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CSP Magazine

CST's New F-Words

How the retailer is shifting from fuel-focused to fresh and friendly

A publicly traded company with a yen for acquisitions, CST Brands has hardly forgotten its primary mission: convenience.

“No one knew who Corner Store was outside of the fuel we sold,” CST president, chairman and CEO Kim Lubel says in an exclusive interview with CSP.

It is easy to forget that Corner Store is the legacy brand of San Antonio energy powerhouse Valero Energy Corp., which jettisoned its retail business in spring 2013 to pursue increased refining riches.

Now the spinoff is showing its might. Under Lubel’s leadership, the publicly traded company has over the past couple of years acquired a score of coveted midsize chains, including Nice N Easy Grocery Shoppes and, most recently, Flash Foods.

And in the final quarter of 2015, aiming to prove its prowess inside the store, it unveiled a new store design and marketing strategy.

“Under the previous ownership of Valero, our primary objective was to be an outlet for fuel,” says Hal Adams, senior vice president and chief marketing officer of the San Antonio-based company. “The Corner Store brand—both the way it was presented and the way we talked about it—took a backseat to the fuel brand. What we ended up having is, over time, several different presentations of the way our (Corner Store) brand was being presented to the public.”

Finding Itself

It may be hard to understand how one of the country’s five largest convenience-store chains could suffer from an identity crisis. But consider that Corner Store in its previous iteration was not the only retailer selling Valero fuel. About 5,000 other stores across the country are branded Valero. “Stepping out of the shadow” of Valero, says Adams, was one of the young company’s foremost objectives.

To create a uniform banner for its more than 1,000 company-owned and -operated locations nationwide, CST enlisted esteemed branding agency Prophet to develop a new image and logo that defined Corner Store’s personality and consumer promise—as opposed to the various banners and looks under which Corner Stores previously operated.

The company conducted extensive consumer research, and “the one prevailing request was that they be greeted and treated like family,” Lubel says.

That was welcome news for CST, given that Corner Store employees scored very high on friendliness. Consumer research also found that CST did a better job of retaining its customers than other retailers.

“Once they’re in, they come back,” Lubel says of her customers.

Thus emerged two critical F words: friendliness and freshness, both in look and taste.

Two years of brand development came to fruition in November, when CST unveiled its first rebranded location with the new Corner Store look and logo. The ground-up build just north of San Antonio features a bright green logo, signage and color palette, as well as free Wi-Fi, expanded seating, a new made-to-order menu and a broader grocery selection.

As CSP went to press, the retailer was expanding the fresh look, with plans to unveil 21 new and legacy San Antonio stores with the enhanced Corner Store branding by first-quarter 2016 and a goal of completing a network of rebranded stores within three years (though acquisitions such as Nice N Easy and Flash Foods will retain their current name and branding for the time being).

“This rebranding is really going to help us,” Adams says. “When you do something different outside your store, you’re signaling to the customer that something different is going inside the store.”

A Friendly Edge

Considering the ubiquity of Valero’s teal logo across San Antonio and other areas, CST executives know forging a distinct retail identity will take time. CST’s internal research shows that while Corner Store shoppers appreciated the friendliness of the staff, size, location and offerings of the stores, very few actually recognized the Corner Store brand.

“[Customers] didn’t know where they were,” Adams says. “The brand wasn’t resonating.”

The reimaging is reaping immediate dividends, according to Lana Cervantes, a seven-year veteran of CST and foodservice manager at the new store. Cervantes says even her own family members have long said she works at Valero, not Corner Store.

“It’s tough to get everyone out of that habit,” she says, adding that the new branding has helped Corner Store stand out. “It’s a fresh new face that everyone’s embracing.”

Rather than just focusing on the critical feedback from its research, CST also celebrated the good news: that while brand identity was weak, consumers liked patronizing the stores and welcomed the overall selection.

“We were all really excited when this research came out,” says Lubel. “This was something we were already doing. Now we get to build around it.”

A Fresh Attitude

And build around it CST has—literally. The rebranded Corner Store that opened in November features a new logo and design, and also a new title. This location became the first of five Corner Store Markets planned for 2015. The title is reserved for larger-format stores featuring a wider selection of groceries, inside seating and expanded made-to-order foodservice programs.

“The biggest difference is the space,” Adams says of Corner Store Markets. “It’s the same friendly service, but the space gives us the opportunity to be more broad and deep. Space is a great gift to keep your stores relevant.”

The stores average 5,000 square feet, with some as big as 7,500 square feet. With CST’s promise of “Simply Fresh, Always Friendly,” the extra room at Corner Store Markets allows CST to test the made-to-order menu popularized by CST’s 2014 acquisition, Nice N Easy Grocery Shoppes, Canastota, N.Y. The additional space also allows for 40% more square footage to a category largely ignored in the broader convenience industry: grocery. About 100 of CST’s existing stores feature some form of a grocery program, but Lubel says it will be a priority for all new builds moving forward—Corner Store Market or not. She wants these stores to encompass “that corner market you can go into and get the food you need to cook dinner.”

Armed with its own distribution center, which allows for three-times-a-week delivery of perishables, CST has a logistical advantage when it comes to fresh. But Adams is quick to point out that CST’s “Simply Fresh” promise isn’t only about the food on the shelves.

“We try to teach our team members that fresh is an attitude and that it starts with them,” he says. “Fresh is an attitude in the way the whole environment looks in the store.”

Growing the Family

The fresh and friendly attitude resonates in the front office as well. In a relatively short period, CST has earned a reputation in the M&A market for retaining key personnel and incorporating cultural features from acquired assets.

“One of the things Kim really impresses upon us is when we buy a chain or group of stores [is that] there’s always something there for us to learn from,” Adams says, citing the way the late John MacDougall ran Nice N Easy as a prime example. “We’re grateful that we’re able to bring his chain over into our family.”

Hence the decision to bring Nice N Easy’s menu to Texas. Cervantes and her fellow foodservice managers spent two weeks training in New York Nice N Easy locations and had Nice N Easy “buddies” come down for the first couple of weeks after the San Antonio Corner Store Market opened.

“We don’t really need to change anything because it’s already very good,” Adams says of the Nice N Easy foodservice program. “What we’re going to be playing with is making sure that menu meets the palate of the south Texas customer and the customers where we go in the future.”

The blending of families isn’t limited to menus. Adams describes Nice N Easy’s director of foodservice, Jack Cushman, as being “really pivotal in showing us the techniques.”

The director of CST’s social media strategy also comes from Nice N Easy.

“We learn an awful lot from these great family-owned businesses who have perfected convenience-store operations in smaller networks,” Lubel says. “We can use those practices to leverage up our current network.”

Forward-Thinking

The shift in focus from fuel to fresh and friendly isn’t to say that CST is moving away from gas; Lubel promises that Corner Stores will offer fuel as long as she’s around. Rather, the rebranding efforts are part of a larger long-term strategy.

“Over time, people are going to need to stop less and less to refuel, but we still want them to come to the store every day,” says Lubel. “Fuel is a customer driver, but we want our stores to be the long-term customer driver.”

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