Norris described Chevron's ExtraMile efforts to CSP Daily News: "We wanted to create a strong backcourt brand and offering to link with Chevron, to help build fuel volume and also help our franchisees be less reliant on fuel margins for profitability and to build customer loyalty," he said. "And of course, we feel one of the best ways to build customer loyalty is through a franchise business system where customers can receive the same products and customer service location to location."
He explained why he believes that ExtraMile, which launched Jan. 1, 2007, has been successful at a time when most other major oil companies have pulled out of retail. "ExtraMile is built around the heavy c-store user," he said, adding that "heavy" and "super-heavy" users account for about 38% of the customer segment, but almost 70% of the spend. "So our destination categories, which are tobacco, coffee, foodservice and the HydraZone [immediate consumption energy drinks and waters, isotonics, etc.] are all built around the heavy c-store user. And we've seen in our customer data that we do very well attracting that segment." He said, in particular, that the company exceeds the competition in the morning daypart around coffee. "And I think it all goes back to that underpinning concept of being built to attract the heavy user."
ExtraMile franchising is currently available in southern California, San Diego, Seattle and Portland. It is also available in northern California, but only in the metro areas (San Francisco, Fresno, Sacramento, etc.) where Chevron is direct-servedbecause the offering is not currently available to marketers. Norris said, "We've been very guarded with ExtraMile from the start, and we wanted to really prove the concept. And we wanted to make sure we had the infrastructure to deliver it, and deliver it right wherever we've rolled out."
He said that in the marketer areas, Chevron does not have the field merchandising infrastructure and other resources to get sites opened and supported to the company's standards. "Not to say that we won't look at ways to expand into our marketer areas in the future, but the necessary resources are limited to our direct-served markets at this time," said Norris.
The company currently has 255 company-operated sites and 155 franchised sites. And, ultimately, the company would like to end up with 600 to 650 sites combined, Norris said. He added, "I think that's a good number for us, in terms of economies of scale."
The company is also ramping up its company-operated sites, and has opened one this year with two to three more in the works. Norris said there are benefits to being involved in both company and franchise operations. "It gives us a beta-testing ground to prove new concepts and new products. It also gives us a laboratory to run new programs before we unveil them to franchisees," he said of the company-operated sites.
And the franchisees, including a nine-member franchisee council that meets three times a year with Chevron execs, also bring a lot to the table, according to Norris. "It's very important for us to see the world from their point of view. And they bring a lot of expertise and things that maybe we hadn't thought of," he said. In fact, the franchisee council provided insights for the company's $6 million ExtraGood to Go food service program, which began launching in June and is slated for completion by August 1.
"We've developed the ExtraGood to Go offerspecifically the products, cooking procedures, packaging and merchandising specificationsall to give the customer a consistent experience whether they shop at an ExtraMile store in Fresno or Seattle," he said. "The true power of franchising really occurs when all locations share a commitment to serving the customer in a like manner."
And Norris said he believes that even outside of ExtraMile, at Chevron itself, it is an advantage for the company's marketers and retailers to realize that their supplier operates sites directly. "I think it does mean something for our marketers and retailers to see that their supplier is experiencing the same challenges they do day-to-day in operating sites. And it allows us to bring a different level of retailing expertise to our network, whether it's an ExtraMile franchisee, Chevron retailer or Chevron marketer."
He added, "We're always looking for opportunities to grow the ExtraMile network, but for now it's limited to our direct-serve geography in the west via a strategy to grow both company operated and franchise sitesbut more heavily leveraged toward the franchise side."
Click herefor a CSPTV look at Chevron's ExtraMile.
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