The retailer, which operates more than 1,600 convenience stores throughout the Southeast, began an aggressive store remodeling program in 2010 based on offering more fresh food and a revamped line of Bean Street Coffee beverages. Results from the program so far have been encouraging, Marks told shareholders Tuesday at the company's annual meeting.
Program Fresh provides stores with Bean [image-nocss] Street Coffee and a broader assortment of on-the-go meal and snack items, such as fresh pastries, breakfast and lunch sandwiches, salads and fruits. An associated store redesign includes fewer gondolas, wider aisles and fewer signs in store windows to open the stores to consumers. (Click here for previous CSP Daily News coverage.)
After the meeting in Cary, N.C., Marks sat down for an interview with the News & Observer:
Q: What's the latest on the Fresh initiative?
A: The Raleigh and Charlotte markets have been good. I don't know if we've said where we're going next, but we will begin construction in a third market by mid-April. The Raleigh stores in particular have done very well, not just with coffee, but fresh sandwiches.... It's a slow burn because you have to go in and do a lot of work. But it's doing well.
Q: If you can't say where it is, can you say how large the third market is?
A: Between 40 and 45 stores.
Q: With gasoline prices on the rise, what are consumers doing and telling you?
A: A lot of people, especially coming out of the recession, are still in a situation where disposable income is tight. If they have a certain amount of money set aside for a trip, that's still what they put in. We see fewer gallons per trip, and they come more often. We also see a slight impact on things like cigarettes. They'll buy one pack instead of three, for instance.
Q: So how does that affect The Pantry? Analysts are already predicting that rising fuel costs may pinch profit margins on gas this year.
A: It's very counterintuitive for the consumer, but as oil prices go up, our margins really do get squeezed. It's hard to get ahead of all the price changes. It's definitely challenging when gas prices go up like this.... We issued our guidance for this year, and I think it's still too early to change that guidance. It can turn so quickly.
Q: The title of this year's annual report is "Transforming the shopping experience." Is it safe to say that continues to be your goal for 2011?
A: What we know is we have to grow our business in-store and become less reliant on gasoline profit over time. No matter where you look, gasoline consumption over the next five to 10 years is projected to be flat or down. It's a declining category. It's very hard to differentiate yourself on anything except price.... We want to continue to engage by focusing on the consumer.
Click hereto read the full interview.
Click here for "The Pantry Pt. 3: The Marketing Plan," a recent CSPTV report on The Pantry's marketing efforts, including coffee.
Also, click the links below to view additional CSPTV segments featuring The Pantry:
"The Pantry Pt. 2: The Store Tour."
"The Pantry Pt. 1: The CEO Interview."
"A Fresh Outlook on C-Stores."
(Andclick here for previous CSP Daily News coverage of the Pantry's foodservice initiatives.)
Based in Cary, N.C., The Pantry is the leading independently operated c-store chain in the southeastern United States and one of the largest independently operated c-store chains in the country. As of February 7, 2011, the company operated 1,662 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.
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