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The Belleville Intelligencer

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.”