Calgary Co-Op's Winning Formula

Members receive discounts, service and annual checks for their patronage

Supported by a business structure that offers customers a lifetime buy-in to the company for $1, Calgary Co-operative is growing at a time when many of its convenience store and gasoline competitors are closing sites.

The operator of 23 high-volume grocery stores, many with pharmacies and travel agencies; 20 wine and spirits stores; and 27 convenience stores or “gas bars,” Calgary Co-op has more than 440,000 members, 3,600 employees, assets of $393 million and annual sales of more than $1 billion. The chain's convenience/gas locations are found on its grocery store sites and at six standalone locations throughout Calgary, Alberta, Canada and a bit beyond.

Customers don't have to be members of the Co-op, but those who are have a say in how the chain is run through suggestion boxes, marketing surveys, phone calls to the member and public relations department and Calgary Co-op's annual general meeting, plus are able to run for the board of directors. Members receive free health seminars and clinics, travel seminars, special events, savings and more. But most customers join the Co-op for the yearly return on their $1 investment in the form of shares and equity.

In 2009, members received a 3.25-percent return paid in cash and shares on retail purchases other than petroleum and travel, a 1-percent return on travel purchases and a 9-cent-per-liter return on petroleum purchases, explained Woody Stelnicki, petroleum operations director.

Depending on total equity, based on the length of membership, and spending habits, members receive checks for as little as $15 and often hundreds of dollars, said Stelnicki, who has been a member for more than 17 years and receives 95-percent of his return in cash with the rest in equity in his share of the co-op.

Calgary Co-op is looking to add to its c-store base, which includes its oldest stores of 400-600 square feet to its newest 3,000-square-foot location. With wines and spirits stores — which are operated outside the c-store division in keeping with provincial law — and touchless car washes at many locations, Calgary Co-op is looking to grow its c-store transactions through greater same-site revenues and new locations.

The retailer has two new c-stores on tap this year, one in High River south of Calgary at a food center location, plus a standalone unit in the Panorama Hills area of Calgary. Calgary Co-op is focusing efforts on growth, mainly in new communities, but also areas in which they are not currently represented. “Some competitors are rationalizing, and we bought one of those locations, but that's not typical,” Stelnicki said.

With big business in traditional convenience items such as cigarettes, cold drinks and candy, the gas bars also sell roller grill items and other food to go, including Van Houtte coffee, cappuccino, Big Cool Slush drinks, shakes and more. The newest c-store has an in-store kitchen, producing muffin tops, pastries, breakfast sandwiches and other hot foods.

“We are actually preparing ribs and wings on site, trying something a bit different there,” Stelnicki said of the site, which opened at a high-traffic location on a major Calgary artery in March 2010.

“Since this is the first store of its kind for us, we are testing a number of menu items,” Stelnicki said. “If we hear about a new product or food item on the market, we may look at adding it to this location's menu to see how it sells. Some of our current menu items are also available in our food stores. We are monitoring the success of these hot food choices and will consider implementing these programs going forward in our new stores.

Calgary Co-op's Vision, Mission and Values

Vision: To be the premier shopping destination in the communities we serve.

Mission: To provide outstanding service, quality products, superior facilities and exceptional value.

Values: Integrity, Respect, Commitment, Leadership, Community.

The site also features one of the co-op's wines and spirits stores and a tunnel car wash.

“We still have some growing to do in gasoline sales there, but the c-store and car wash sales are significantly over feasibility,” the retailer noted.

In general, gasoline sales are a resounding success for Calgary Co-op. The gas bars' big footprint — its newest store has 12 pumps, fueling up to 24 vehicles at a time — and full-service option are major draws. Attendants will fill the tank, wash a car's windows and check the oil level at no extra charge.

“All locations also offer self-serve pumps, but full service is what we are known for. The full service is popular among moms with kids, but also many others who are looking for that service,” Stelnicki said.

Calgary Co-op in a Snap

■ Calgary Co-op adheres to the seven Internationally recognized principles upon which all co-ops are modeled. These are: voluntary and open membership; democratic member control; member economic participation; autonomy and Independence; education, training and information; cooperation among co-operatives; and concern for community.

■ In 2009, Calgary Co-op member-owners shared $44.4 million in patronage returns. This represents $29.9 million paid In cash and $14.5 million In share equity, for an overall patronage return of 5.07 percent 2009.

■ Calgary Co-op was selected Best Grocery Store in the Calgary Herald Readers' Choice Award for nine consecutive years. Also taking top honors were the co-op's deli, liquor stores and car washes.

■ Calgary Co-op received the 2009 Most Respected Corporation's award for Environmental Stewardship in Alberta in a poll conducted by Alberta Venture magazine. Calgary Co-op also received an achievement award for its waste management program that year from Calgary-based Metro Waste Management Services.

Also contributing to the retailer's gas customer loyalty: Revved Up Rewards. The program awards members 3 cents per liter purchased, given in the form of a coupon, the value of which is taken off a grocery store purchase.

Annual gasoline sales average 2.9 million gallons per site. The highest-volume location rings up a whopping 4.6 million gallons per year. By comparison, competitor sites that have been recently shuttered were pumping anywhere from 250,000 to 750,000 gallons annually.

“The amount of interaction among managers and the support they provide each other is amazing.” Woody Stelnicki, Calgary Co-operative

While in-store products are purchased and priced centrally — Stelnicki and his team use centralized planograms, then tailor the product mix to each store — the c-store director credits store managers with much of the chain's success. “They are there every day, and we sometimes adjust our product mix based on what they are hearing from customers,” he noted. “But their true role is that of a team leader, making sure we execute our marketing and merchandising programs, sanitation, safety and acting as coaches and trainers. Unlike some of our competitors, we don't have commissioned operators. Our managers are staff members who are invested as employees and as Co-op members. We rely on their knowledge of what we are doing and how we can do it better. I rely on them individually and as members of subcommittees.”

To facilitate communication up from the stores — plus sharing among c-store managers — Calgary Co-op holds manager meetings at least six times a year, bringing all of the managers together. Managers also attend additional meetings on c-store operations, environmental issues, safety procedures and other topics.

“The amount of interaction among managers and the support they provide each other is amazing,” Stelnicki said, noting e-mail is a key manager tool for alerting each other about day-to-day business issues. “The managers look to the other managers in their operating quadrants for assistance, but strong relationships develop across the city,” he noted.

Also giving Calgary Co-op a competitive leg up is its 11 -percent equity in Federated Co-operatives Ltd., a group of 300 co-operatives across Western Canada. Federated Co-op is the retailer's major grocery and petroleum supplier, which operates its own refinery. “Most of the product is trucked in daily from Regina, about eight hours away,” Stelnicki explained. “We aren't depending on a major oil company refinery. Because Federated Co-operatives owns its own refinery, our success is based on our own economics.”

Just as Calgary Co-op shares its profits with members, Federated Co-operative shares its profits with Calgary Co-op and its other members. In 2009, Calgary Co-op received $33.9 million in patronage refunds from FCL.

Looking to be price competitive with other c-store operators and grocery stores, Calgary Co-op typically promotes its c-store specials — such as king-size Cadbury chocolate bars at two for C$3.33 or two Monster energy drinks two for C$5 — through weekly flyers.

While the retailer is not involved in social media yet, it is re-launching its five-year-old Web site this spring. “It will be very intuitive and very user-friendly,” Stelnicki said. “Also, we'll do a direct mail campaign to members who want to receive offers.”

Much of Calgary Co-op's customer engagement involves community outreach. The retailer has several initiatives throughout the year to raise money, which is given back to the communities it serves. One of the largest community programs is Bags to Riches, whereby members who recycle bags or bring in reusable bags are credited 3 cents per bag, which goes to the customer or to charity. Last year, Calgary Co-op donated approximately $50,000 generated from the Bags to Riches program to local charities, which are selected with store employee input. The 2011 designated charities are Calgary Humane Society, STARS Air Ambulance, Heart & Stroke Foundation and Tom Baker Cancer Centre.

“We want people to recognize their peers, staff and coworkers on a regular basis.” Wood Stelnicki Calgary Co-operative

Looking forward, the chain's biggest challenge will be hiring, Stelnicki said. “We're highly service oriented, and we need to hit certain numbers of employees. We need people with a positive attitude and a willingness to serve, to smile and do something to make someone's day.”

To boost retention and reward excellence, the retailer rolled out the Smile Rewards program this year. Through employee feedback, the operator learned some of its former recognition plans discouraged immediate recognition for a job well done. Smile Rewards addresses that problem by giving every store manager on-the-spot recognition cards. When a manager witnesses an employee living the values of Calgary Co-op, he instantly awards an employee 500 to 3,000 points. Points are later redeemed for prizes ranging from gift certificates, movie theaters and restaurants to iPods and other electronics. There are even travel packages, such as a white-water rafting trip.

Additionally, any employee can recognize a job well done via the Smiles page on Calgary Co-op's internal Web site. Employees type in the name of the person they wish to recognize and briefly describe why they are recognizing the employee. That information is instantly displayed on the Web site's Smile Rewards homepage and the recipient is notified via e-mail. Each month, the person from every store who receives the most “Smiles” receives an additional 2,500 points.

“We want people to recognize their peers, staff and coworkers on a regular basis,” Stelnicki said. “Every retailer is going after the same type of individual. But we've been successful, and we will continue to be successful as our employees all come together and do what it takes to keep a store successful.”

For comments, please contact Barbara Grondin Francella, Senior Editor, at [email protected].