Ideas 2 Go: Marts, Coves & Drive-Thrus
In a video montage of retail creativity and business best practices, the 2011 Ideas 2 Go session featured nine retailers, each with a concept that should inspire others looking to refresh their own offerings. A sampling:
- Scaled-Down Opportunities: Pak-A-Sak Inc. has repurposed two sites originally designed as Starbucks to fit a smaller version of its c-stores. As customers queue up in the drive-thru lane, they can see the store’s selection of packaged beverages through large glass windows. Sixty-seven percent of sales are made through the drive-thru.
- Healthful Fixings: Nourish Market, a single-store operator in McLean, Va., specializes in homemade prepared foods and has gotten a boost by catering open houses for local real-estate agents. Other offerings include organic wine and gluten-free beer and crackers.
The Coco Cove store brand from The Sullivan Family of Cos., Honolulu, features a deli and sushi case. At the store’s salad bar, customers pick their own greens and fixings and have the salad tossed fresh.
Healthful living and truckers may not always be synonymous, but Russell’s Truck & Travel Center, Glenrio, N.M., is hoping to make the connection clearer. The site offers “an oasis in the desert,” including a fresh-fruit program and exercise equipment for truckers.
- Bold Design: Open Pantry Food Marts of Wisconsin Inc., Pleasant Prairie, Wis., also aims to remake the convenience mold with one of its newest sites. The high-end store includes 72-inch gondolas, flat-screen TVs above the coolers in lieu of signage, and a beer vault stocked with a huge microbrewery offering.
Honolulu-based Aloha Petroleum’s Aloha Island Mart chain has also used design to make a new convenience statement with a tear-down and rebuild. The 3,000-square-foot site, designed by Joseph Bona of retail branding and design firm CBX, has a Polynesian feel to tie into its tropical surroundings. Tall, loft-style ceilings and large windows lend an open feel, and angled gondolas enable customers to more easily navigate the store. —Samantha Oller
A Tale of Two Refiner-Marketers
Valero, Speedway execs share rare passion for retail
At a time when refiners are quickly divorcing themselves of their retail holdings, two refiner-marketers are embracing their street presence as a counterbalance to the cyclical drop in refinery margins. In the “Tale of Two Retailers” panel at the 2011 NACS Show, moderated by Cumberland Gulf CEO Joe Petrowski, Tony Kenney of Speedway LLC and Gary Arthur of Valero Energy presented their retail philosophies and opportunities.
For Valero, San Antonio, retail is focused on five platforms, Arthur explained:
- Foodservice value and quality.
- Private label, which began with an offering of 100 SKUs and will expand by 50 more SKUs in 2012.
- Self-distribution, through Valero’s Texas warehouse.
- An emphasis on the core categories and big brands within beer, tobacco, packaged beverages, snacks and candy.
- The expansion of services such as car wash, ATMs, lottery and Redbox DVD rental kiosks.
With 995 company-ops in eight states and 1.2 million customers a day, Valero is a leaner, more productive company since culling underperforming sites over recent years. The result: Valero’s Corner Store sites are three times more productive than the average of only a few years ago.
Speedway, Enon, Ohio, has also hit its fighting weight, spun off with Marathon’s refining and terminal business into Marathon Petroleum Corp. (MPC), and down to 1,375 sites after it exited non-key markets. As the fifth-largest U.S. refiner and fourth-largest company-owned and operated convenience chain, Speedway serves more than 2 million customers a day, with a dedication to elevating its brand positioning.
Components of this effort include:
- Customer service, delivered by 19,000 Speedway employees.
- The Speedy Rewards loyalty program, Speedway’s “go-to-market strategy,” with 3.8 million active members.
- A dedication to consistency in its retail offering across the network, which develops trust and confidence between the retailer and its customers and forms the foundation of its brand equity.
- An embrace of technology to help trim costs and keep the company running efficiently.
Petrowski asked both execs why their companies continue to grow the retail and wholesale distribution businesses as many refiners exit them. Arthur explained that Valero’s investment in retail and its growing ethanol business provide counter-cyclicality to refining.
A big point of difference between Speedway and the majors, said Kenney, is that his chain has differentiated its retail business—Speedway—from its distribution brand, Marathon. In addition, the retail and wholesale businesses create flexibility and synergies for MPC’s pipeline and terminal businesses.
Petrowski asked whether the general consolidation trend in the c-store channel will expand. Kenney said the c-store model has replaced the old two-pump setup and is more viable in the long term. “I think there is still room for rationalization of assets,” he said, but he sees them being replaced by larger sites.
“We will see some decline, but not as dramatic as over the past 20 to 30 years,” said Arthur, who pointed out that the channel is still very fragmented. At the same time, sites are much more efficient and productive.
One area of industry focus—foodservice— is still a work in progress at both chains. Kenney described Speedway as a “good foodservice operator, not a great one,” and said the industry has to raise the perception of what it can offer. Arthur said Valero was not built on foodservice, but it has come “a long way,” with its advanced foodservice program rolled out at 40% of its sites within the past five years of its existence. Even so, it is no silver bullet.
“Foodservice is not perfect for every store,” he said. “It’s just one of those levers we pull each day to improve our business.”
Getting Good
Life is good founder, chief executive optimist details company’s evolution
It all started at the family dinner table. Bert Jacobs, chief executive optimist of Life is good Inc., grew up knowing that he had to be there at 6 p.m. every day “no matter what was going on, no matter what was happening in the house.” And he knew that his mom would look around the room at her six kids and say, “Tell me something good that happened today.”
He told attendees at the NACS Show’s opening general session: “It’s a very simple thing, but it made us focus and start a conversation around something good that was happening. … Our mom really embedded that optimism that became Life is good.”
Optimism can be a self-fulfilling prophecy, he said. “As soon as you believe that there are opportunities there, opportunities open up,” he said. “Optimism is the most powerful tool you have—not just for your business, but for your life.”
Bert and his brother John grew up to start the Life is good clothing company, known for its designs focused on the company “mascot” Jake and optimistic sayings, with a combined $78 in 1994. Prior to that, the two sold T-shirts out of an old van they called “The Enterprise,” which they hoped would “boldly go where no T-shirt guy has gone before.”
One day, they were discussing negativity in the media. “We realize that difficult things happen in the world. But good things happen, too,” he said. “And we talked about the impact of always being told what’s wrong with the world, and rarely being told what’s right with the world.”
During that discussion, John said, “What if we created a hero whose power was his optimism, so he’s like Superman, but his power is his disposition and he’s always happy … and therefore, he’s capable of anything.”
Out of that conversation, Jake was born. The first batch of 48 Life is good T-shirts sold out in 45 minutes to a mix of people that included a Harley-Davidson guy, a schoolteacher and a kid on a skateboard. “And we thought, ‘People are starving for good news … People are starving just to celebrate life,’ ” Jacobs said.
Without any advertising, and relying solely on word of mouth, Life is good has grown from that $78 into a $100-million company. It also has a few other unique distinctions: The company is active with its Life is good Playmakers, a nonprofit dedicated to helping kids overcome life-threatening challenges. (Jacobs’ speaking fees go to the organization.)
It also holds music festivals to raise money for charity and has even become part of the Guinness Book of World Records for having the most lit jack-o’-lanterns displayed (30,128) at its pumpkin festival.
“To us, the trick is to blur the line between work and play. If you can make your work about your play, about what you care about the most, then you have it beat,” he said. The company’s motto has become, “Do what you like. Like what you do.”
Going forward, Jacobs said Life is good is looking at extensions of its offerings, including home goods, footwear and international expansion.
From the beginning, he and his brother realized they might be onto something special: “If we could make this thing work, this simple artwork and this idea of spreading optimism, spreading good vibes, we thought: That could be something.”
Coming Together
Swipe-fee reform was the “biggest legislative victory in [our industry’s] history,” Miller Oil Co. president and NACS chairman Jeff Miller said during the opening general session. Not only will the industry and its customers see $830 million in savings because of swipe-fee reform, but the victory also “showed what happens when we come together and we speak with one voice.”
“It was something no one outside our industry thought would ever happen,” he said. “But we thought that it could happen. We fought together. And we won together.”
Reading from a news report about the battle, Miller said, “Big banks have not lost many legislative fights in Washington. …Wall Street can beat almost anyone in a legislative brawl, but it cannot defeat the entire American retail industry.
“Let me summarize that: We came together. And we kicked ass.”
What We Learned and Heard at the Show
“You need to be buying for your customers, not selling for the suppliers.” Steve Montgomery, president of b2b Solutions LLC, in his presentation “Negotiating for Products Like You Have 100 Stores,” at NACS
If you want to experiment with organic, start with coffee and bottled-beverage LTOs, which will attract the organic clientele without alienating existing customers, according to Catherine Porter of Sara Lee.
“When you build your own brand, unless you screw up, it’s not going to be taken away.” Stewart Spinks, founder and CEO of The Spinx Co., on the benefits of having your own retail brand
What do you need when applying for a loan? Sid Gregory, president of Gregory & Associates, said:
- Plans and specifications for the project
- Three years of financial statements, including:
- Balance sheet
- Statement of cash flow
- Tax returns
- P&Ls
Reasons why the growth of hypermarkets is lagging, vs. predictions, according to Joe Leto of EAI:
- Site saturation
- Economy delayed/curbed plans for growth
- No significant new entrants
- Smaller formats may not have room for fuel
- Walmart’s national rollout of fuel hasn’t happened; it remains regional.
Rockland, Mass.-based Tedeschi started its private-label efforts with 2-liter bottles of carbonated soda, and today those bottles account for one-third of its carbonated category. “The quality has got to be there; it’s not always about price,” said Joe Hamza, president of sales and marketing.
Fueling Loyalty:
- If a fuel loyalty program does not attract store customers, it is a losing proposition.
- The key is to reward the best in-store customers and keep the offering dynamic.
- Create minimum performance criteria for the program, measuring it through a strong I.T. and accounting backbone.
- For point-based systems, consider letting customers choose their reward. “Give the consumer free will—you’ll be surprised by how little of the time they use discounts for fuel,” said Pat Lewis of Oasis Stop N Go/Kickback Points.
- If considering a partner program with a grocery chain or other retailer, understand who owns the customer transactional data. Here, coalition programs offer greater access to that valuable information, said Lewis.
For a renewable-fuels program to work, education and financial incentives for the consumer are critical, said Scott Zaremba of Zarco 66. This is especially key during market inversions—the price of crude becomes cheaper than corn—or the loss of tax incentives, such as the end of the ethanol tax credit this December.
Valero has gone to all private label for its peg bag candies, because branding isn’t a factor in consumer choice for the product, according to Hal Adams, vice president of retail merchandising for San Antonio-based Valero Energy Corp.
Brokaw Seeks Reporting ‘Context’
Is there truth in journalism? Ask Tom Brokaw and he may just say no.
The former anchor of “NBC Nightly News” readily admitted to attendees at the NACS Show’s closing session that MSNBC is liberal and Fox is conservative. What he prefers to do is “put news in context.”
From that perspective, he thinks of journalism as the work of a historian, an observer, which may be appropriate in light of his 1998 best seller, “The Greatest Generation,” which tells the stories of those who fought in World War II.
Brokaw ran the gamut recalling his life experiences, relating stories on everything from broadcast news legend Walter Cronkite to his own appeal for volunteerism in uncertain times.
Recalling a story with Cronkite being in line at a gift shop, Brokaw said a woman tapped the former CBS news anchor on the shoulder and said, “Do you know you look like Walter Cronkite before he died? … [He] is dead, isn’t he?”
Then Cronkite’s wife, Betsy, who was also in line said, “If he isn’t by now, the old S.O.B. ought to be.”
But Brokaw also got serious. Citing how he gives several college-graduation speeches a year, he said in the last two years many of those young people have had one or both parents lose their jobs. Many no longer believe that a college education will lead to stable employment. And for a significant number, their family homes may be worth less than the mortgages on them.
Bringing up the “Greatest Generation,” he described that population of Americans as one that grew up in the deprivation and sacrifice of the Great Depression, only to be asked to take arms against two of the most developed military forces in history.
“And yet they never stopped re-enlisting as citizens,” he said, pointing out how those men and women came home to obtain college degrees, raise the largest generation of Americans (the baby boomers) and put the country on the path to economic domination. —Angel Abcede
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