24/7 convenience stores in the San Diego, Denver, Boston, and New York markets.
Heart-healthy product offerings are novel to the market, as there is currently no convenience store that specifically provides heart-healthy and organically derived convenience food items. The ability to obtain hormone-free milk is also important to the markets served. 24/7's supply chain can facilitate milk delivery at a lower cost than what competitors currently offer, and its transportation model assures further cost savings.
24/7 convenience stores target a new kind of late-night convenience consumer while also serving the existing late-night shopper. The current Seven-Eleven does not provide heart-healthy choices to the extent that 24/7 stores will. Often, when one enters a Seven-Eleven, numerous hot dogs and sausages are available on the grills — a category where Seven-Eleven does not generate tremendous business and where the 24/7 model will thrive. Coastal locations, particularly those near beaches, are expected to yield the greatest return on specialty heart-healthy and organically produced items.
Mission Statement: To provide a twenty-four-hour convenience market that is eco-friendly in design and offers low-cost, heart-healthy convenience food items.
The mission statement defines the reason 24/7 exists. Investors must understand that while Seven-Eleven also operates 24 hours, many of its locations do not provide the heart-healthy selections that nocturnal consumers are increasingly seeking. This is the target market and the niche the company addresses against its competitors.
Vision Statement: To be the option of choice for the late-night consumer in each market we enter.
The vision statement describes where the organization aspires to be. It is succinct yet precisely captures the nature of the business. By providing a niche market offering, the goal is to deliver a compelling advantage to consumers — specifically, to capture the late-night market share currently held by Seven-Eleven.
Goal 1: To obtain 15% market share in the first year of operation.
Objective 1: To segment each market based on the male/female demographic and median income.
Result: To establish operations in female-dominated markets where the female median income exceeds the mean.
Goal 2: To become profitable by year five and increasingly profitable each year thereafter.
Objective 2: To reinvest retained earnings into improving profitable business areas and develop strategies for marginal-performing areas.
Result: To achieve break-even by year five and generate a marginally increasing profit stream each year after.
Pro-Forma Financial Statement
The increasing revenue at a rate proportionally greater than the increase in sales reflects the product mix being purchased. Higher-cost items are being purchased at an increasing rate from year one through year five. The assumed median purchase is $20.00 USD in year one, with an assumed cost of $13.50, yielding a net of $6.50. Year two: $30.00 revenue, $15.00 cost. Year three: $36.00 revenue, $17.00 cost. Year four: $40.00 revenue, $22.00 cost. Year five: $43.00 revenue, $25.00 cost.
The ideal initial market is the Boston, MA area. A strong professional class and a population of working females make this an attractive market segment. Additional target markets include San Diego, CA; Beverly Hills, CA; Minneapolis, MN; Boston, MA; and New York, NY.
The primary focus of the marketing strategy is the promotion of heart-healthy convenience food items, supported by a strong local radio advertising campaign and placements in relevant publications.
"Drive-thru, customer feedback, and multilingual service"
"Operational and location strategy recommendations"
24/7 convenience stores represent a new trend in the consumer market, seeking to provide value and heart-healthy products to a lifestyle-conscious demographic. The business model is designed to be unique and specific enough to capture an initial 15% of the market in the first year of operations. With time and additional investment, this market share can grow to a larger portion of the overall market in each area of business activity.
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