General Managers Report: The Decision on Gas at Lyme Road
added 06/23/08
by Terry Appleby
Why did the Co-op discontinue gasoine sales at our Lyme Road store?
As of this writing, destruction of the original Co-op Community Market on Lyme Road has taken place. The old gas pumps and underground tanks have been removed, and the former service station building has been demolished. When the new store is completed in roughly five months, the site will not include gasoline for sale.
I am the first to admit that the Co-op could have done a better job of communicating about the decision to discontinue the sale of gas at Lyme Road, and for that I apologize. This was a big issue that affects many members and non-member consumers. We should have solicited feedback and communicated issues and concerns in a timelier way. This is my belated attempt to explain how the decision was made.
In the initial phases of planning for a new Community Market, Co-op management considered gasoline sales to be a given. During our surveys and focus groups, our primary interest was to find which products members wanted in an expanded store. We did ask questions about the usefulness of gas at the store and found a high percentage of respondents appreciated that convenience. Unsurprisingly, we also found that a higher percentage of non-members patronized that location, as compared to the two food stores.
Early on, several groups—the Town of Hanover’s planning board, neighbors, and the Co-op’s Board of Directors—made clear their desire that a well-built, environmentally sound building should anchor this developing part of Hanover. Last fall, as we put together the design and program for the new store, it became apparent that affording the kind of store needed would be impossible when we added the significant cost of new gas pumps and related infrastructure—roughly $300-$400,000. We had to make choices about how to proceed.
A major decision point was the economics of gasoline sales. The gas business has been a money loser for the Co-op for years. As gas prices have risen in the past several months, already low gas margins have shrunk further, at times to zero. Paying back such a significant investment with no profit from gas sales would require subsidizing the sale of gas with higher prices on food, just as it is done with convenience stores. We did not want to build a conventional convenience store. We wanted prices on food at the new market to be in line with our other stores.
Another decision point was parking. The larger footprint of the new store meant parking space would be tighter. The presence of gas pumps and the need to accommodate a large tanker truck on a regular basis would exacerbate the problem.
We were also concerned about the safety of the young people likely to access the site from the Ray and Richmond schools. During the two-year period leading up to our design of the store, I attended many meetings about the development of the section of the Lyme Road between the traffic roundabouts. A repetitive theme involved the desire to make the area friendly to walkers and bicyclers and to encourage alternative and mass transportation.
I believe the decision to discontinue gas at the Lyme Road site was right and necessary. However, I clearly made a mistake by not developing a better mechanism for involving and communicating with the members along the way. I promise to do better in the future. Lesson learned.
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