Despite recession, 7-Eleven is opening hundreds of new stores

Amid recessionary closings and dire, apocalyptic mutterings, 7-Eleven, the world's largest chain store, has announced plans to open 200 more locations this year. While the company is building across the country, its two biggest areas of expansion will be California and the New York metropolitan area.

Both areas are well-primed for this move. In New York, falling real-estate values have made long-term leases very attractive to landlords, and many have been eager to strike bargains with the company. In one case, a landlord who was previously charging $140 per square foot dropped his rate to $91. Also appealing, the chain's quality control ensures that the stores are clean and well-run, in stark contrast to many of the bodegas and corner delis that currently function as the city's informal food-distribution network.


%Poll-31903%

In a larger context, however, 7-Eleven's popularity reflects some hard recessionary truths. While the chain charges more than most grocery stores, its convenience makes it ideal for consumers who may be trying to save money by underbuying during their visits to the market. Beyond this, of course, the company's selection of bargain-priced convenience foods makes it a compelling alternative to fast food franchises and traditional restaurants.

Still, old habits die hard, and 7-Eleven faces a strong small-market culture in both of its major expansion zones. It's particularly notable that 20 of the chain's proposed 44 store openings in New York will actually be "business conversions," wherein an existing proprietor transforms his convenience store into to a 7-Eleven. The company invests approximately $280,000 per conversion, in return for 25 percent of the store's profits.

7-Eleven is only the latest in a long series of companies that are using the recession as a tool for broadening their reach. Bargain-priced department stores, notably Kohl's and H&M, have all taken advantage of newly-accessible real estate and penny-pinching consumers to launch major expansions. Kohl's, for example, is on track to open 50 new stores in 2010, while H&M continues to expand worldwide.

%Poll-31910%

In terms of stores that court 7-Eleven's consumers, Dollar General and Big Lots have also expanded massively. Dollar General, for example, has announced plans to open 450 stores in 35 states, while Big Lots has 45 stores set to open in 2009. Although neither store overlaps 7-Eleven's offerings, all three chains appeal to the same price-conscious, bargain-hunting shoppers.

With disposable income at a premium and real estate at a discount, it looks like the recession may transform the face of American consumption. As in the case of Wal-Mart, it's worth asking if a price-sensitive population can go back to its previous habits. Perhaps more importantly, will it want to?