While recent years have been a challenging time for many retailers, others have turned it into a window of opportunity. Among the latter crowd is Express Oil Change, a Birmingham, Ala.-based auto service provider.
For much of its 32-year history, shopping center owners have shunned the chain because of negative associations conjured by auto repair shops and also because of its large land requirements. (The chain prefers sites of up to 35,000 square feet, according to R. Kent Feazell, Express Oil Change’s senior vice president of real estate.)
Even though Express Oil Change doesn’t use underground oil tanks, when landlords heard the words “oil change” they would immediately think of older auto repair and dealership sites plagued by environmental contamination issues and by problems with people breaking in to steal auto parts at night, Feazell notes. So during the boom years, Express Oil Change would often lose out to restaurant chains or drugstores when competing for shopping center pads.
During the recession, however, as many shopping center landlords were hit with multiple big-box vacancies , Express Oil Change saw an opening and set about remediating its image.
The chain prefers to be in locations where it can benefit from daytime traffic generated by stores such as Target, Lowe’s and Home Depot and where customers can have their car looked at while shopping. The chain’s management also feels that by adding a new service for shoppers, it can help shopping centers as well.
“We firmly believe that if you are going to service from a neighborhood or a regional area, it make sense to have automotive services,” Feazell says.
Getting attention
To get Express Oil Change on landlords’ radars, Feazell and his team have stepped up their presence at ICSC shows in the past few years. The chain has also upgraded its marketing materials, including brochures that address any misconceptions the landlords might have about its stores’ environmental impact. And it has tried to emphasize the fact that its buildings have an upscale look, with red brick facades, blue pitched roofs, all glass doors, well-lit parking lots and landscaping.
Express Oil Change stores typically have two sides, one where customers can get their oil changed without leaving their vehicles, and another that includes a full mechanical shop with check-up and tune-up services.
In addition to appealing to landlords directly, Express Oil Change has been pursuing partnerships with other retailers. Sometimes, when a shopping center pad becomes available it’s too large for the chain to use the entire site. So it’s been negotiating with convenience chains and fast food operators like Dunkin Donuts and Wing Zone to share the pads.
So far, the strategy seems to be paying off.
Feazell says the chain has been able to sign a number of deals in the past few years that would not have been at the market’s peak. Today, Express Oil Change has 23 stores under development in 18 different markets (the company operates a total of 176 stores). As those stores open and succeed, the hope is that additional landlords will become more willing to do business with the chain. Going forward, Feazell would like to open 15 to 18 stores annually.
“As the market slowed down, it’s allowed us to get meeting with developers to show who we are, what our product is,” he says. “We hope that when the market comes back, they’ll remember us.”
Express Oil Change stores average 3,500 square feet and because of its unique use, the chain usually needs to build its properties from the ground-up. Like many other pad tenants, it prefers to buy the sites from the developer and employs an internal real estate department that handles pre-construction and permitting, to take the pressure off franchisees that might not be familiar with the process.
Over the years, the chain has also developed working relationships with multiple lenders around the country, which means it can secure construction financing relatively quickly. It costs anywhere from $300,000 to $600,000 to build an Express Oil Change store, depending on site requirements.
“To date, we have not lost a single deal, either corporate or franchise,” Feazell notes.