A Tale of Two Leaders

Susser, Krause share insights to growth during good times and bad

Samantha Oller, Senior Editor/Fuels, CSP

ATLANTA -- One is public, one is private. One is based in the Midwest, and the other in the Southwest. But Susser Holdings Corp. and Kum & Go LC have much in common, as attendees learned at the panel, A Tale of Two Retailers, during the Thursday general session at the NACS Show in Atlanta.

Let's start with the strong family backgrounds, a commonality the two also shared with panel moderator Sonja Hubbard, CEO of E-Z Mart Stores Inc.

Panelist Sam Susser, president and CEO of Susser Holdings Corp., Corpus Christi, Texas, introduced the company of 500 Stripes and [image-nocss] Town & Country stores in three states and a fuel distributorship as a "family-led business," with its origins as a few service stations operated by his grandfather, to his father's growth of the company into a major 7-Eleven and later, Circle K licensee. Now with Susser's leadership, the retailer has forged its own identity and established itself as a foodservice leader.

Kyle Krause, president and CEO of Kum & Go, West Des Moines, Iowa, with 435 stores in 11 states, worked in his grandfather's grocery store and under his father, W.A. "Bill" Krause, former company CEO, for 17 years. His brother Kevin heads up marketing. While they've had their disagreements, "The key piece is to allow the kids the latitude to make mistakes," he said, counting himself among "the kids."

Susser noted that some of his company's past business transactions have involved family members, and credits Susser Holding's strong board of directors for providing not only an outside perspective but also a process for evaluating transactions.

Next comes a strong company culture. Some years back, Kum & Go hammered out seven qualities that define the company, including caring, discipline, family, integrity, professionalism, teamwork and work ethic. It's a mantra that draws more than 50,000 people a year to apply for jobs at Kum & Go.

"The critical piece for both of us is people," said Krause. "It allows us to do what we're doing."

"We just have to walk the talk to be real leaders," said Susser, who added that "eyes are on us" to practice what company leadership preaches.

Innovation is another key driver of both companies. Kum & Go has hired a full-time social media associate to oversee its activity on Facebook, Twitter and other portals and a category manager dedicated to the Latino consumer. Perhaps most famously, it named a manager of sustainability, who has overseen the retailer's Leadership in Energy & Environmental Design (LEED) building initiative. The company is committed to building LEED-certified sites where possible to establish itself as a sustainable, conscientious member of its community.

For Susser, its key differentiation is foodservice. The company made a commitment to decrease its reliance on tobacco, and it has been able to make good on it thanks to growing foodservice sales from its proprietary Laredo Taco Co. program, which has grown from $70 million to $162 million in annual sales since its inception in 2001. Foodservice now contributes 29% of Susser's gross profits, compared to 10% for tobacco.

Susser considered the "Walmarting" of the economy and retail space a prime opportunity for c-stores to "crack the code" with consumers and differentiate themselves; for his company, foodservice has helped crack that code. "We don't try to out-Walmart Walmart," he said.

Inner strength such as this has helped both Kum & Go and Susser come out ahead during the recession.

The Midwest region of the country did not get hit as hard as some others; therefore, Kum & Go enjoyed "wonderful sales growth" during the down economy, said Krause. It avoided dramatic shifts in strategy, and aimed "to make fewer mistakes."

Krause also noted Kum & Go's precision in growth; in the last six years, 381 stores have gone into and left the store system. "We're 51 years old, but we have to keep evolving," he said. The retailer's new 5,000 square-foot Titan store model is part of that evolution, a larger footprint that will accommodate greater sales volumes. The 20 to 30 new sites Kum & Go builds each year are aimed at helping to further finance that growth.

For Susser, the economy notwithstanding, the growth environment is strong. With a big population boomthanks to relocations from other states and the second highest birth rate in the United States"we are open for business in Texas," Susser said.

The retail chain did not begin to feel the economic malaise until late 2009. To help Susser Holdings stay strong when it was not yet clear if the economy hit bottom, the retailer shored up on liquidity and access to cash, trimmed expenses and re-examined its procurement.

Cash flow for Susser is driven primarily by retail; indeed, 70% of gross profits come from inside the store. Susser noted that the company has been able to drive growth in its oldest stores, typically former 7-Eleven and Circle K sites from its previous existence as a franchisee and licensee. "They're our ticket to the right to continue to make investments."

And being aggressive helps, too. "We need to fight for every single transaction," said Susser, adding that the stores are focused on growing transaction size. Thankfully, the strategy has paid off, and now Susser, which spent the last 18 months playing defense, is now playing offense.