The revenue and logistics costs of convenience store chains in Taiwan

Abstract

Purpose

The objectives of this study were to demonstrate that the high-density 7-Eleven c-stores in Taiwan benefit from economies of scale in distribution and can, therefore, leverage the logistics costs; and to decide the proper locations for the future inauguration of c-stores.

Design/methodology/approach

The study spatially analysed the c-stores located in Tainan, Taiwan and examines the influence of spatial configuration on c-store revenue. This study developed models to quantify the revenue and logistics costs that the 7-Eleven convenience store (c-store) chain encountered when adopting a high-density expansion strategy. The revenue models’ parameters were calibrated utilizing data collected from financial statements in 7-Eleven chains’ 2015 corporate annual reports and modelling was used to quantify the influence of agglomeration forces and the distance separating c-stores on revenue.

Findings

Positive agglomeration forces increased 7-Eleven’s company-wide sales and the average daily revenue of its individual c-stores, and decreased those of competitors. The study findings demonstrate the high-density 7-Eleven c-stores in Tainan benefit from economies of scale in distribution and can, therefore, leverage their logistics costs. The spatial analysis concluded that higher-density and higher-revenue c-stores were spatially clustered.

Originality/value

The study extends the use of analytical revenue and spatial models to decide the proper locations for the future inauguration of c-stores.

Citation

Lin, P.-C., Lin, C.-J., Shen, C.-W. and Wang, J. (2020), "The revenue and logistics costs of convenience store chains in Taiwan", International Journal of Retail & Distribution Management, Vol. 48 No. 11, pp. 1255-1273. https://doi.org/10.1108/IJRDM-12-2019-0402