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AWMA Show Highlights Convenience

LAS VEGAS -- Three top convenience store retailers outlined steps their companies have taken to be successful and respond to the needs of their consumers during the 2010 AWMA Show, held last week in Las Vegas by the American Wholesale Marketers Association, whose members are distributors that serve convenience stores across the nation.

Jim Fiene, chief operating officer, Open Pantry Food Markets of Wisconsin, explained how his company "recreated" Open Pantry after it purchased 39 conventional c-stores in the Milwaukee area. The objective was to create a "Starbucks-like atmosphere" that would attract female shoppers as well as the "Bubbas" of the world, and customers just stopping for gas.

Open Pantry closed 13 of the stores that could not be transformed, and overhauled the remaining 26, adding seating areas, leather couches, free Internet, slate flooring -- all designed to make shoppers feel comfortable and at home. The result has proven successful, he said, adding lunch traffic is terrific, boosted by the Internet offering that draws many workers unable to surf the Web or check personal e-mail at work.

The company focuses on quality and execution of smart marketing ideas, Fiene explained, and averages just under 10,000 SKUs in each unit.

"We want to be the consumer's secondary grocery store," he said. "We want to play in the world that other c-stores have gotten out of. The word 'pantry' means something -- a place to get my groceries. That's just what we want to be." So, unlike many c-store operators, Open Pantry carries multiple choices of such products as catsup and mustard and makes sure they are in-stock on products consumers need, such as laundry detergent.

Charlene Kovacsik, marketing director at Pacific Convenience & Fuels, Kent, Wash., said her company took over stores previously operated by a major oil company and is a franchisee of Circle K. "Driving costs out of the system was important, as was offering foodservice that would compete with QSRs," she said.

By working to attract the "soccer mom" trade, her company has been able to broaden its appeal without losing the traditional c-store customers. "We are working on fresh," she said. "It's also the way we merchandise products. We are now looking at a branded sandwich for grab-and-go."

The offerings there include a mix of branded, to draw traffic, and private label to help boost margins. "We want the customer to recognize the quality and feel comfortable taking our food home and consuming it," she explained.

Her company's partnership with its distributor has been important to its ability to execute its new strategy she said, including a strategy to get new products in quickly and to get them out of the store when their time has passed.

Jeff Turpin, chairman and CEO of Worsley Operating Corp., which operates 200 convenience stores in North and South Carolina, said his company changed its grocery mix with the objective of improving its margin, and said being known for having new products first is important to its success. "We've got to have something different for our stores that the other guys don't offer," he said. The company's stores operate under the banners Scotchman, Young's, S&E Food Marts and Li'L Cricket Convenience Stores. It also operates two truck stops.

Initially, when his firm took over the chain, "We cleaned out SKUs," Turpin said. "But now we are adding, not taking away." Today, Turpin said, his company continues to upgrade many of its stores by adding branded fast foods such as Subway, Quizno's and Blimpie. In addition, many of the stores have their own brand of foods, he said, and offer a breakfast and lunch menu including biscuits, hot dogs, pizza, and fried chicken.

Like Kovacsik and Fiene, Turpin said social networking is part of his strategy, although it is treading carefully in those waters. "When we have specials, we communicate it out [using Facebook.] We are going to have to dedicate resources in marketing to do that. This is going to be very important stuff."

Supermarket Guru Offers Challenges
Phil Lempert, the "Supermarket Guru," one of the leading experts on developments in the food industry -- including consumer trends, told distributors at the conference that they are in a perfect position to capitalize on an increasing desire of consumers to shop in smaller format stores to benefit from their convenience.

"Consumer trends change and evolve," Lempert said, "so our job is to continually evolve and change as well. We need to stay in front of those trends."

While consumers are still nervous about the economy and some of their newly adopted strategies to save money are likely to remain even as times improve, Lempert said "value" is at the heart of their decision-making today when it comes to spending money.

"There are new rules at retail," he said. "Don't screw up. People will not accept mistakes. For them, 'It's all about me.' Quality is where it's at. Quality is everything, just to be in the game."

Other important consumer concerns, according to Lempert, include an increasing interest in the country-of-origin of food, a desire to eat healthier, an increasing interest in, and use of, technology -- including social media -- and a need for ways to save time in busy schedules.

Distributors, he said, need to care about what is driving consumers so they can better understand the needs of their retailer customers. "If you don't care about consumers, fold up your tent and leave," he advised. "You must have knowledge of your customers' consumers."
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