NEW YORK — Reading last week’s announcement that the National Restaurant Association had taken a majority stake in Winsight LLC, the publisher of CSP magazine and CSP Daily News, I felt a little jolt.
In 2008 when I was a member of the board of directors of CSP LLC (now part of Winsight), I worked on a long-range plan for the company and, lo and behold, Winsight has now become what that plan envisioned. I assume that the current management does not know of the existence of the plan I worked on and has moved in this direction because it makes so much sense. Nevertheless, this is a great example of a company that knows where it wants to go and takes the right road to get there.
Similarly, it is clear from frequent reports in this publication that a lot of convenience retailers know where they need to go and are planning for a time when cars will no longer be powered by fossil fuels, a time when the gasoline brand and price on the pole sign will no longer be a major factor in drawing customers to their sites. They know that the store itself will have to become the only reason for drivers to stop there rather than at a competitor’s site. It will, in short, have to become a destination.
Destination-Bound
How do you become a destination?
The surprising headline of a recent obituary that appeared in the New York Times gives a hint about how one company did it. It read “W. Galen Weston, Who Transformed a Family Food Empire, and Made Private Labels Trendy, Dies at 80” (my italics). Weston was a very wealthy and powerful man from a very wealthy and powerful family. The New York Times has a staff of people who research and write obituaries for such people in advance. So the fact that they chose to mention private label in the headline of his obituary shows how important it was in his long and accomplished life.
Why did it merit so much attention? In short because, “Faced with the task of turning around a nearly bankrupt supermarket chain, he made private-label merchandise fashionable,” the obit says.
Commitment—that’s probably the most important lesson of all.
Weston transformed Loblaw Groceterias, a Canadian supermarket chain “burdened with debt and poor sales and teetering on the edge of bankruptcy,” into the dominant supermarket chain in Canada. How? A key ingredient was by making the stores into destinations for their private labels. He took a twin approach to private label beginning in 1978. At the bottom end, he introduced a line of products in vivid yellow and black packaging that promised low prices and high quality.
But the real breakthrough was at the top end, where he introduced the President’s Choice brand with a chocolate-chip cookie. At the time, according to the NYT article, the market-leading cookie brand, Nabisco’s Chips Ahoy, were made with 24% chocolate chips and used vegetable oil. President’s Choice cookies were 40% chips and made with butter. Also, while priced competitively, they were much more profitable than the national brand. Weston’s commitment to the President’s Choice Decadent Chocolate Chip Cookie became a key element in the grocer’s turnaround. Loblaws stores became a destination for a chocolate-chip cookie.
A C-Store Equivalent
Today, c-store retailer Wawa is famous for outstanding foodservice programs, including coffee, hoagies, Sizzli breakfast sandwiches and more. How did Wawa become the place to go for these items? By first becoming a destination for—wait for it—cigarettes!
Many years ago, after Wawa had developed the beginnings of the strong foodservice programs it has today, the chain needed to find a way to draw additional traffic to its stores. The executive team decided to sacrifice the large profits they were making from cigarettes, cutting prices to the Pennsylvania state minimum for cigarette sales. The result: Wawa, one of the 10 largest c-store chains in the U.S., became a destination for low-priced cigarettes, met its target of selling a thousand cups of coffee a day per store, increased profits, and started the journey to today’s success as one of the world’s most admired convenience retailers.
Loblaws did it with a chocolate-chip cookie. Wawa did it with cigarettes and foodservice.
What is the lesson here? I think it is three things:
- First, when reviewing company strategy, don’t do the obvious; think outside the box. You could start by asking the people on your front lines what they think would attract new customers. Listen for something that may sound outrageous and think about whether you could do it.
- Second, do something hard. If you do something easy, your competitors will copy it the next day. Do you have some unique capability? Can you use it to make your private-label—or something else—enhance your brand?
- Third, make a commitment, go all out and stick with it. Commitment—that’s probably the most important lesson of all.
As I addressed last week in part one of this series, gasoline will be the primary motor fuel—and one of your biggest consumer brand draws—for quite a few more years, so there is still time to plan your destination strategy. But if you have not already done so, now is the time to consider where you want to go, and to start the journey on the road to get you there.
Gerald Lewis is a semi-retired consultant who has served more than 300 convenience store and oil companies at board level on five continents for more than 40 years. Reach him at glewis@c-man.net and (646) 215-7741.