Top of the Class
What retailers big and small can learn from CSP's top 25 industry giants.
Foodservice isn’t the only area top retailers are turning to for proprietary offerings. Ninety-two percent of the top 25 chains sell private-label products, not all of which are food-related. From lighters to energy drinks and cigarettes to motor fuel, the sky is the limit when it comes to private label.
“When starting out to develop a new program, you have to ask yourself: What are the things you want to be famous for?” Lewis says.
Cumberland Farms, for example, is famous for dairy products—and its private-label offerings reflect that.
“We are showcasing what has made us special in New England, which is our farm-based legacy, our focus on best-in-class dairy products,” Cumberland president Ari Haseotes said a few years ago, a statement that holds equally true today. “That includes milk, bread, cream, ice cream, cheese, yogurt, things that we’re known for.”
Like propr ietar y foodservice programs, private-label products are appealing due to their impressively high profit margins and consumer-friendly prices. Still, jumping into private label can be risky. Such products are difficult to produce, and many of them fail—even for top retailers such as Wawa, which does very well with most private labels but discontinued its ice-cream novelty and isotonic lines.
And while chains such as Aldi have found success selling almost exclusively private-label discount brands, Meyer points outs that c-store consumers are quite different than Aldi’s core market.
“When you go in a convenience store, people generally want (and expect) regional or national brands,” he explains. “When it comes to expanding private label, it’s not about doing so just for the sake of getting a cheaper cost from the supplier. If you don’t have the brands people want, consumers will go someplace else and often take their fuel business with them.”
It’s a lesson successful private-label purveyor Kum & Go keeps in mind when stocking its shelves. Although the chain offers private-brand products in everything from wine to batteries, brand names still constitute 90% of in-store stock.
“You don’t have to cannibalize the brand names for private label to succeed,” says Meyer. “You can coexist. You can keep your private-label existence, but you need the brands, too.”
For private-label products or expansive foodservice, size can count. But as the top 25 chains often prove, the most successful lines of business are often the ones right in front of you.
Take coffee, a c-store staple, albeit one whose reputation deservedly was rather bitter. Today, coffee is the cup of competition, not just with fellow convenience compatriots, but also with the finest of QSRs. Do it well and your business may, well, smell the coffee.
Case in point? Petro-Canada, whose customers buy as many as five cups of coffee a day. Or Chevron’s ExtraMile, which described its recently signed partnership with Seattle’s Best Coffee as the company’s “biggest revolution.” Or Wawa, which Lewis estimates sells upwards of 1,000 cups of coffee a day.
Other retailers in the top 25 are investing heavily in their coffee offer, from roasters and thermal pots to innovative marketing campaigns that make coffee their branded loyalty. The Pantry and Pilot Flying J, for example, are employing “coffee hosts” to better serve customers, and QuikTrip and Sheetz offer full-service coffee bars, complete with baristas.
“McDonald’s upgraded its coffee offering to prevent customers from leaving after eating and going to Starbucks for their coffee fix—and once McDonald’s does something on a mass scale, it opens the landscape for everyone,” Lewis says of the high-end-coffee phenomenon.
But coffee, in a sense, is something even more important—it’s a driver. It’s the 16-ounce cup that broadcasts your name, builds customer loyalty and cuts through all day-parts.
And coffee underscores an equally important lesson: maximizing space to sales.
Tapping the Trend
“Leverage your existing sites and draw as much traffic as you can to them,” Meyer suggests. “When Pac-Man first came out, retailers made millions of dollars off these machines that didn’t take up a lot of room. But guess what? That’s why people came.”
In a modern take on this concept, 7-Eleven has expanded its PayNearMe program, which essentially turns stores into Greyhound ticketing offices. The company is impressed by the results of a three-month trial run.
Not ready to turn your stores into ticketing offices or invest in a vintage Pac- Man game? Not to worry. Something as simple as a small but timely promotion can offer a big payoff.
“There are some common-sense promotions, like when you give away a bottle of water to get somebody to fill up a $60 gas tank,” says Meyer. “This is very cost-effective, and it brings the fuel customer into the store.”
The point, he says, is to be creative and embrace a total-store strategy not reliant on the success of one category or, worse yet, a single product.
“There’s no magic changes in how successful c-store chains operate,” Meyer says, “provided they continue to steer their companies with the same disciplines and strategies that earn profits and create a ‘culture’ for success.”
As such, perhaps the most important lesson from how our top 25 c-store retailers operate, or, for that matter, how successful retailers have always operated, is that it’s rarely a question of this or that, but how to make this and that work for you.