CSP Magazine

Cover Story: Changing Sheetz

Lab store or milestone? New 15,000-square-foot college site reflects trends in demographics and eats

More than a dozen frozen-beverage dispensers churn cartoon-colored flavors begging to be mixed into a crazy concoction. A vaulted proscenium frames a stone pizza oven, full kitchen and barista-manned coffee bar. Cherry oak tile leads the eye to an Order Fresh Food Here pillar of flat screens, scrolling through still shots of pastrami sandwiches, cheeseburgers topped with fried eggs and breakfast burritos made fresh to order from dawn to midnight.

Walking into the latest Sheetz convenience store on the campus of West Virginia University (WVU) in Morgantown, W.Va., can overwhelm the senses. Images and aromas trigger hunger, thirst and salivation.

In this warehouse-chic destination, technology meets build-your-own meals, which in turn meets candy store. It’s as if Willy Wonka had married Panera Bread and they had a Potbelly princess.

Emily Sheetz is less flowery when she describes the mammoth, 15,000-square-foot site, calling it a laboratory designed to hone the company’s future as a food-first café.

“We’re amplifying what we do today. In laying out the store, we’re bringing the dining experience to the front,” says Sheetz, oldest daughter of Louie Sheetz (former executive vice president of marketing) and director of special projects for the 502-store Altoona, Pa.-based Sheetz Inc.

Click here to view a slideshow inside Sheetz's WVU c-store and an exclusive peek at the floor plan for the unique site.

Admittedly, the uber-hip, kitchen-centric site—reliant on foot traffic and complete with grocery, produce and frozen foods—is most likely a one-off. However, with hypermarkets and other large-format retailers going small and channel blurring forcing a tighter bond between convenience goods and foodservice, the new Sheetz store could be an incarnation of things to come.

Consider the retailing trends aligning:

Urban revitalization: Multiple generations are finding purpose in moving back into the cities, spurring retail development and innovation [CSP—June ’15, p. 28].

Stay awhile: On the flip side of grab and go, more larger-format stores are rolling out made-to-order food programs, emulating a restaurant style with seating, wireless and, in the best of all worlds, even fostering a “third place” approach [CSP—May ’15, p. 34].

Brand extensions: As retailers expand and revitalize their store brands, nontraditional opportunities emerge as a natural evolution.

Small formats: Walmart, Target and Home Depot are experimenting with or executing smaller-format strategies to drive growth and exploit demographic shifts to urban areas.

Millennials: As the youngest and largest demographic in the workforce, millennials represent a golden opportunity for retailers.

Customization: Influenced by the digital era, more retailers across shopping segments are empowering consumers to customize their selections, from food to apparel.

All day: As daylong snacking gradually supplants the traditional three meals, operators are mixing things up, offering breakfast items as late-night snacks or smaller bites of protein as a morning pick-me-up.

These are the transformative pictures prompting the Sheetz family to think radically. “Our vision is to improve, putting today’s Sheetz out of business,” says Sheetz. “We dug into shifting demographics, more people moving into urban settings, driving less, but still looking for a home away from home.”

Consumers Will Eat It Up

Larger-format c-stores are a strong bet, according to Donna Hood Crecca, senior director for Chicago-based research firm Technomic Inc. From research the company conducted jointly with CSP late last year, three-fourths of consumers overall (77%) and 85% of those ages 16 to 34 find larger-format c-stores highly appealing. About half of consumers (51%) indicate they would probably visit their favorite c-store more often if it were remodeled into a larger format. Larger-format stores can also encourage foodservice purchases; 43% indicate they would be more likely to visit for foodservice purchases if their favorite c-store remodeled itself into this larger format.

Whether the larger-format store is a bona fide trend, Crecca says the approach will vary. Each operator will need to assess its own strategy and core consumer, as well as real-estate availability, infrastructure and capital resources. “Not everyone can or should go big, and not every market calls for such footprints,” she says. “The small-format store remains viable and vital in many locations and markets.”

Larger-format stores can have their downsides too, she says. Does that convenience operator risk abandoning the very attribute consumers most value about the stores—convenience? Retailers building large-format stores need to develop sites that are easy to navigate, with clear signage and traffic patterns, sharp attention to speed-of-service elements (such as self-serve kiosks), along with a well-trained staff that can execute a made-to-order sandwich quickly and accurately and also deliver on customer service and hospitality.

“If you build it, they may come,” she says. “But if you build it and they can’t get in and out quickly and have a pleasant experience, they may not come back.”

CONTINUED: Young and Hungry

Young and Hungry

In the new store, the design assumes a customer knows nothing about Sheetz, says Keith Wozniak, senior computer- assisted drawing (CAD) operator for Sheetz. That’s because many students come from outside Sheetz’s current operating footprint. But the larger goal was to get everyone—loyalists and newbies alike—to look at Sheetz with a new eye.

So when customers step into the main vestibule, they will see a restaurant instead of a c-store, Wozniak hopes. “Like the hands of a clock, from left to right you see drinks, a kitchen behind the counter, order points and seating,” he says. “Then like a yellow-brick road, the dark tile leads you to our touchscreen order kiosks.”

Such design elements help consumers intuitively navigate the space. “People are used to Panera Bread or McDonald’s in terms of walking in and ordering,” so they respond instinctively to what’s visually presented in the new store, he says.

Likewise, the wall columns and bulkhead framing the kitchen, pizza oven and Sheetz Bros. barista-run coffee program create an “amphitheater” around the main foodservice offer. An element of the food-theater concept is transparency, Wozniak says. As with Mongolian barbecue or hibachi-style cooking, food is prepped before customers like a stage of actors in front of an audience.

“It’s about the entertainment value,” he says. “They’re getting fresh product here … so that transparency is showing off the authenticity of the food.”

New to Sheetz

Many of the new store’s menu items, as well as the ability to customize an order (as with Sheetz’s Made to Order, or MTO, program), are already part of the standard Sheetz offer. Though largely a reworked version—MTO was an idea from a store manager who took orders on pieces of paper back in the 1980s—one of the central opportunities for the WVU store is as a testing ground for anything from new menu items to payment methods and supply chain.

Sheetz already has in the new store:

Frozen noncarbonated beverages: Part of an effort to maximize beverage sales, about a dozen frozen-noncarbonated-beverage machines occupy a prime spot in the front of the store, providing a visually colorful focus for incoming customers.

Grocery: The developers of the larger housing complex that the store is attached to pushed the concept of grocery; Sheetz bought into it, developing several thousand feet for frozen foods, eggs and produce.

Freshly made pizza: A new stone pizza oven helps staff prepare MTO pies from scratch.

Yogurt bar: A self-serve frozen-yogurt and ice-cream bar with a buffet of toppings provides a sweet way to customize.

Self-serve checkout: “Pay here” signs and impulse aisles define a path to checkout areas, but within that queue are two self-service-payment kiosks. Sheetz officials hope to measure the concept’s potential when lines build during peak hours.

Seating: Inside and outside seating encourages lingering. Amenities include matching tables that people can push together, booths for groups of six or eight and a high bar of 12 tall seats that allow for singles to wait for their orders or groups to gather.

Even within these larger experiments, more subtle questions of flavors, portion size and ambiance are fair game for testing. In the company’s hot-dispensed-coffee line, for instance, officials are testing a new variety, Sumatra. In the grocery store, they are testing looser packaging (vs. tightly wrapped) around produce to evoke freshness, and apples are sold in bags of two or three for individual student shoppers. The seating area has multiple outlets and USB ports for students who want to plug in while eating.

“C-stores have evolved,” says David Smith, Sheetz’s concept development manager. “Our specialty is great variety and appeal.”

CONTINUED: Creating a New Vision

Creating a New Vision

Eager to continually align products and strategies with evolving consumer tastes, Sheetz early in the decade developed a cross-department team focused on innovation. That team developed a café concept based on foot traffic and no pumps. By 2012, the project was taking shape, with plans finalizing in 2013.

Soon after that time frame, Sheetz began talks with WVU officials and a developer building student housing. Much of the existing housing options for students living near campus were not ideal. Dilapidated row houses two or three stories high were perched on the area’s steep hillsides.

A new twin-tower housing project for 900 beds, with retail at ground level, was set for completion in November 2014. After interviewing other potential tenants, the developer awarded Sheetz the project. It was a perfect opportunity to act on the company’s café concept, Emily Sheetz says.

As the university and the developer became prime stakeholders along with Sheetz, months of discussion and compromise followed.

So while Sheetz was able to execute its food-first café, the retailer agreed to develop a viable grocery program for what would essentially occupy the back end of the store.

“I don’t see our future cafés going in the same direction [with grocery],” Sheetz says. “But it may become an additional concept we explore, more like a corner market.”

Stores of the Future

While no one expects Sheetz to make the college café business a permanent venture, the retailer is intrigued and is building a second model on the campus of Penn State University, State College, Pa.

The WVU experience is only months along, having opened this past March. But some data is emerging: Grocery sales are sluggish—an awareness issue, Sheetz believes.

But foodservice sales, she says, “have exceeded expectations. We were surprised at how quickly food sales took off.”

Sheetz used social media, campus newspaper ads and both digital and static signage to get the word out to students in advance of the store’s opening, according to Tamara Dunkley, corporate advertising manager for Sheetz. It intends to use direct-marketing efforts aimed at student residents to build awareness of the grocery offer, she says.

Commenting on the chain’s traditional network of stores, Sheetz says the company intends to build within its existing six-state footprint. But that tie to a tried-and-true format won’t stop Sheetz from innovating. If the WVU location is any indication, Sheetz is bent on defining itself not only based on what the world is like today, but also what it will look like a decade from now.

The Science of Groceries

The undertaking of a grocery and produce section was new to Sheetz, says David Smith, concept development manager for Sheetz. To gather information about the concept, he says, the chain conducted research with college students and produce suppliers.

Surprisingly, Smith says, results from both the student focus groups and supplier data aligned. Bottled water by the case was a mutual request, as were quick meal options such as Hamburger Helper, macaroni and cheese and, yes, that perennial college-campus favorite, dried ramen noodles.

If the grocery items prove popular, the company has the option of pushing back walls and creating more space on both the dry-shelf side as well as the coolers, Smith says.

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