The urgency of now. Immediate consumables. Live for today.
These truisms celebrate the power of the moment and are codified by Emily Dickinson’s “Forever is composed of nows” and the profundity of A.A. Milne’s short dialogue between Winnie the Pooh and Piglet.
Pooh: “What day is it?
Piglet: “It’s today.”
Pooh: “My favorite day.”
This foot-to-the-metal, accelerator-driven philosophy is confronted by another view: “Slow down, you move too fast,” sang Simon & Garfunkel.
Smell the roses. Drink the coffee. Slow and steady wins the race.
And this pearl from Bill Gates: “Bad news is a headline … gradual improvement is not.”
Two modes of personality—one of intense urgency, the other a calibrated progression. Both are playing out in dramatic ways in the convenience channel, most notably among some publicly traded heavyweights.
More than five years ago, Alimentation Couche-Tard began a hostile takeover bid for Casey’s General Stores. The Canadian retail giant asserted that Casey’s stock was undervalued, that its growth was sluggish and that absorption would yield the greatest value to shareholders. Casey’s countered that its growth strategy was prudent, its operations strong and its return to shareholders stable. It also spoke of a leading retail presence and a clear strategic road map to serving predominantly smaller neighborhoods.
One approach is guided by optimizing shareholder value, and the other by maximizing customer experience. While they differ on which comes first, both recognize that shareholders and consumers are critical.
So which philosophy was right?
A look at Couche-Tard and Casey’s suggests both were right. Couche-Tard continues to digest sizable entities, from The Pantry in North Carolina to Topaz in Ireland. Couche-Tard’s Circle K brand will not beat our industry’s best-run operations on a store-by-store basis, but it masterfully leverages its supply-chain logistics, occupies strategic corners and has built a robust national brand.
Casey’s methodical growth is a case study in incremental brilliance. It is the first in the channel to successfully extend its core foodservice program (made-from-scratch pizza) to home delivery. It grows primarily through new builds and modest tuck-in acquisitions.
A look at the stock value of Couche-Tard and Casey’s demonstrates the efficacy of both the urgency of now and slow and steady wins the race. The key is to know who you are and stay true to your values.
These dueling approaches are playing out at CST Brands, spun off from Valero Energy Corp. three years ago. No one disputes the stock value of the San Antonio-based company is undervalued and that CST must do a better job educating Wall Street on its short- and long-term initiatives. But as Wells Fargo analyst Bonnie Herzog acknowledges, Wall Street is, by nature, impatient.
In roughly 36 months, CST has made several key acquisitions, begun rolling out a reimaged program with expanded foodservice, ushered in a new-to-industry plan with larger-format stores and charted a growth platform that will stretch its base beyond Texas.
Shareholder activists are right that CST has at times stumbled to communicate its road map clearly and that the company’s upper echelon would benefit from reinforcement on the retail end. But are activists right to push for new leadership or a new owner?
The answer depends on if you believe CST should be the next Couche-Tard or the next Casey’s.
CST lacks the multigenerational retail legacy of Casey’s, and its Southwest market is more hotly contested than the Midwest, which Casey’s, along with Kum & Go, have long dominated. It is also true that CST president, CEO and chairperson Kim Lubel is an attorney by trade and not an operator.
That said, CST has retained strong retail minds such as Hal Adams, who last month was promoted to president of retail operations; and fast-tracked Jack Cushman, the respected former foodservice director of Nice N Easy Grocery Shoppes, which CST acquired in 2014.
Where CST is most vulnerable is its board of directors. It has gender and age diversity and depth across real estate and finances/accounting. But there's a shortage of minds with retail-operations experience.
Ultimately, I believe CST will be a blend of both Casey’s and Couche-Tard. Its leadership thinks more along the lines of Casey’s, with a preferred appetite for controlled growth, increased ground-ups and in-store focus. But external pressures will drive CST to accelerate acquisitions, outside recruitment and short-term-value optimization.
Mitch Morrison is vice president and group editor of Winsight’s Convenience Group. Reach him at mmorrison@winsightmedia.com.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.