Breaking Patterns
Culture of innovation and change helps Stripes reinvent itself
For a company with 22 consecutive years of same-store sales increases, falling into the same patterns is a path to slow and steady ruin.
The answer? For Susser Petroleum and its 525-store business, it’s to instill a culture of innovation and change.
“Look for the wallpaper,” said Steven DeSutter, president and CEO of Susser’s Stripes chain, describing how many routine—and possibly ineffi cient or uninspired—processes become automatic and blend into the background. “Change the pattern.” DeSutter outlined how his chain developed an overall strategy, one that encouraged open communication and exchange of ideas. The next step was to develop and support processes that would engrain these changes into people’s daily routines. “How do you get [ideals such as] ‘clean, fast and friendly’ to happen on the graveyard shift?” he said.
DeSutter joined the Corpus Christi, Texas-based Stripes chain after years of heading companies such as Londonbased BP on both domestic and international fronts. Preferring what he called the “people businesses” over manufacturing, DeSutter brought his expertise to c-store retail with Susser more than two years ago. Working with many layers and departments within the chain, DeSutter and his team fashioned a strategic model that would reposition the company for innovation and change.
Their first step was to develop a strategy specific to the company’s internal passions that everyone could understand. Intentionally simple, the plan laid out values that addressed areas of operation, fi nance, marketing and human resources. It also needed those driving it to believe in “continuous improvement” and employ an array of procedures that support that value. One of their tools was a “balanced score card,” a measurement tool tied to store data and prioritized by tasks that really affected the company’s bottom line. In addition, the language with which district managers used had to change to one of improvement vs. policing.
Instilling change also required a committed, consistent flow of communication. DeSutter faithfully and deliberately produces a weekly voicemail that’s sent companywide to update employees on current initiatives and the chain’s progress. “Communication is a contact sport,” he said. “The [importance] of the initiative needs to be matched by the degree of communication.” For example, a complex upselling program could never be effectively executed after employees read only one e-mail.
“Communication is lubrication for change,” he said. Finally, he said chains must encourage employees to “become chief pattern breakers,” with the idea that “patterns are the enemy of change.” “Our world is full of wallpaper,” he said. “So drive a different way to work; ask yourself, ‘Why am I doing this [particular task]?’ Then new worlds will emerge.” —Angel Abcede
Standing Out
Portalatin: Fuel rewards, meals big opportunities for c-stores
The good news is that customers are returning to convenience stores for their shopping needs. However, therein lies a challenge: how to make sure they come to your c-stores. The average chain saw about 7% traffic growth over the final three quarters of 2010, according to David Portalatin, director of industry analysis for The NPD Group, Houston. Where retailers should direct their attention, however, is to chains that experienced growth of 10% or more. Portalatin outlined efforts that make those chains stand out:
- Delivering Value. “We still have a consumer that, although recovering, is recovering very slowly, and the consumer is still very, very focused on value,” Portalatin said. Value offerings at these chains were seen in both fuel and product pricing.
- Retail Execution. “The consumer is telling us things like, ‘We choose this store because it’s a cleaner store, and it’s a better merchandised store.’ We also see that these retailers, because of that level of execution and performance over time, have established some equity around the retail brand.”
- Differentiated Offer. Portalatin pointed out that many consumers choose stores that have a broader selection of products or services, but that kind of variety doesn’t have to be across the board: “What the data suggest is that these retailers … have figured out a spot where they can put a stake in the ground, a category that they hang their hat on that says we will be best in class in this category.”
- Day-part Development. Many of the top-performing retailers have double- digit increases over the industry average in the morning day-part and afternoon snack occasions, with many seeing as much as 30% traffic growth at lunchtime. “That’s a real need in the marketplace. It’s … certainly an opportunity that I would encourage you to explore,” he said.
Fuel and Food
Going forward there are three influencers that will affect the industry: driving patterns, with one in five c-store trips related to work/commute; the economy, with unemployment rates remaining high; and overall consumer sentiment, with spending being need-driven and consumers deal- and discount-oriented.
With that as a context, Portalatin pointed to two other trends/opportunities in research conducted specifically for CRU: fuel rewards and foodservice offerings.
“Fuel rewards,” he said, “have moved the marketplace greater than anything that we’ve been able to measure in our data in 30 years.” He said that consumers were asked why they purchased the brand of gasoline they most recently purchased. Historically, rewards, coupons, discounts and promotions would have accounted for 2%. Today, that number has soared to 14%. Beyond that, 27% also made purchases in the store on that same occasion.
Portalatin also pointed out that 55% of the discounts were only 1 to 5 cents off per gallon, but that 40% of consumers said they wouldn’t buy the brand without it: “The discounts are not that deep; it’s just that consumers are addicted to discounts right now.”
As for foodservice, 39% of consumers said they had never eaten at a c-store. And while there may be attitudinal hurdles to overcome, in terms of consumer perceptions of c-store food, inflation in cost of goods has meant that c-stores might actually be able to provide food at a lower cost than consumers will spend to make it themselves.
In conclusion, he cautioned, “Consumers are coming back to your channel; you’ve got to figure out if you’re like those top 10% traffic chains, or whether you’re just in there on average with everybody else.” —Linda Abu-Shalback Zid
Winning Ways
CSP honors NOCO Express, PS Food Marts, Maverik with CRU Awards
With focuses on customer experience, community leadership and retail execution, CSP awarded three CRU Awards to retailers in recognition of their retail operations.
Customer Service
Henry Bays accepted the Customer Service Award on behalf of NOCO Express. From the point-of-purchase to the gas pump to the street and even into the home, NOCO Express is pushing the boundaries of how technology can be used to increase store sales.
This Buffalo, N.Y.-based chain of 32 stores has found that keeping its brand in front of consumers brings feet into the stores, where customers can peek at the numerous TV and video screens—dubbed TNN, The NOCO Network—to fi nd out about the day’s specials. They can also learn about reward opportunities, such as a recent texting promotion in which customers could win tickets to a Buffalo Sabres hockey game. Out at the pump, customers can watch the price of a gallon of gas drop by a dime when they swipe their EZPay Friends and Family Club loyalty card, and also collect points to earn free gasoline. And because EZ-Pay links directly back to a customer’s checking account, it eliminates creditcard processing fees for the company.
On the road, a driver in need of gasoline can look up gas prices and store specials using the NOCO app developed with Gas Buddy. And from home or the offi ce, consumers can fi nd details of each store’s specials and gas prices online.
Community Leadership
Dick Folk, president of Folk Oil/ PS Food Marts, accepted the Community Leader Award. When the recession hit in 2008, the company brought its charity closer to home.
With 22 stores in Michigan and eight in Ohio, the company found the Food Bank of South Central Michigan covers all of the chain’s stores in Michigan and could benefi t from company fundraising efforts. And so in March 2010, PS Food Marts asked customers to buy paper hearts for $1 each, allowing them to “Fight Hunger” and “Give Hope,” and raised $50,000.
Then in November, the Homer, Mich.-based company widened its target, collecting donations of Pop Tarts (two for $1). Working with Kellogg’s, 29 PS Food Marts sold nearly 28,000 Pop Tarts that were donated to 24 different food pantries, homeless shelters, after-school programs and churches in the community.
“It’s not about what we give and the recognition, but it’s about that we’ve done something right,” Folk says.
Retail Execution
Ken Rash, executive regional director of Maverik Inc., accepted the Retail Execution Award on behalf of that chain.
Ten years ago, Maverik became “Adventure’s First Stop,” a place where residents and tourists alike could stock up before heading out to any adventure, from scaling a mountain peak to just going into the offi ce. A big piece of bringing that message to consumers was the company’s own reality TV show, “Kick Start TV,” which ran for three seasons on local TV affiliates. The show literally, in some cases, put customers in the driver’s seat, teaching them how to whitewater raft, skydive or drive in a NASCAR vehicle while TV cameras rolled.
At the same time, Maverik has focused on the everyday challenges of being a good retailer. This past summer, the North Salt Lake, Utahbased chain of 221 stores came in third in the CSP-Service Intelligence Mystery Shop, just one point behind the winner. —Steve Holtz
Wujec: Map It Out, and Find Clarity
“Clarity is the essential part of business that allows us to really understand and make sense of what our priorities are,” said Tom Wujec of Autodesk. “Clarity is the missing ingredient that distinguishes great teams from not-so-great teams.” During his presentation on “Visualizing Business Strategies,” Wujec said teams that get clarity tend to:
- Make Ideas Visible. “The word ‘visualization’ means different things to different people. The way we use it here is representing ideas and information, your business, in the form of diagrams and images so that you get it better and your team understands it better,” Wujec said. He gave the example of Mattel Inc., which uses a cartoon (rather than a lengthy document) to demonstrate its fi nancial performance. “They changed how people understood how to contribute to the bottom line, and where they can grow profi tability.”
- Get Consequential. Wujec said teams with clarity also build consequential prototypes and models. One innovation challenge he’s worked with involves teams of four who have 18 minutes, 20 sticks of spaghetti, one yard of tape, one yard of string and one marshmallow to build the tallest freestanding structure possible. The unique challenge finds people jostling for positions in the team and planning together. “It creates a crucible or prototype of what people do to collaborate together when they’re trying to do something that they haven’t done before,” Wujec said.
- Collaborate. Another part is “working with other people for the purpose of creating a common goal and deep engagement.” Using “sticky notes and large pieces of paper,” he suggested, teams can map out what a business is doing in terms of context, vision, strategy, process, culture and tracking. In a follow-up session, Wujec gave attendees their own mapping challenge, using sticky notes to recall what they had learned at CRU. “Making your ideas visible, tangible and persistent is something that helps people get clarity,” he said. “And it takes that extra little bit of effort of doing something different that will provide new kinds of insights and new kinds of approaches.” —L.Z.
Three Chains, Same People Focus
"A clean, organized store is a magnet for business.” That’s what Sam Picone, regional vice president of operations for Thorntons Inc., Louisville, Ky., believes. One of three panelists speaking on creating a motivated, store-level workforce, Picone said internally, focusing on culture is key, because in the consumers’ eyes, the “store will speak for you.”
In agreement were the other panelists: Steve DeSutter, president and CEO of Stripes LLC, Corpus Christi, Texas; and Michael Ursini, director of operations support for The Pantry Inc., Cary, N.C. Through an aggressive implementation of excellence-building targets starting in 2006, Picone and his team reduced turnover from 157% to 86% at the store level, 70% to 25% among store managers and 38% to 15 % with general managers. A quality payment plan, a hiring strategy using personality-assessment tools and morale-building programs that instill pride all lead to a consistent, friendly customer experience, he said.
For The Pantry, the priority is going toward a larger culture change, according to Ursini. Part of that plan is encouraging all levels of staff to embrace and guide decisions based on a “fast, friendly and clean lens.” That has led to moves such as reducing administrative processes to increase the “face time” that managers give to customers.
The larger goal is to “adopt hospitality as a way of life,” Ursini said, to move the 1,700-store regional giant into its next phase.
DeSutter of Stripes, a 525-store chain with the strong Laredo Taco foodservice brand, said delivering a quality customer experience means creating a mindset of empowerment while measuring for quality and progress.
“You’re got to create passion for the team,” and if measuring behavior reveals areas of improvement, “then do something about it,” he said. —A.A.
Futuristic Cars Further into the Future
Despite the talk on Capitol Hill and the demos at car shows, alternative vehicles are at least a decade away from strong auto sales and will remain, at best, a niche product over the next several years. Says who? Surprisingly, a sober advocate. Chris White, communications director for the California Fuel Partnership, nevertheless urged c-store operators to pay attention to what will be a gradual evolution to non-gasoline-reliant cars and to establish an infrastructure of batterycharging and hydrogen stations. Propelling this costly movement are several factors, from global warming to a call for greater oil independence. “I’m very realistic about this,” White said. “I’m not going to convince people to buy these cars or install charging stations right now, nor should they. But it’s important they be aware of the new technologies and the changes that are slowly happening and to raise any concerns they have earlier than later.” Some recent developments:
- Battery Electric Cars: Two are in production: the Chevy Volt and Nissan LEAF. Both operate without gasoline and, White said, the LEAF in demonstrations has shown it can go 60 to 80 miles before needing a new charge. “They don’t see this for someone taking a long drive because the recharge time is four to 12 hours,” she said.
- Fuel Cell and lithium Battery Cars: These show promise but are vulnerable to weather extremes. “We’re worried about the snow—we’re really worried about the snow,” she said. However, fuel cell engineering is showing promise in Sweden, she said.
- Electric Charging: White outlined the three levels and said Level 2 is where c-stores and traditional gas stations will be most active. While electricity is priced by local utilities, operators of charging stations will be able to charge a convenience fee.
Predictions: White cited a report by Deloitte & Touche, predicting that by 2020 3% of cars sold will be electric (based on annual total car sales of 15 million). —Mitch Morrison
Car Washes: Getting Their Due?
When more than two-dozen convenience operators are fi ring off questions about their car washes, it raises the following question: Why do car washes generate such little attention in the c-store industry? So when Eric Wulf, executive director and CEO of the International Carwash Association, made his case for the convenience channel to consider in-bay automatics to bolster their forecourt, he was speaking from a sense of opportunity and hope. The hope is that it’s not farfetched to believe that c-stores could become a dominant player in car washes. And there’s opportunity in that retailers are seeking to generate new profi t drivers conducive to marketbasket increases. “Car wash is a really crummy casual, non-integrated investment,” he said. “But we think it’s a really great integrated investment.” Statistically, there are approximately 80,500 car washes in North America, 45,000 of which are owneroperated; 30,000 are run by c-stores or gas stations. Notable growth is in the shift from home washing to car washing, and major upgrades in recycled, treated water at washes. —M.M.
C-Stores Must Reach Higher than Foodservice Basics
In 1999, customers wanted cleanliness. Now, customers are still less likely to eat at a c-store with a messy bathroom, but quality, freshness and general convenience rank as the most important factors in a successful foodservice program.
Kevin Higar, Technomic’s director of research and consulting, examined results from a c-store foodservice survey taken in 1999, and another in 2010. At their core, c-store foodservice customers aren’t all that different. But in those 12 years, c-stores have mastered the basics, and consumers’ expectations are higher.
According to Technomic, 62% of c-store customers are happy with food and beverage taste and flavor; 59% of consumers are happy with the quality; and 86% are content with the quality. Higar sees that as a lot of opportunity: “We probably want that quality number a little higher.”
Health, Nostalgia Changing Face of Foodservice
A number of emerging trends are influencing the innovation a process in the foodservice industry, according to Abbie Westra, executive editor of Fare magazine. “With that, trends and habits are being adopted much more rapidly than ever before, as foods, fl avors and concepts quickly trickle across the foodservice spectrum, from fi ne dining to c-stores,” she said. With that, Westra explored four foodservice trends that are shaping the greater industry:
- Health vs. Indulgence. Eating healthfully and allowing for wholesome indulgences are equally important to consumers, and the underlying theme for both is choice. According to a study from The Hartman Group, when asked what is most important to healthfulness in a foodservice operation, consumers answered “offers a variety of options, some healthy” most often. Likewise, a recent survey from Technomic found that 33% of consumers will visit an establishment because it offers healthy options, even if they don’t ultimately buy the healthy item—indicating healthy options drive sales. That number increases among women.
- Roots. Here, says Westra, three trends collide: nostalgia and comfort in uncertain times, a growing interest in American foodways, and exploration of global comfort foods and street foods. Locally sourced meats and produce also fall under this trend, as well as the overall desire for comfort, simplicity and back to basics.
- Channel Blurring. Restaurants are acting like retail stores, supermarkets are adding restaurants, and drug chains are morphing into c-stores. All bets are off as everyone tries to steal share of stomach. Creative outlets such as pop-up restaurants and food trucks add to the fun.
- My Way. Consumers increasingly want personalization in a purchasing experience, and the c-store retailer’s golden weapon is coffee. According to proprietary research from White- Wave Foods, 72% of c-store coffee consumers say the most appealing part of c-store coffee is the ability to customize. Retailers should leverage this power to boost breakfast sales.
Find a Social Media Circle
Retailers wading through the evercomplex world of social media may take solace in a few words of advice from Amber MacArthur, cofounder of MGI Media, Toronto.
- Create a Policy. Setting guidelines on how to engage the public will provide a standard to build upon.
- Listen Well. A simple use of Google Alerts or other such programs can provide insight on what people are saying about a company.
- Choose Tools. Start with a fi nite set of options, such as Facebook, Twitter and YouTube, and develop a plan.
- Measure Success. Many tools can break down who is engaged with a retailer’s brand.
- Keep on Trend. Sites that allow individuals to band together for deals are emerging all the time.
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