Minimarket Expansion : Arco Hopes to Pump More Mustard Than Gasoline in Taiwan
Atlantic Richfield, which retreated from the East Coast gasoline market a few years back, is expanding to the Far East hot dog market.
Arco says it has signed a licensing agreement with a Taiwanese firm to establish 500 AM-PM minimarkets there starting this fall and hopes to enter Japan’s convenience store market as well.
As with its recent expansion into Oregon and Washington, Arco’s Taiwanese shops won’t sell gasoline at all. Instead, they will go head-to-head with 7-Eleven’s highly successful operations there and sell a mixture of Chinese and American fast-food items.
Arco said it has even dropped the word “petroleum” from its former Arco Petroleum Products Co., the unit of the oil and gas company that refines and sells gasoline, operates more than 620 AM-PM stores and runs Southern California’s largest cogeneration facility.
15 to Open by Year-End
The Los Angeles company said it signed an agreement with the Wei-Chuan Foods Corp. to establish AM-PM markets in Taiwan. The venture will “focus on expanding Western and Chinese fast-food items,” Arco said.
Arco wouldn’t say what its investment is or describe the ownership structure of the new venture. The first store is to open next month in Taipei, and 15 are to be in operation by year-end.
This is Arco’s first major international move with its fast-growing AM-PM chain, which produced $300 million in food sales last year out of the company’s $17.6 billion in revenue. Rents and royalties from the gasoline-food markets yielded profit of $40 million, Arco says.
The AM-PM stores have been a key element in Arco’s West Coast gasoline retailing strategy, which is based on low prices, cash-only sales and high volumes. The company’s share of the lucrative West Coast gasoline market has jumped to 17% from 10% since 1981.
Translation Problem
Arco also has five AM-PM stores in Brazil, but described them as a market test and said there are no plans to expand there. It is looking for other partners in the Far East, including Japan, a spokesman said.
Arco contracted with Greg Cliff & Associates, a Pasadena graphics design firm, to design the Taiwan stores. Owner Greg Cliff said they will look like the American stores with the AM-PM logo outside but will be otherwise bilingual.
He said he is working with Chinese linguists to find an acceptable translation for “hot dog.”
Earlier this year, Arco signed a licensing agreement with Plaid Pantry Inc., Portland, Ore., to convert 120 Plaid Pantry markets in Washington and Oregon to AM-PM stores. Most of those stores won’t sell gasoline, either.
