EL DORADO, Ark. -- Even as its unit sales volume in tobacco declines, Murphy USA Inc. is seeing margins expand as consumer trends and company strategies begin to pay off.
Starting with the consumer trend of purchasing more premium products, Andrew Clyde, president and CEO of El Dorado, Ark.-based Murphy, said the company has seen higher margins within the category, and the reasons are varied. When asked about “premiumization” within the category, Clyde said the story was partially about consumers buying more premium items but also manufacturer discounts, which also contributed to a higher mix of premium sales.
Here’s other points Clyde made about the tobacco category ...
Another factor was Murphy's switch last year to South San Francisco-based Core-Mark as a supply chain partner, which “significantly enhanced” margins, Clyde said.
Murphy wants to “leverage digital and other assets that the manufacturers have and so, as we think about our loyalty programs and the way we want to interact from a digital marketing standpoint differently with our consumers, we are going to be pushing a lot on that front as well,” Clyde said.
Clyde added: “Just from a capability standpoint, we’ve added resources within the category to get sharper around our pricing and making sure that we’ve got the most competitive prices out there while recognizing there are more retailers in the space, like the dollar stores, that are selling at low prices. So it remains a competitive and dynamic segment, but we still feel very good about the segment and its potential for margin growth over time, despite the systemic unit decline that we expect to continue.”
Get today’s need-to-know convenience industry intelligence. Sign up to receive texts from CSP on news and insights that matter to your brand.
CSP’s Top 202 details the largest chains in the convenience-store industry and the biggest M&A stories of the past year. Welcome to a deep dive into the c-store landscape.
Category sales performance in Beverages, Candy, General Merchandise, Packaged Food/Foodservice and Snacks.
The industry’s largest distributors by sales volume
Corporate retail news affecting the convenience-store industry
The latest information on products and trends in the convenience-store and foodservice industries.
Peek inside new convenience stores to uncover the best in retail store design across North America.