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All Aboard the MAPCO Express

With a new conductor at the helm and a coach full of experienced executives, MAPCO Express is putting into motion a new multi-year strategy to elevate the MAPCO brand in the minds of consumers, grow market share and increase long-term profitability.

Over the last several months, the Brentwood, Tenn.-based company brought aboard the right people and processes to achieve its objectives. In June 2009, MAPCO Express parent, Delek US Holdings Inc., named Igal Zamir as president of the convenience store segment, which operates 443 locations, more than 90 percent of which are in Tennessee, Georgia and Alabama.

Zamir, who reports to Delek US Holdings President and CEO Uzi Yemin, brings to the top post more than 15 years of senior, CEO-level experience in international, consumer-oriented markets, and is charged with managing key strategic and operational aspects of the retail division.

Four months later, Convenience Store News broke the news that MAPCO Express added to its management ranks with the hiring of four new executives -- two in newly created roles for the company. Bill Reilly joined the retailer as vice president and chief marketing officer; Tony Miller as vice president of sales and merchandising; Blake Miller as vice president of human resources; and Russ Shrewsberry as director of private label.

"While our bench of talent was deep in some areas, it was less so in others," the company told CSNews. "With the addition of Bill, Tony, Blake and Russ to the team, we believe we have the right people in place to take the business to the next level."

Each of these new leaders has a role to play in helping the convenience retailer engineer its plans for strategic growth. As chief marketing officer, Reilly is tasked with building the MAPCO brand in and around its core Southeastern U.S. markets, while also redefining the customer experience by delivering a unique value proposition on a market-by-market basis.

"In Delek US Holdings, MAPCO has the benefit of a well-capitalized strategic partner that is willing to do what it takes to bring the right people together with the required financial resources to make this business a success," Reilly said of his decision to join the company. "I am excited by the opportunities for growth that lay ahead of us in 2010 and beyond."

Previously, Reilly spent more than a decade at Altoona, Pa.-based Sheetz Inc., and also served as chief marketing officer for The Spinx Co., with headquarters in Greenville, S.C. This experience, coupled with what he was able to achieve at those two best-in-class retailers, makes him one of the finest marketing executives in the industry.

And his former employer agrees. "Bill Reilly was a positive influence on our company while he was with us," said Steve Spinks, president of The Spinx Co. "He was a big help in advancing our merchandising, marketing and store design ... and we remain thankful for his tenure."

Like Reilly, Tony Miller is a c-store veteran as well. During his nine years at Louisville, Ky.-based Thorntons Inc., he built a reputation as a seasoned operator with a focus on bottom-line results.

In his new role, he is responsible for managing the chain's vendor relationships and ensuring in-store product selection effectively addresses the tastes and preferences of local market demographics. Since he became part of the team, MAPCO began to take a closer look at its product SKUs and inventory management store by store, which over time will provide customers the truly personalized convenience they deserve, the company said.

"It's not enough to have a vision for growth. You also must have the expertise and financial wherewithal to execute your plans," Tony Miller explained. "At MAPCO, we not only have a vision for excellence, but also the capital and the people necessary to elevate our brand in the eyes of consumers. I joined MAPCO not because of the company it has been, but rather because of the company I am confident it will become."

MAPCO realizes, however, that it's not enough to say, "We want to be successful as an organization." There must be ways to define the metrics of success and measure progress on a regular basis. In the newly created role of vice president of human resources (HR), Blake Miller (no relation to Tony Miller) is focused on developing a change-driven culture, recruiting and retaining employees, and developing and training talent within the organization.

He is an accomplished HR leader who, since 1987, has held executive-level human resources and operational positions at top companies, such as Whirlpool, Merck and Dell.

"When we say we are focused on culture change, we mean that MAPCO is becoming increasingly performance-driven. Our operational objectives are measured and benchmarked in a way that positions us to achieve continuous improvement," the company's leadership said in an exclusive interview with CSNews.

"As the head of human resources, Blake helps our associates grow and adapt to their roles in the organization, while also helping them measure their success as individuals and as members of a team. We want our associates to look at each and every store with the sense it is 'their MAPCO.' Our most successful people are the ones who take pride and ownership in what they do."

It is this same thinking that compelled MAPCO to create the director of private label position. The retailer, based outside of Nashville, Tenn., began testing private label products in its stores in 2006, but at that time, the new initiative was managed by multiple departments.

Until now, no one manager at the company has "owned" private label, per se.

With the addition of Shrewsberry as the dedicated point person for private label, MAPCO is making the sale of quality, affordable unbranded products a top priority within its long-term strategic plan. Shrewsberry has a strong background in developing successful private label programs in multiple channels. Most recently, he worked in New Jersey with The Great Atlantic & Pacific Tea Co. Inc., where he served as U.S. Director of A&P.

MAPCO's current private label offering consists of bottled water, soft drinks, cigarettes, motor oil, transmission fluid and bagged candy. In 2008, private label merchandise sales represented 2.9 percent of the chain's total retail segment merchandise sales, vs. 3.0 percent in 2007.

Under Shrewsberry's lead, MAPCO intends to boost these numbers by introducing new private label SKUs that provide the company with a point of differentiation and enhanced margins, while giving consumers more unbranded alternatives to popular branded products in its stores.

Private label as a percentage of merchandise sales is much lower in the convenience channel than in the grocery, drug or dollar store channels, but MAPCO is focused on achieving significant penetration in the private label category over the next several years. According to research by The Nielsen Co., private label represents only 3.0 percent of convenience store dollar share compared to 18.7 percent of grocery share and 14.1 percent of drug store share.

Along with developing a substantial private label offering, MAPCO's new strategic plan also calls for the continued reimaging of its existing store base. As a result of several acquisitions, MAPCO operates stores under numerous banners including MAPCO Express, MAPCO Mart, East Coast, Discount Food Mart, Fast Food and Fuel, and Favorite Markets.

Since 2006, the company has reimaged its stores to the MAPCO Mart brand, with the ultimate goal of consolidating all the regional brands under this single identity. As of Sept. 30, the end of its third quarter 2009, nearly 27 percent of the company's total store base was reimaged. In the first nine months of 2009, the retailer reimaged 22 stores.

Reimaged locations get new fixture and graphics packages -- including new floors, lighting, counters and signage -- aimed at creating a more modern sensory experience to engage the customer. One of the company's primary areas of focus is on curb appeal, trying to draw customers in with more appealing external construction, and increase traffic in the stores.

When comparing the results of reimaged locations open more than one year to the rest of its legacy store base during the nine months ending Sept. 30, the reimaged locations significantly outperformed the legacy stores, selling more fuel gallons and ringing in higher total merchandise sales, according to MAPCO execs. "Clearly, the investments we have made -- and continue to make -- in our stores are paying financial dividends, which support the reimaging initiative," they said.

Morgan Keegan analyst Benjamin Brownlow, who specializes in the convenience industry, agrees management's focus on improving the merchandise offering and presentation is paying off. While MAPCO's strength is its very strong market presence in Tennessee, Georgia and Alabama, he said the company's weakness is the inconsistency of its brand image.

"In the Nashville market, they put a lot of emphasis on MAPCO Mart. But in the Memphis market, the quality of assets and merchandise presentation is not as highly looked upon as it is in Nashville," Brownlow told CSNews. "Management, though, has been focused on improving the assets, and I think these investments will be key to MAPCO holding and gaining market share."

Another key for the company, according to Deutsche Bank analyst Paul Sankey, is the fact that it owns much of its real estate. Delek US owns 60 percent of the underlying real estate of its company-operated locations, compared to the industry average of 40 percent, which gives the retailer more control to implement strategy and react to changes in the industry, he said.

MAPCO Express will continue to invest in new, ground-up MAPCO Mart locations as well, although the company declined to release specific growth goals for 2010.

MAPCO Mart prototypes boast significantly more square footage than reimaged stores, carry a more robust fresh food offering and have additional MPDs (multiple pump dispensers). All in all, they are "state-of-the-art, high volume retail locations" MAPCO believes can compete head-to-head with virtually any other convenience store offering in the country.

With its new executive team and multi-year strategy on track, MAPCO Express is moving ever closer to the final stop of this journey -- a new MAPCO brand in the eyes of consumers.

"By creating a customer-centric shopping experience that re-emphasizes the concept of the local 'neighborhood market,' we are hearkening back to a bygone era where shopkeepers knew the names of their customers, as well as their respective shopping habits," company leaders said.

"Net-net, we intend to further customize the shopping experience for our customers on a more localized basis. We will have what they need, when they need it -- with a smile."
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