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Simple vs. Nimble: 3 Retailers on Offering Value to Customers

Should c-stores stick to a few areas of expertise or roll with the changes?

RANCHO PALOS VERDES, Calif. -- As more consumers bring more business online and seek to redefine retail, convenience-store operators must ask themselves: Are c-stores offering the best value? And if c-stores are not offering the most value, are tech solutions such as mobile checkout or online delivery the answer? Mitch Morrison, vice president of retailer relations for Winsight, led a three-retailer panel on these subjects the final morning of the 2018 Outlook Leadership conference.

Cars and trucks may be growing more fuel-efficient each year, but Billy Milam, president of Atlanta-based RaceTrac Petroleum, said fuel consumption and miles driven are up year over year. Further, he said c-stores should be wary of chasing after every tech innovation or potential disruptor on the horizon. “What ends up happening is you do a whole lot of things and not particularly well,” said Milam. He suggested c-stores find three to four areas of expertise and stick to them.

Milam used QSRs, including Five Guys, Raising Cane’s Chicken Fingers and Chick-fil-A, as lessons in profitable simplicity. “They limit their menus and they limit complexity,” he said. Meanwhile, c-stores have to juggle fuel, lottery, alcohol and more, all on top of a growing foodservice category.

Diesel demand, unlike other fuel categories, is declining due to fuel efficiency and miles driven, said Ken Parent, president of Pilot Flying J, based in Knoxville, Tenn., which juggles both consumer and commercial vehicles. As demand for some goods or services dips, efficiency becomes increasingly important, whether in the store or the forecourt, Parent said. “We have mobile fueling for both our gas and our diesel customers,” he said. This allows for easier and faster transactions and allows Pilot to market directly to customers through the app.

Parent does not confine his focus on efficiency to the consumer but also extends it to the employee. “We’re looking at everything we can do to minimize labor and make things efficient and simple,” he said. Pilot makes an effort to schedule staff during peak hours, he said. The chain also focuses on training employees in their first 90 days on the job due to the industry’s high turnover.

He also said that a focus on staying nimble and efficient comes with risks. Parent briefly described a streamlined checkout process Pilot tested at 40 stores, mostly in Texas. “It has not gone really well,” he said. The software in the system was too slow and the system was difficult for customers trying to pay with coins. Even so, credit cards performed well in the test, he said; if the company can get faster software, he is still interested in finding a system that allows one employee to manage three or four checkouts.

But as the need for c-store operators to stay nimble and ready to change increases, Rocky Dewbre, CEO of Tulsa, Okla.-based Empire Petroleum, doesn’t see the fast pace of mergers and acquisitions slowing down anytime soon. “Consolidation has been a theme that will absolutely continue,” he said. “We’ve been in a low-interest-rate environment. It’s starting to tick up a bit, but it’s still low relative to historic norms.”

Both Dewbre and Parent hinted that if delivery continues to gain traction among consumers, Empire and Pilot might consider flipping some stores into fulfillment centers for delivery. And while Milam did not indicate if RaceTrac might do the same, he did acknowledge that the delivery business has grown beyond the classic pizza delivery model. “I don’t think it’s the same thing; I think it’s something we need to be attuned to,” he said.

The CSPOutlook Leadership conference was held Aug. 19-22 at the Terranea Resort in Ranchos 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.

Photograph by W. Scott Mitchell

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