ARKO Maintains Momentum of Key Marketing & In-Store Initiatives
RICHMOND, Va. — ARKO Corp. continues to execute on its three key merchandise and marketing pillars, which are designed to enhance the company's relationship with customers by providing them with value through a strategic focus on loyalty, core destination categories and foodservice offerings.
During the company's most recent fourth quarter and full year 2023 earnings call, ARKO Chairman, President and CEO Arie Kotler highlighted how these three pillars are contributing to strong in-store performance:
1. Grow sales in core destination categories through data-driven decisions and strong supplier partnerships
During the fourth quarter and for full year 2023, the six core destination categories — packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer — accounted for more than 50% of merchandise contribution.
"This concentration allows us to focus our assortment initiative on a narrow group of categories and leverage strong supplier partnerships that help drive total store sales," Kotler explained.
2. Drive increased frequency and total spend through order and delivery, and relevant in-store and in-app personalized deals via the fas REWARDS program
At the end of the fourth quarter of 2023, ARKO exceeded more than 2 million enrolled fas REWARDS members. The program has grown exponentially in the last two years. In 2022, approximately 283,000 members were enrolled in the fas REWARDS program. In 2023, the program gained approximately 730,000 members.
During Q4 2023, transaction size associated with enrolled loyalty members averaged $12.70, which was approximately 32% more than the $9.62 per transaction for customers not enrolled in the program.
"We continue to invest to drive new enrollment growth, deepen our relationship with existing customers, and offer our enrolled members valuable discounts that help address the ongoing inflationary pressure they're facing," Kotler said. "We are pleased with what we are seeing from our loyal customers and believe there is significant untapped opportunity as we continue to evolve our loyalty program."
ARKO is aiming to have 3 million enrolled loyalty members by the end of 2024, Convenience Store News previously reported.
3. Develop high-margin food programs
In January, after almost a year of research and development, ARKO launched a signature pizza program. The premium offering is available hot to customers at 225 convenience stores and frozen to take-and-bake at more than 1,000 locations in the GPM Investments LLC network. GPM Investments is a wholly owned subsidiary of ARKO.
Tapping into consumers' price sensitivity, the 12-inch pizza is available for $4.99 for enrolled fas REWARDS loyalty program members vs. $7.99 for customers not enrolled in the program.
"We have seen very positive customer reaction to the pizza with over 70% of those surveyed saying they will definitely purchase again. Our goal over the next several months is to have as many consumers as possible try this pizza and to roll out the offering, both take-and-bake and hot, to significantly more stores," Kotler said.
Additionally, at the end of 2023, ARKO collaborated with Tyson to launch a value-oriented chicken sandwich, available for $2.99 for fas REWARDS members. The offering is currently sold in 300 select locations.
[Read more: GPM Investments Creates Leadership Role to Focus on Foodservice Growth]
On the hot dispensed beverages side of foodservice, ARKO last year added bean-to-cup coffee at 391 locations, including newly acquired stores, bringing the offering to a total of 945 convenience stores.
"[Our] foodservice proposition is a multiyear process. We are already building the foundation to support our long-term journey to establish ourselves as a food destination by establishing foodservice credibility," Kotler expressed.
Richmond-based ARKO, which owns 100 percent of GPM Investments, operates in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites; and GPM Petroleum, which sells and supplies fuel to its retail and wholesale sites and charges a fixed fee, primarily to its fleet fueling sites.