LAVAL, Quebec – As Alimentation Couche-Tard Inc. continues its global rebranding to a single Circle K banner, it shed some light on its pricing strategies regarding tobacco, revealing what it’s doing specifically to drive traffic to its Pantry convenience stores.
In its most recent earnings call, Couche-Tard, parent of Circle K, said it has used price to draw more traffic, taking a short-term hit on margin growth.
“In the Pantry specifically, we needed to grow traffic there, and so we’ve introduced intentionally and consciously some deflation in key categories and we’ve decreased our margins specifically … in tobacco,” said Brian Hannasch, president and CEO of Couche-Tard. “You know as we rebrand and introduce our offers we need to drive more traffic in there for people to experience those offers, so that’s been a very clear part of the strategy.”
Hannasch, however, said that total gross profit inside the stores and the Pantry is growing at a “very, very healthy rate.”
In its quarterly earnings call in late August, Couche-Tard officials reported positive same-store sales growth and improvement in year-over-year gross margin percentage for the quarter; however, both the same-stores sales growth rate and year-over-year gross margin improvement decelerated.
Laval, Quebec-based Couche-Tard’s network includes 7,888 convenience stores in North America under the Circle K and other brands. The network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all 10 provinces. In Europe, Couche-Tard operates a retail network across Scandinavia (Norway, Sweden, Denmark), Ireland, Poland, the Baltics States (Estonia, Latvia, Lithuania) and Russia through 10 business units.
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