What I know about running stores where the next town is twenty miles away

A Marrick store takes about US$1.7 million a year in an 8,200-square-foot box, and its four-wall profit depends on a handful of variables I watch closely: labour hours, rent, shrink, the share of sales in consumables and the cost of getting goods to the door. In a small town the margin for error is thin, and the decisions that matter most are often about real estate. I prefer short leases with renewal options, because they let us relocate within a town when traffic moves or close when an employer leaves. Over the last decade Marrick has relocated 96 stores and closed 41. I review every new site and relocation with our real estate committee, and I ask for the town's population trend, its distance to the next shopping centre and whether it still has a pharmacy, a bank branch and a grocery store. A rural discount store is often the last general retailer in town, and site decisions should be made knowing that.

I spent my first twelve years in loss prevention, and I still read shrink reports by cause before I read them by store. Shrink is the gap between book and counted inventory, and in a small-box chain it usually comes from four sources: process errors at receiving and in markdowns, vendor delivery discrepancies, employee theft and external theft. Each needs a different remedy, and the remedies for external theft, such as locked cases and guards, carry costs in lost sales and staff time that a store with two people on shift feels acutely. I treat store safety as a separate decision. At Marrick that means a rule that no store trades with fewer than two people, set before the labour budget is calculated. Our asset protection team reports to me, and I take incidents and shrink by cause to the audit committee each year. I would not claim to have solved organised theft. I can say how much of our loss it represents.

Many of the towns we serve have lost their pharmacy, and a variety store is often asked to fill the gap. I learnt the economics of small-town dispensing at Brannock Food Stores, where I ran the closure of fourteen low-volume counters, and I have applied that knowledge at Marrick by hosting independent pharmacist-owners rather than operating pharmacies ourselves. My work in this area covers the terms we offer, the fit-out standard, the working-capital support a new owner needs while reimbursements catch up, and the over-the-counter health range in host stores. Pharmacy is regulated by each state's board of pharmacy, and rules on remote dispensing and staffing ratios differ from state to state, so I rely on our pharmacist tenants and on counsel rather than my own reading. I measure the programme first by how many of our towns still lack a pharmacy within twenty minutes, then by the survival of the pharmacies we host, and only then by store sales.

Our customers notice a price change on a roll of paper towels faster than any analyst does. I work with our chief merchant on price architecture: which items carry an opening price we will defend, which are free to move and how often we can change them without confusing a customer who shops twice a week. Own-label products are central to that. They reached 21% of consumables sales in fiscal 2025, up from 13% in 2021, after we replaced cheapest-specification products with ones tested against the leading national brand. The 2025 tariff changes made sourcing concentration a board subject. We now review the share of purchases by country each quarter, hold second suppliers for our highest-volume own-label items and write cancellation terms into seasonal orders before we need them. I do not believe a discount chain can absorb every cost increase. I do believe it should decide in advance which prices it will hold.

In a small-box chain the assistant store manager is the role on which everything else depends. Assistants cover most closing shifts, train new cashiers and become the store managers of the next five years. When I arrived at Marrick their turnover was close to 80% a year, which meant we were promoting people into store management before they had seen a full year of trading. We raised average store hourly pay from US$11.40 in 2021 to US$14.60 in fiscal 2025, partly to keep pace with minimum-wage increases approved by voters in two of our states and partly to compete with the warehouses and factories in our towns. We also put a second person on every close, published shift patterns a fortnight ahead and created a paid store-manager-in-training route. Assistant turnover is now 51%. That is still too high, and it is the workforce figure I report to the board first.

Marrick has three groups of shareholders with different horizons: Stonebeck, whose fund must return capital within a defined period; the Marrick family, who hold a quarter of the company and have traded in its towns for nearly seventy years; and management, who own about 4%. I work with a nine-member board of three Stonebeck partners, two family directors, three independent directors, one of whom chairs, and me. My practice is to bring the board decisions with the dissent included, to keep the value-creation plan and the operating plan in one document, and to state my own interest whenever management equity is affected. I have learnt to prepare for an exit years before it happens: clean data, a credible record on remodels and a succession plan a buyer can test. I have also learnt that a sponsor's questions about return on capital are usually good ones, and that the answers improve when the family directors hear them too.