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CSP Magazine

Cover Story: Mapco's Ticket To Ride

Bus tours, safe zones and accountability: How a cultural evolution is driving the retailer’s success

After several years of quietly building a significant platform of store programs, from an array of foodservice options to enviable loyalty, private-label and craft-beer concepts, Mapco seems about ready to burst. Or at least talk.

The improvements that customers experience in the stores are the result of a cultural evolution that begins at the corporate level and plays out at Mapco’s Brentwood, Tenn.-based headquarters and in its stores.

In 2013, I began pestering leader Tony Miller to let CSP feature the chain in a major story. “We’re not ready,” he said, a refrain he would repeat to us many times over the next two years. “When we have a story to tell, then we’ll do an article.”

This summer, Mapco agreed.

“I believe we have a story to tell,” Miller says today. “We’ve had a couple of fantastic years, but it’s not just the results. It’s the accomplishments of the team and the organization, and the culture that we’re building.”

“Excellent!” I thought. "Where should we begin?" Turns out, it’s on a bus.

Planting a Seed

One can't discuss Mapco without acknowledging its parent company, Delek U.S. Holdings. The publicly traded company made headlines this spring when it acquired nearly half interest in Alon USA Energy, a similarly structured energy company (refining, fuel logisitics and retail), both with roots in Israel.

Closed in May, the $572 million deal speaks to Delek’s intentions to grow in the United States. As of today, however, the transaction has had little effect on Delek or Mapco in terms of operations. Could that change in the future? Sure, and I’ll come back to that. For now, why does Mapco want me to get on a bus?

Turns out my visit to Mapco headquarters coincides with one of the company’s Store Support Center team’s CARE tours, this one through Memphis, Tenn. CARE tours are quarterly bus trips—each through a different market—during which the executive team leaders reward good employees, consider where future capital expenditures should be made and identify hurdles that keep the stores and their employees from succeeding.

Click here to view a slideshow of one of Mapco's test stores.

On this tour, 20 company leaders have loaded onto a motor coach for a two-day trip from Brentwood to Memphis and back. One pair of bus seats is piled high with Mapco’s private-label snacks and beverages to settle rumbling stomachs and parched lips. Dinner the first night is followed by a leisurely evening of playing pool and building camaraderie.

After visiting each store—19 sites on this outing—each team leader from marketing, foodservice, fuels, IT, etc., shares with the full team his or her impression of the stores and what can be done better.

“This [fried-chicken concept] does less traffic than the store we were in last, and this is a much larger store. … That indicates that we do have some barriers to sale that we need to address.”

“On this visit I had the opportunity to go up on the roof, and the [sub-sandwich] oven wasn’t venting properly. I think we have a larger issue there that we need to address.”

“I think the store manager recognized every person that comes in that door. That is a neighborhood store!”

That store manager—in the lead role for only a few months—is awarded 10,000 Mapco Rewards points, usable for free gasoline and merchandise.

The idea for the tours grew out of Mapco’s continued and increasing focus on company culture. Its CARE Culture is based on four tenets:

  • Customer friendly
  • Accountability
  • Respect
  • Excellence

Having a great culture, in Miller’s mind, is a key ingredient at Mapco. His predecessor, former company president Igal Zamir, had just outlined a five-year plan that focused on fresh foodservice, an emphasis on new-to-the-industry store construction and growing sales of private-label products, a strategy Miller supported then and still does today. But to truly make it work, he felt the need for the company culture to evolve.

“The CARE Culture has been here for about five years,” Miller says. “But we got really serious about living the CARE Culture a couple of years ago.”

Executive coaches were brought in. Workshops were held. Conversations—lots of conversations—took place. And suddenly, the plaques hanging on office walls, the ones outlining the CARE Culture, began to mean a whole lot more.

“The culture that we’re creating here is the one that we’re most comfortable with,” says Miller (his official title: executive vice president of Delek U.S. Holdings overseeing retail subsidiary Mapco). “This is what we need to grow in the future.”

The CARE Culture avoids placing blame or making excuses. “Instead, we’re building a culture where employees are empowered to fix things,” he says.

“We underscore accountability—individual and mutual accountability—by finding solutions with a positive and supportive approach.”

Building the Team

As with most cultural evolutions, change also occurred within the ranks of the company.

In recent years, Mapco has built a motivated team, scooping up both c-store veterans and prospects from outside the industry: a foodservice leader from casual-dining chain Ruby Tuesday, a private-label aficionado from Aldi and an experienced marketer from quick-service-restaurant chain Krystal. The company has also brought in new leaders in fuel pricing, category management and human resources.

There’s been change for Miller, too. Gone is the big desk in his office, replaced by a table chairs as a way to engender open conversation. “I spend 90% of my time having conversations,” he says, pointing out the Safe Zone signs throughout HQ that “promote an environment where everyone’s voice, thoughts and ideas are equally heard without consideration to position or level.”

Duties also have changed. In November, Mapco hired industry veteran Dave DeSerio—19 years with Wawa, five years with Spinx—as vice president of operations, relieving Miller of one major assignment.

“I had the entire operations team reporting to me,” Miller says. Today, he has three major focuses: future growth, driving company culture and delivering sales results, he says.

Results Are In

Over the past four years, Mapco has seen same-store merchandise sales grow by at least 2.3% every year except 2013, when rising gasoline prices took their toll. (See chart at left.) And Mapco is confident its focus on company culture and retail programs is leading the c-store chain in the right direction. To date, much of the success is credited to constant program testing and re-engineering by a nimble staff.

Foodservice: Two years ago, the company was chasing what it called an “aspirational consumer” with its foodservice program, hoping soccer moms would recognize quality ingredients, made-to-order subs and fresh fruits as a cut above that of the typical c-store. Today, quality and customization are still the focus of Mapco’s proprietary deli.

“We were going after a consumer that we couldn’t reach,” says Andy Scoggins, vice president of food and beverage, who joined Mapco about 18 months ago from Ruby Tuesday. “I knew that consumer [from my previous job], and we weren’t reaching them.”

Scoggins steered the offer “back to the blue-collar male, toward millennials but without offending the boomers,” he says. While the chain still offers numerous co-branded foodservice options, including Noble Romans pizza, Quiznos or Subway, and Krispy Krunchy or Chester’s chicken, “today, the focus is on adding great flavor and credibility to our food to break the stereotype of quality in a convenience store and to show our customers how great it can be.”

Loyalty: Launched five years ago, the Mapco Rewards loyalty-card program rewards customers with points, free products and cents off fuel gallons for purchasing a number of products in Mapco stores.

Austin Martin, vice president of sales and merchandising, oversees the program, which has 1.3 million registered users, and continues to enhance it through updated offers. (See sidebar below.)

“We were one of the first c-stores to have a loyalty program,” Martin says. “As the industry catches up in the loyalty space, it becomes incredibly important for us to enhance not only the offer, but also the experience of using our program.”

To that end, Mapco launched its My Rewards mobile app in 2013, offering reward-points … summaries, couponing and store-location capabilities. Further embracing cutting-edge payment technology, Mapco last year became one of the first retailers in the country to link its app to PayPal, allowing mobile-wallet convenience at the pump.

In its stores, Mapco uses Gilbarco Veeder-Root’s Odysii Impulse technology, placing tablets at checkout counters to drive upsell, provide order validation and survey consumers about their in-store experience.

What Mapco now seeks is to break into the next level of loyalty.

“We need to move beyond discounts,” Martin says. “We need to look at tiers, encouraging customers to become VIPs … . Engagement is key, and we’re focused on doing a better job there.”

Private label: Private-label products have been a company focus from the beginning. For years the chain has offered an enviable variety of private-label beverages, snacks and fresh foods, as well as motor oil, batteries and other general merchandise. (See sidebar below.)

“It lets you differentiate yourself from the marketplace,” says Martin, who came to Mapco from Target and worked for private-label giant Aldi before that. “It helps you build your credibility; it helps unite your brands,” he says in reference to the company’s seven different c-store banners. In 2014, private-label products accounted for 7.8% off all merchandise revenue in the company’s c-stores.

“We’ve been consistently trying to grow it at least 1% a year,” Martin says, “and I think you’ll see that excel in coming years based on some of the programs we have in place.”

Those programs include a process of repackaging and rebranding many of its private-label products under two brands: the new “Good Livin’ ” brand for food products and the “My” brand for general merchandise and other nonfood products. The new packaging is bolder and contemporary, while the rebranding will add consistency and reflect a larger company platform based around “goodness.”

“ ‘Goodness’ is how we position ourselves with the customer,” Martin says. The theme starts with private label and extends to coffee and fountain branding. And Martin promises more to come.

Craft beer: Martin also oversees Mapco’s beer offer. Recognizing more than two years ago the growing trend by drinkers toward craft beers, the company added new SKUs, developed a build-your-own six-pack program ($9.99) and installed growler stations in select markets with six to 10 taps pouring both national brands and local favorites.

The Pick Six offer “is one of our top-selling SKUs in the stores where we offer it,” Martin says. It is available in 190 stores, while the growler program is in about 30 stores with more to come. “Wherever we open a new store, we put it in.”

Given the program’s introductory price of $4.99 to buy a 64-ounce growler and $5 for the first fill-up, it’s difficult to see how any beer lover could pass up at least trying it.

New stores and renovations: Delek U.S. has historically grown its retail branch through acquisition, beginning with the initial purchase of 198 Mapco Express stores from Williams Express in 2001 that started the company. As a result, the company counts seven different c-store names among its brands, including East Coast, Favorite Markets and Delta Express.

While there are no immediate plans to unify under a single retail banner, the company has taken incremental steps in that direction.

First, the chain consistently builds 10 to 12 large-format (5,000 square feet) c-stores per year, always under the Mapco brand regardless of market. These new-to-industry stores incorporate the company’s latest programs and updated store layouts.

“This allows us to improve our portfolio of stores by moving away from the 2,000-square-foot store,” Delek president and CEO Uzi Yemin said in the company’s 2014 annual report. “This larger format offers a wider product selection and a prepared-food offering, improving the shopping experience for our customers.”

Click here to view a slideshow of one of Mapco's test stores.

Meanwhile, older stores are being reimaged as in-store concepts are developed. Older, smaller stores add programs as square footage allows, keeping them as current and lucrative as possible. Sixty percent of the company’s store base has been recently reimaged or newly constructed.

Second, a new coffee program completed its rollout in September, taking the place of disparate hot-dispensed-beverage offers in all stores. The new Feel Good coffee brand intends “to unite us under one brand that we could leverage with the consumer,” says Scoggins. Click here for more on Mapco's coffee program.

Back at Corporate

All of which leads us back to that recent deal with Alon USA.

In May, Delek closed on its purchase of a 48% share in Alon, a Dallas-based midstream oil company and retailer like Delek.

To industry observers, such as Raymond James analyst Cory Garcia, the deal made sense for Delek. “The goal for them is always growth,” he says. “They saw the opportunity for an asset base similar to theirs: niche refineries plus a retail business.”

The question, however, quickly became: Why not acquire the entire company?

According to Yemin, financially, a total acquisition wasn’t in the cards for his company, and strategically, that wasn’t what Alon wanted at this time. He makes no secret, however, that a total buyout is possible in the future.

“When the market conditions are right,” Delek will look “very seriously” at acquiring 100% of Alon USA, Yemin said during a company earnings call in May.

“By all intents and purposes,” says Garcia, “people expect them to buy out the rest of Alon.”

The purchase would more than double Delek’s refining capacity to more than 370,000 barrels a day and nearly double its retail presence from 365 stores to about 650, stretching its retail reach into Texas and New Mexico.

Mapco executives can or will share very little about the deal. If there’s any sharing of ideas between the Alon and Delek c-store chains, it’s not being discussed publicly.

In the meantime, the Mapco team is staying on point, working as a rejuvenated organization to develop and improve store programs to drive sales and store traffic.

“We don’t think in terms of c-store or foodservice. We think about both,” says DeSerio, vice president of operations. “We talk about our people in every meeting. And when we’re rolling out a new program, I look at my team’s job as understanding what the program is and making sure the people that have to execute it understand it, too.”

It’s there that Mapco’s CARE Culture resonates the most; ultimately, its goal is to make it “easy to succeed, hard to fail.” Several company execs will quote this to me over the two days I spend with them on the CARE tour.

“It really sets the tone for what you do during the workday,” director of operations Andrew Heck tells me during a store visit. He started with Mapco as a store manager 10 years ago. “It’s ‘What can I do to make things better today?’ It makes you challenge yourself.”

Category manager Shane Vasel, who has been with the company for four months, says he has found his introduction to the company culture refreshing and entrepreneurial.

“We’re encouraged to own stuff, to take risks,” he says, “and I can do that without worrying [about what will happen] if I fail.”

For a store manager, especially one who’s been with Mapco for only five months, it’s particularly energizing.

“Everyone came in very open-minded. They asked what we need to make things better for our customers,” Carlisa Bell-Butler tells me after the CARE tour has whisked in and out of her Mapco store in Memphis.

“It’s great that they get to see what we do every day.”

“I realize it starts at the top,” Miller says later. “We’ve made some good progress on it. Everything we do today—new products, company policies, everything—they’re all done through the filter of CARE.

“We’re not there yet by any means,” Miller says, “but we’re working on it."


Four Years of Growth

Like many c-store chains, Mapco found 2013, with its volatile gasoline prices, a tough year in which to grow same-store merchandise sales.

YearSame-store merchandise sales growth
20112.3%
20123.4%
20130.6%
20143.4%

Source: Delek U.S. Holdings annual reports


From the Private Collection

Private-label products accounted for an astounding 7.8% of all merchandise sales in Mapco stores in 2014. Just how wide is the chain’s variety of self-branded products? Here’s an in-no-way-complete list:

Batteries

Beef jerky

Bottled water

Carbonated soft drinks

Cheese curls

Cherry sours

Chips

Chocolate-covered raisins

Cookies

Doughnuts

Energy drinks

Energy shots

Gum

Hand sanitizer

Hand wipes

Iced tea

Motor oil

Nuts

Popcorn

Power-steering fluid

Pretzels

Protein shakes

RTD coffee drinks

Sparkling waters

Sports drinks

Sunflower seeds

Toothbrushes


Rewards Aplenty

You’ll find cents-off-fuel offers on just about every rack and cooler in Mapco c-stores. Here are some we noticed during our visit in August. All discounts are cumulative and can be used on purchases of up to 30 gallons:

Buy ThisGet This
12-pack of Pepsi soda30 cents off per gallon
Four-pack of 5 hour energy shots30 cents off per gallon
Register your rewards cars10 cents off per gallon for three months
Any breakfast sandwich and coffee10 cents off per gallon
Any Gatorade10 cents off per gallon
Two Crav'em Chips (house brand)10 cents off per gallon
Three packs or one carton of Marlboro cigarettes6 cents off per gallon
Any size fountain drink5 cents off per gallon
Pay at the pump using PayPal3 cents off per gallon

 

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