Growing demand for prepaid phones in convenience stores

If you had to guess, where would you think a convenience store in Texas would make more money: At the gas pumps, or inside the store? With the cost of fuel nowadays, it might be intuitive to answer “inside the store.” According to Mary Sullivan, owner of San Angelo, Texas-based Town & Country, that’s not the case. She claims that in the year ending December 30, 2007, they made $52 million more in gross profits form in-store merchandise than at the pumps. “Sullivan says lottery tickets and pre-paid phone cards for pay-as-you-go cell phones have been big growth categories.”

This gives prepaid customers one more place they can top-up. Because of increased availability of refill cards — I’ve seen them at CVS, Wal-Mart, and plenty of other outlets — you don’t have to go to the carrier’s retail store to add more minutes to your account. The availability of refill cards is also beneficial for teenagers who do not have a credit card.

I’ve also seen an increasing number of prepaid phone starter kits sold at convenience stores in my area (which is not San Angelo, Texas, nor is it within 1,500 miles). If my prediction about prepaid becoming a more widely sought alternative in times of economic downturn is true, I think we’ll see an increasing market for these, too. They allow consumers a cheap glimpse into the service of a carrier. If they don’t like it, they can switch to another one.

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