Shortly after I joined GPM, we made a sizable acquisition in rural Virginia and Tennessee. We saw a huge opportunity and we were sure that we could achieve a healthy lift in sales once we got these stores converted to our Fas Mart brand.
We quickly went in and rebranded every site. We changed the signs, refreshed the forecourt, repainted, remerchandised, reorganized, upgraded equipment and implemented our foodservice offering and customer-service policies. This was clearly a huge improvement that every customer would certainly appreciate.
We celebrated how smart we were and how we executed the changeover with military-like precision. Then the sales started to decline. So we went back in and tweaked the merchandising, and put a huge emphasis on customer service. Then sales declined more.
We went back and resurveyed all of the competition and determined that we were priced competitively inside and out. We also confirmed that we now had the nicest stores in the area. Yet sales continued to slide. How could everything that we did, all of the positive changes we made, have a negative effect on sales and customer perception?
Keeping a Promise
We made a couple of strategic miscalculations. First, we assumed our newer, better, one-size-fits-all approach would work. After all, a brand is about consistency, and how can we be consistent if we have one offering in Charleston, S.C., another in Wethersfield, Conn., and yet another in Appalachia, Va.?
That’s when we realized that a brand isn’t necessarily about design or a building facade, a specific store set or offering. Instead, a brand is about keeping a promise and being consistent. We understood this after studying what made these stores desirable.
It wasn’t uniformity of store design or technology. It wasn’t that they carried products or services that competition didn’t have. It was the “feel” of the store and how it matched up with the neighborhood. This was a place where customers felt at home.
Moving forward, we committed to keeping the promise of customer service, on the customer’s terms, and convenience. This is a promise that the GPM family of stores endeavors to keep regardless of the store name.
The second—and biggest—miscalculation was underestimating the value of the brand we were acquiring. We failed to consider that this industry was born out of the general store, and there is something lost when you homogenize that general-store feel into a chain-like retail presence. In the example above, these customers were not shopping these stores because they were the biggest or the brightest. They frequented these stores because they had charm and a warm presence.
We mistakenly eradicated that charm with all of our changes. Whether by accident or carefully crafted, the brand we acquired meant something to the customers it served—something that wasn’t clearly visible when it was viewed piece by piece, aisle by aisle, but became more obvious when viewed holistically.
We realized that an acquisition is more than just the quality of its assets. We need to understand the brand’s story, its history and the attributes that made it important to its customers.
Listen Closely
This is why we have developed a strategy for identifying what is special about each brand that we acquire, and how can we bring something to the table that complements but does not eradicate. If you find yourself on the purchasing side of an acquisition, particularly with a smaller regional operator, here are a few things to consider:
- You don’t know everything, even if people tell you that you do, even if past successes have led you to believe them. Entrepreneurial c-store operators are some of the most resourceful and creative business people that you will ever meet. They know their neighborhoods and their customer’s needs better than anyone.
- Learn as much as you can from them. Listen to them. Don’t be afraid of having a different brand or a different offering in different markets.
There is a reason that car manufacturers have more than one model with varying options. We are in a people business, and people live differently and have different routines and purchasing habits in different geographic regions. Be humble enough to realize that what works for you in a metropolitan area may not work as well in a rural environment.
A lot of time is spent on negotiating the “deal” and analyzing the numbers. As part of your due diligence, spend as much time visiting the stores and talking to customers as you do studying the financials. This will help you identify what, if anything, is special about the brand you are purchasing. Suppliers are also knowledgeable about the stores they service and can tell you a lot about purchasing habits and brand reputation. This all helps to determine whether you should use your existing brand or keep the brand you are purchasing and make complementary changes.
And, as always, there is never a substitute for surrounding yourself with the best people.
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