News Column

The Retail Challenge

July 24, 2006

Alexander Aponte

Elise Hernandez, CEO, Ideal Systems Solutions
Elise Hernandez, CEO, Ideal Systems Solutions

2006 Hispanic Business 500. Ideal System Solutions Inc., a Jenkins, Minnesota-based computer retailer (number 233 on the Hispanic Business 500), hopes to get bigger by pampering customers with networking, consulting, integration, and maintenance services. Ideal, founded in 1996, reported a 27.3 percent revenue increase last year, from $16.5 million in 2004 to $21 million. And they project a bigger jump, to $35 million, in 2006, says CEO Elise Hernandez.

Mid-Atlantic Petroleum Properties a large Germantown, Maryland-based owner of gas stations and convenience marts founded in 1995 (number 61) has grown by appealing to two market segments: women and upscale customers, says CEO Carlos Horcasitas Sr. He also increased revenues 27 percent last year, from $85 million in 2004 to $108 million.

Both companies are prospering in sectors with razor-thin profit margins boosted by currently favorable conditions but planning to stay aloft through unique service offerings.

Bull by the Wires
Ideal System Solutions is riding a bull market due to lower-than-ever prices on computers. PC sales posted year-over-year growth of 10 to 20 percent for each month from November 2005 to March 2006, says research firm Current Analysis.

But the buoyant volumes won't last forever, says Ms.Hernandez, whose business is 25 percent commercial sales and 75 percent federal subcontracting. She plans to increase commercial sales by providing customers with one convenient source for all computer-related services. She will also emphasize continuity. "We need to give customers the satisfaction that they are not dealing with big companies where representatives change all the time," she says.

Also on the agenda: growing the federal contracting business by "letting people know we can do what
bigger companies do through partnerships and alliances," says Ms.Hernandez. She hopes to sell a minority stake in Ideal to a company specializing in computer services.

Connoisseur Convenience
Mid-Atlantic Petroleum owns or operates about 50 gas stations in Washington, D.C., Maryland, and Virginia, and is a wholesaler of the Chevron brand. "When we buy a station, we spend the right amount to turn it around and make it completely full service," says Mr. Horcasitas.

Like Ideal, Mid-Atlantic has grown by providing a high quality of service not traditionally found at competing gas stations. Since most stations are independently owned and operated, and compete by keeping margins on gas sales at a small fraction of pump price, they rely on store sales for most profits, according to the National Association of Convenience Stores. Mid-Atlantic's strategy is to build 4,500-square-foot outlets (double the industry average) with room for a wide variety of products and a range of retail services, catering to an upscale clientele.

The gas stations sport Spanish-tile roofs and immaculate landscaping. Soothing music plays. Customers can enter restrooms finished in marble without asking for a key. In addition to a lube center and car wash, there is a delicatessen and gourmet coffee bar where patrons can grind their own beans. "I compete more against Starbucks than 7/11," says Mr. Horcasitas.

His advice to anyone thinking about opening a service station: "Control the property so you can control your destiny. Own it, or lease it from a third party, not from the gas supplier. When you [lease from a supplier] you basically become an employee."

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