Breaking Conventions, Charting Futures at NACS Leadership Forum

By Mehgan Belanger

MIAMI BEACH, Fla. -- Under sunny skies here, approximately 200 of the convenience store industry’s best and brightest retailers and suppliers joined during the inaugural NACS Leadership Forum to develop new ideas on convenience retailing by acknowledging and challenging past conventions that may limit companies, but also learning how to see the industry through a new point of view.

Kicking off the conference on Feb. 25, was opening general session speaker Howard Stockel, CEO of Wawa Inc., who set the tome for the conference by discussing the traditions and history of the 200-year-old company, and gave a picture of the current retailing landscape. Wawa started on its current path as a c-store retailer in the 1960s, and evolved into a fresh food and gas retailing over the past 45 years, he explained.

Today, "the retail landscape is changing like never before," he said, noting customers are worried about their jobs and keeping more of their earned money by eating out less and making fewer impulse purchases. In addition, "Everyone is trying to sell customers their next meal," Stockel said, adding food retailing today is about two things: value and price.

Stockel also shared Wawa’s "hedgehog framework," a strategy vetting process created by author Jim Collons, who wrote "Good to Great." The hedgehog framework helps companies understand their DNA, or several basic truths, and states that as long as the company never compromises on these, it will b successful. For Wawa, these are:

  • Core purpose: simplify customers’ lives. When decision making, proposals must make customers’ lives easier, but also must not complicate them, which is one reason why Wawa does not have video or DVD rentals or offer money orders -- it would hold up customers, Stockel said.

  • Values: Wawa’s six are delight customers; value people; passion for winning; do things right; do the right thing; and embrace change. The values are "coming in more handy today than ever before," he said. "Customers have choices, what separates one retailer from another is the customer experience."

  • Know what you can be best in the world at. For Wawa, this means satisfying frequent and immediate needs quickly and easily, a phrase known to employees as FIQE for short. Stockel said Wawa executes this through "limiting the playing field" by not selling everything, and not trying to be everything to everyone.

  • Know what drives the economic engine. "Running a business today is like being on a roller coaster," he said, giving as an example the oil and gas price volatility of 2008. At Wawa, what drives the business is customer transactions and increasing profit, which is done by drawing people into the stores.

But Stockel noted the convenience chain doesn’t always succeed. For instance, he said recent forays into food ordering through cell phones’ text messaging systems and a store design with drive-in islands "failed miserably." Both initiatives saw slow starts, and didn’t get off the ground even after discounting products to encourage usage. When the retailer went back to customers to determine the problems, they told the retailer, "if it’s not broken, don’t fix it," explained Stockel, adding customers enjoy coming in the store, and even waiting the four minutes it takes to prepare fresh food orders.

In 2009, Wawa will focus on three things -- tradition, trust and traffic. "Consumers will look back and ask who they trusted in the past, and that’s who they will trust now," said Stockel.

Also presenting on the first day was Paul Ballew, vice president of research and consulting firm the Integer Group, which analyzed the convenience industry for the NACS/Coca-Cola Retailing Research Council. Ballew presented findings of a recent study, with the task of creating new value propositions for operations in the convenience store channel.

Through interviews with customers and c-store retailers, Integer Group discovered three types of convenience stores -- neighborhood stores, which caters to fill-in grocery stops and are not reliant on fuel for traffic; commuter stores, located on busy roads and are relied upon by customers to be a quick in and out stop; and interstate stores, which are primarily fuel stops for families and professional drivers.

Integer Group also outlined six c-store customer types: Drop-in Daily; Mobile Professional; Long-distance Driver; Highly Hesitant; Overstretched Mom; and Local Loyalist. Ballew noted c-stores have historically catered to the Drop-in Daily customer, which is better known throughout the channel as "Bubba," but in doing so, have limited their scope and may be missing business opportunities with other shopper types.

Through the interviews, the firm also developed a five-level hierarchy of customer needs. At the foundation are the first three: Safety, Cleanliness and Hospitality. The fourth level is Simplicity and Ease, and the pinnacle is Time Enrichment, or making connections with shoppers.

Executing these five needs was the topic Gary Arthur, senior vice president of Valero, spoke about on the second day of the conference. He emphasized retailers should not "blow off" the three needs that make up the foundation.

"Safety is more critical today than ever before," he said. "If you think about the economy we are in, there is more risk of burglary." Some ways Valero has focused on safety in its stores are lighting and DVR surveillance, along with establishing a central monitoring system that provides real-time views into the stores. The retailer also is making a push for employees to wear pendants that connect them to the central monitoring division, so in the case of an emergency, help can be dispatched immediately. The retailer currently has a roughly 92 percent compliance rate, with the goal of 95 percent.

Cleanliness is obtained through clear, enforced standards that are internally audited, Arthur said. And hospitality is facilitated by greeting customers and learning names, as well as customer service training and a selective hiring process.

Some ways Valero is addressing the fourth level of shopper needs – simplicity and ease – is by creating a point of differentiation from the other channels that are vying for the convenience dollar, Arthur said."In and of themselves, speed and convenience isn’t enough to grow the business," he said, adding Valero tries to create value by refreshing the products and services it offers, as well as de-centralizing the store-level decision making to allow for "niche market opportunities."

For Valero, time enrichment, the highest level of shopper needs, is made through one of its core values – community service, explained Arthur. For example, the company gave a record $1 million to the United Way last year, and its employees spent more than 10,000 hours volunteering at charities and local projects.

"Money is great, but it’s easy to write a check. Time is invaluable," he said.

Later, the attendees were encouraged to tackle the hierarchy of needs first-hand through interactive breakout sessions. The workshops positioned retailers in the shoes of their customers, and made them evaluate through shoppers’ eyes various operational ideas – such as implementing customer service training, a bonus award program for stores based on performance, a drive-thru service, a dog wash, suggestive selling program, technology, and more. Then, the attendees were asked to rank the ideas based on potential return-on-investment and the time it would take to implement.
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