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3 Retailers Leading the New-to-Industry Surge

Chains share the evolution of their growth strategy, how they solved the real-estate equation

RANCHO PALOS VERDES, Calif. -- The drumbeat of announcements about new-to-industry (NTI) convenience stores from some of the channel’s largest and best-known chains has been growing. There’s the wave of c-store chains launching in Florida—Wawa, Thorntons and CEFCO to name a few—and operators entering new markets, such as QuikTrip’s debut in San Antonio and Austin, Texas, and Kum & Go’s introduction to Denver.

“We’re seeing a greater pause in how we’re using our locations,” said Mitch Morrison, vice president of retailer relations for Winsight at the 2018 Outlook Leadership conference’s opening general session. To dig more into the factors behind the trend, Morrison led a panel of three retailers who are leading this NTI surge.

For QuikTrip Corp., Tulsa, Okla., the evolution to its current model has been 60 years in the making.

“One thing that has changed dramatically is the ability for people to get in and out of the stores,” said panelist Stuart Sullivan, vice president and CFO of QuikTrip. He pointed to the modern QuikTrip’s multiple entrances and the layout of its lots, which allows the c-store chain of more than 780 stores in 10 markets to maximize the efficiency of its sites.

Rutter’s may be smaller than QuikTrip, but the York, Pa.-based chain of 60 sites has “a somewhat similar story,” said President and CEO Scott Hartman. It too is committed to new builds. “We like to own our own dirt,” he said. And more recently, it has been searching for sprawling lots, opening its largest location to date—a 10,500-square-foot c-store on 11 acres of land. For Rutter’s, it was about providing room to introduce a few new-to-the-retailer offers: video gaming and beer caves.

In 2017, the state of Pennsylvania passed legislation that allows truckstops to have video-gaming terminals, and so Rutter’s built a site that fits the state’s requirements. Similarly, legislators opened beer and wine sales to c-stores for the first time only two years ago, and so Rutter’s has added beer caves to all of its new locations, despite the hefty license fees.

In fact, Hartman believes that Rutter’s biggest mistake has been to not buy enough land for some of its locations to expand. “We really understand we need to grow sales and need to anticipate ahead of time to have enough land,” he said.

For Kum & Go LC, West Des Moines, Iowa, its recent launch into the Denver market was made possible by the lessons it learned from entering the Little Rock, Ark., and Colorado Springs, Colo., markets. The retailer is entering Denver with its Marketplace 4.0 concept, which features 5,800 to 6,100 square feet of retail and kitchen space, including a full-service fresh market and outdoor seating.

In its move into Denver, Kum & Go was certain to implement a couple of best practices: quickly introduce its culture to new associates and customers by relocating some of its best general managers into the new market, where they could build teams and train associates for promotion into management positions. “We want the best and brightest, but our core team is doing work the way we want to do work,” said Todd Meiners, operations manager.

Another important tool for success: philanthropy. Kum & Go donates 10% of its profits to local charities. “All of this helped us to quickly become part of the community and not be seen as an out-of-town organization,” Meiners said.

Kum & Go also learned that timing its construction pipeline was critical to its success in a new market. For example, in Colorado Springs, the slow pace of store openings—due to local dynamics that bogged down construction approvals—slowed down the chain’s introduction into the community.

To keep its new builds in new markets, QuikTrip focuses heavily on establishing a good relationship with local planning, zoning and government representatives. The success of its model—where every store has a nearly identical inside offer and customer experience—depends on its ability to master the NTI model.

“Consistency of the offer is key to our success,” said Sullivan. “The only way we can make sure is if we build it.”

The CSPOutlook Leadership conference is being held Aug. 19-22 at the Terranea Resort in Rancho Palos Verdes, Calif. Next year’s Outlook Leadership conference will be held Aug. 11-14, 2019 at the Omni Grove Park Inn, Asheville, N.C.

Photo: Stuart Sullivan (left), vice president and CFO of QuikTrip; Scott Hartman, president and CEO of Rutter's; Todd Meiners, operations manager for Kum & Go; and Mitch Morrison, vice president of retailer relations for Winsight.

Photograph by W. Scott Mitchell

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