Casey's Maps Out Plan to Create Efficiencies
NEW YORK — Casey's General Stores Inc. is entering 2020 with bold ideas to grow its business. However, growth comes at a price and the convenience store operator realizes the need for efficiency.
With that in mind, Casey's President and CEO Darren Rebelez noted that creating investment capacity through efficiencies is one of three strategic pillars of the company's agenda. It stands along with reinventing the guest experience and accelerating unit growth, as Convenience Store News previously reported.
This piece of the puzzle, according to Jay Soupene, senior vice president of operations, will drive efficiencies to improve the shape of Casey's business and fund future growth.
"Maintaining positive control and sustaining a culture of continuous improvement are key elements of our strategy," Soupene said during the company's 2020 Investor Day, held Jan. 9 in New York.
Casey's is optimistic about the opportunities it has identified and its ability to drive cost out of the business going forward.
"Through new leadership, and an increased focus on efficiencies and enhancement of systems and processes, we will improve performance to reinvest in the growth strategy," he explained.
Casey's is focused on four primary areas for greater efficiency:
- Transforming its fuel capabilities;
- Driving procurement excellence;
- Optimizing the supply chain; and
- Driving process improvement and store-level efficiency.
On the Forecourt
With the integration of new leadership over the past year, Casey's saw significant shifts in its fuel strategy — focusing on fuel price optimization, commercial fuel expansion, fuel procurement and fuel transportation optimization, Soupene explained.
From a transportation perspective, the retailer currently delivers 75 percent of its fuel and sells roughly 2.4 billion gallons of fuel a year.
"With a large and leveragable transportation division, we are well positioned as we have significant overlap with many pipelines, refiners and terminals across the Midwest," said Soupene. "This provides us opportunity with our scale and buying power across a very broad footprint."
From a guest perspective, Casey's already implemented a major shift in its fuel strategy with the launch of a fleet card program in October. Through the second quarter of its 2020 fiscal year, the retailer added more than 8 million gallons to its network.
Casey's has made adjustments to its fuel product mix as well, with 194 Unleaded88 locations and 710 locations converted to biodiesel. It also pivoted from its traditional decentralized pricing approach and established a centralized fuel price optimization team with a new pricing platform.
This fiscal year, Casey's plans to integrate new efficiencies to streamline communication directly from the point-of-sale to the fuel sign, Soupene said. "These changes will provide more flexibility as we refine our market-level strategies and continue to balance volume and margin to maximize gross profit dollars," he added.
Inside the STore
As part of its strategic planning, Casey's also identified opportunities for value for non-fuel procurement. Under its current model, the various departments work independently to procure for their specific areas. However, the retailer will be moving to a new centralized procurement process.
"Our ability to improve capacity related to buying will position the organization for success. We are partnering with a recognized consultant in procurement to guide us through this journey," Soupene said, adding that the outcome will result in a centralized procurement center of excellence program.
From a distribution perspective, Casey's integrated supply chain differentiates it from its competitors, according to the senior VP. Currently, the company delivers the majority of products to its stores from two distribution centers — one in Ankeny, Iowa, and the other in Terre Haute, Ind. A third distribution center is being constructed in Joplin, Mo. The 283,000-square-foot facility will be fully operational in fiscal year 2022.
"This new [distribution center] gives us the ability to expand our growth, both south and west, while simultaneously optimizing the support to our stores in our 16-state footprint," Soupene noted.
In conjunction with the transition, Casey's is increasing the frequency of delivery to its stores to reduce out-of-stocks and drive value. The retailer will kick off the pilot this fiscal year and, based on results, will continue to expand the program through fiscal year 2021.
From a process and store-level perspective, Casey's will continue to focus on best-in-class talent, newly defined roles and responsibilities, automated tools and analytics, and the deployment of cross-functional teams, according to Soupene.
"We believe these changes will enhance operation agility, elevate in-store standards, scale efficiencies and drive performance," he said.
Ankeny-based Casey's operates more than 2,000 convenience stores in 16 states.
This is the third article in a four-part series on Casey's 2020 Investor Day.