Circle K Tests Tobacco Club

More than 600,000 members enrolled in new rewards program in six weeks

LAVAL, Quebec -- In an effort to get out in front of concerns about lower foot traffic, Alimentation Couche-Tard and its Circle K stores are moving on a number of initiatives to keep merchandise sales and margins healthy, including a tobacco rewards program called the Circle K Tobacco Club.

President and CEO Brian Hannasch during a recent investor conference call revealed a “strong pipeline of tactical campaigns” to go into effect this spring and summer targeting both fuel and merchandising goals. The company's objective: “to execute quickly, learn quickly and scale quickly if they work,” he said.

One such program launched in early 2018 was the tobacco club, which Hannasch described as using part of the chain’s existing loyalty platform and involving 4,500 U.S. stores. The program essentially offers smokers “additional value,” he said.

Over a six-week timeframe, Circle K enrolled more than 600,000 unique members and executed 2.4 million related transactions. The activity drove incremental traffic and sales, Hannasch said.

“We’re moving rapidly to deploy tools targeting [customers] and [are developing a] more personalized product assortment and pricing, some of which will begin to hit our stores this summer,” Hannasch said.

The efforts are part of a plan to reinvigorate store visits. On the March 20 investor call, Hannasch said Circle K’s lower traffic counts and resulting sluggishness in merchandise sales followed a larger U.S. retail trend across all channels. “Overall, when you step back and look at merchandise, retail sales in February in the U.S., [those sales] were negative,” he said. “Despite lower unemployment and consumer confidence, it’s a bit of a puzzle that we and a lot of our key supplier partners are working to understand.”

Specifically, Circle K has seen softness in the beverage and tobacco categories, and regionally in its Southeast and Midwest business units where several snowstorms in the Carolinas and Georgia added to a general retail malaise. “So really, it’s the midcontinent part of the U.S. where we see some persistent weakness inside the box,” he said. Initiatives such as store resets, technology upgrades and fountain programs were helping the chain fight back the negative trends, he said.

With more than 8,000 c-stores in the United States, Laval, Quebec-based Couche-Tard ranked No. 2 in CSP's2017 Top 202 list of the largest c-store chains in the United States.

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