This article focuses on the impact of 7-11 on the small stores in NYC

(Big) Gulp: Bodegas Fret Over 7-Eleven

By SUMATHI REDDY

Natalie Keyssar for The Wall Street Journal

Competition from 7-Eleven convenience stores, like this one in Manhattan, have some bodegas worried.

The 7-Eleven next-door hadn't opened yet when Kyung Yu started to worry. The owner of Kyung's Fruit Store in Chelsea for more than 25 years, Mr. Yu even contemplated sending the company a plea for mercy this summer, warning that its arrival could spell doom for his business.
About a week ago, the convenience store's signature green and red sign was up, and the store was open. Mr. Yu is bracing for the worst. "If my business goes down, I don't know what I'm going to do," said Mr. Yu, whose offerings include Asian candy, orchids, coffee, a Korean bulgogi on a hero and a $2.99 turkey burger. His best hope: 7-Eleven will buy him out to expand.
In the 1990s, it was the Gap and Starbucks, and in the new century, Dunkin' Donuts and Subway sandwich shops have sprouted on what seems like every corner. Now 7-Eleven, the Dallas-based company that bills itself as the world's largest convenience retailer, is positioning itself to take on New York. It has plans to open 30 new outlets over the next five years, making it among the city's fastest-growing chains.
A staple of suburbia, 7-Eleven now has about 100 stores across the five boroughs, according to a list compiled by the company, with at least a dozen more expected to open by year's end.
It has grown 72% between 2008 and 2012, according to Jonathan Bowles, executive director of the nonprofit Center for an Urban Future, ranking it among the five fastest-growing retailers with 50 or more stores in the city.
Mr. Bowles said his group's annual count of chain stores in New York, due out in the next few weeks, will rank 7-Eleven as the 15th largest, compared with 26th in 2008. It is the first retailer that could pose a direct threat to one of the idiosyncrasies of New York City: its thousands of corner bodegas and mom-and-pop green grocers.
Officials from 7-Eleven say they have reached out to the Bodega Association of the U.S. They held a meeting earlier this month with its members to promote a business conversion program that allows established shop owners to become a 7-Eleven. They promote benefits that include a fully stocked store as well as regular visits from a business consultant, an inventory tracking system that boosts sales and reduces spoilage, and a model in which gross profits are split between corporate and the franchisee.

"In the street, people are talking about 7-Eleven," said Ramon Murphy, president of the Bodega Association of the U.S. "Some people agree, some people not agree. The main thing is, let's educate our members, let's be prepared for competition. If you want to be 7-Eleven, great. You don't want it, I'll help you, too. We want to keep the bodega in New York."
Many of the stores opening are corporately owned and looking for franchisees. But no one showed up to an open house at an Upper West Side location earlier this month. And no bodega owners have applied for the business conversion program, though nine other business owners have since February.
Jose Fernandez, who is president of the National Bodega Federation, a separate group, said though there have been concerns about 7-Eleven's expansion, at the moment the chain hasn't penetrated neighborhoods where many of their members operate. "Most of our members carry food products, usually from different countries, that 7-Eleven doesn't carry," he said.
But 7-Eleven, whose parent company, Seven & i Holdings Co., is based in Tokyo, is trying to cater to customer tastes beyond taquitos and Slurpees. A store on York Avenue in Manhattan, for example, carries a greater selection of organic cleaners and vegetarian products. One on the Upper West Side has kosher sandwiches, and in a Flushing, Queens, store, there are Chinese and Korean offerings.
While as a group, bodega and small grocery stores owners may not be worried about the 7-Eleven influx just yet, those sitting in their shadow say they are already feeling the squeeze.
"They're gonna close me," said Sedki Ali, the owner of 374 Deli on Eighth Avenue. The 7-Eleven is just a few blocks away from the one concerning Mr. Yu.
He said since 7-Eleven opened about a month ago, his sales have been cut in half. "I usually order cigarettes every week, now this is the third week I still have them," he said.
A similar refrain is heard in the East Village. Near a two-month-old 7-Eleven close to the once counterculture corner of St. Mark's Place and Second Avenue, bodega owners say they saw an instant hit to their bottom line when the store opened, with sales decreasing on everything from coffee and soda to hot dogs.
"We are trying to do different things," said the owner of Gem Spa, across the street. "We have to add. We are thinking of adding something. We don't know what to add."
—Pervaiz Shallwani contributed to this article. Write to Sumathi Reddy at sumathi.reddy@wsj.com

A version of this article appeared September 25, 2012, on page A21 in the U.S. edition of The Wall Street Journal, with the headline: (Big) Gulp: Bodegas Fret Over 7-Eleven.