Life not easy for corner store owners
By Leah Kellar
Local News - Thursday, April 20, 2006 @ 10:00
Special To The Intelligencer
A combination of rising costs, taxes and competition are taking a toll on
local convenience stores, owners say.
“We’re not asking for much, we just want to pay our bills,” said Tarek
Taraboulsi, owner of 7 Days convenience on Dundas Street East in Belleville.
Taraboulsi agrees with other store owners who say the rising price of
cigarette taxes, utility costs and the ever-expanding product markets of
big-chain retailers are driving down sales.
Three area convenience store owners said cigarette sales have dropped 30 to
50 per cent within the past year due to the cheap cigarettes sold at several
locations on the Tyendinaga Mohawk Territory, just east of Belleville.
They see cheaper competition from the neighboring territory and soaring
retail taxes on cigarettes as two of the biggest contributing factors to
their plummeting profit.
“Compared to a year ago, we have lost up to 30 per cent of cigarette sales
because of the cheap cigarettes sold on reserves,” said Ki Yoo, an employee
at the Pro One Stop in Stirling.
Yoo said his father, who has owned the store for 16 years, pays $52 for
eight cartons containing 25 cigarettes each; he estimates there is a 60 per
cent difference in cost between what the family pays and what retailers on
the territory pay.
“Ninety per cent of our customers are regulars,” said Yoo. “Many go to work
and come in from Belleville every day, so we noticed it a lot when sales
dropped.”
A recent Ontario government proposal to ban cigarette marketing displays
will not affect the Pro One Stop as much as other area variety stores. Yoo
said they currently do not display labels, but he worries future legislation
to hide cartons entirely from the view of customers will create a problem
for businesses.
“I’m concerned when it takes effect in 2008 ... you’ll have to hide your
cigarettes behind a black curtain,” said Yoo.
Yoo said he knows some store owners who make $4,000 to $5,000 a year from
companies that receive display allowance from manufacturers.
Amir Jajo is among the many Belleville retailers who is attempting to
counter the effects of cheaper competition by buying more inexpensive
varieties and fewer name brands.
“I’ve noticed I’ve been selling more of the cheaper cigarettes here. Of
course it’s more expensive than the reserve, but people are buying them and
it’s helping,” said the owner of Daisy Mart variety on Bridge Street West.
“But we really rely on the commission from the displays so after this
regulation we won’t have that.”
Jajo runs the variety store with his wife and three kids. He said higher
cigarette prices have raised insurance rates making it difficult to pay the
bills.
Other store owners say they have noticed their insurance rates rise each
year an additional financial difficulties for many of the family-run
convenience chains.
“Every time there is an increase in price in cigarettes what you see is
insurance companies lower coverage,” said Yoo. “Before five years ago, they
used to cover up to $20,000 worth of cigarettes, now the maximum they cover
is about $5,000.”
Robberies in bigger cities such as Toronto are also a concern for store
owners who have relatives operating businesses there.
“There are four to five gunpoint robberies in Toronto each week, and that
shows the increase of criminal activity because of rising cigarette prices,”
he said.
With cigarette sales accounting for nearly half of a variety store’s
revenue, the hike in cigarette tax is spawning a domino effect in other
areas of business.
Taraboulsi read a store rental statement listing the amount of taxes he pays
monthly to operate his store.
“I pay $547.50 in taxes per month not including rent. So suppose rent for a
month is $1,000; you have to pay $2,000 because you have to pay the taxes,
the clean-up, the snow removal, the sign. It’s a lot to pay with continuing
tax increases.”
Owners say lottery sales have helped to boost revenues in place of sales
slumps in gas and cigarettes, but admit it’s hard to compete with local
businesses like Wal-Mart that have expanded their market to include
convenience store items.
“You can go into a place like Canadian Tire and buy chocolate bars or go
into Wal-Mart and buy cheap cigarettes and groceries now, but where is the
government for the small businessman like us,” asked Taraboulsi. “It seems
you must be rich to live. If you are not rich than nobody cares.”
He added it is difficult for many small convenience stores to get popular
lottery terminals like Lotto 6/49 and Super 7.
“All stores must meet the same quota of scratch and win ticket sales to get
the big lotteries. It’s easy if you live in Toronto, but that’s not always
possible if you are in a small town like Belleville,” he said.
The retailers say they would like to see more done to decrease property
taxes for small business owners in Belleville and counteract the rise in
sales tax on a product they claim has kept them in business and their
families fed.
“Of course, we will keep doing our best,” said Taraboulsi. “That’s all we can
do.”