Chevron Promises Continued Push into Growing Retail and Exploring Alternative Fuels

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Chevron Promises Continued Push into Growing Retail and Exploring Alternative Fuels

DENVER, Colo. -- Promising not to rest on their laurels, Chevron North America executives told its marketers, dealers and franchisees that the best is yet to come during the oil company's biannual convention in Denver last week.

"Beyond the Horizon" was the theme for the event, which attracted almost 2,500 attendees, according to a company spokesman. In the opening Town Hall session Friday morning, Danny Roden, vice president of North America marketing; Frank Herbst, general manager of the company's Eastern retail region; and Cary Knuth, Herbst's counterpart for the Western region, disclosed the company's achievements since its last convention two years ago in Nashville, Tenn., and outlined new initiatives aimed at growing marketing share in the retail arena.

In addition to announcing a one-month extension (until the end of September) of its temporary credit-card fee reduction program and the imminent end of its 75-cent upfront fee on gift cards, Chevron also revealed that next year it would introduce a new co-branded credit card tied to a loyalty program. Roden told Convenience Store News that further details of the new co-branded card would be revealed in the coming months.

Roden also spoke about the success of the company's dual-brand strategy, the progress and positive results of the company's forecourt image refresh program and its fledging ExtraMile c-store franchising effort, and Chevron's commitment to exploring and developing alternative fuels.

Dual-brand Strategy
Since acquiring the Texaco brand from Shell in July 2004, Chevron has added 2,400 new Texaco locations in 20 states. "No other oil company has been able to accomplish anything like this," said Roden, who added that Texaco remains one of the most respected brands in the world.

Texaco represents power and performance, said Roden, while the Chevron name is viewed by consumers as engaging and likeable -- thus enabling the company to reach two distinct consumer demographics. "Both brands, regardless of location, have a unique consumer profile," said Herbst. They do not cannibalize sales from one another, and enable the company to gain market share, especially in traditionally weaker markets for Chevron. Roden said 800 of the locations are existing Texaco dealers, while the rest are conversions from other oil companies. New Texaco sites include 90 former Conoco locations in Mississippi and Texas, 100 former ExxonMobil sites in Texas, more than 200 former Citgo locations in Louisiana and Florida and 130 former Crown dealers in Virginia and Maryland, said Herbst.

"The list of new customers goes on and on," continued Herbst, who added that the company's brand and support offering is an attractive "to a single-store operation in Miami as it is to a 200-unit operator in Texas."

In a private meeting with CSNews, Roden noted that the dual strategy works because the brand offerings are distinct from one another, but "everything behind the customer is the same, from invoicing to pricing to programs."

Image Refresh
Unlike the 12 years it took for the company to roll out its Hallmark 21 image, Chevron expects to completely refresh the forecourt look of 8,000 facilities across the nation in just five years. The image fresh program that started last year has been a hit with many Chevron retailers and marketers. The rejuvenation program updates key image and lighting elements of the forecourt fueling area while using less energy. Wenda Lewis, CEO of Gainesville, Fla.-based Lewis Oil Company, reported that sales increased 11 percent for the first seven months of 2007 after converting all the company's 24 locations to the new look.

Herbst noted that the image refresh is scaleable to virtually any size outlet and that the energy-efficient lighting is brighter -- thus making consumers feel safer while refueling.

Underlining the company's commitment to retail, Herbst said Chevron is developing a "new vision" for the role of the company's business consultants. "We want them to be world-class," he said. The company hired a consulting firm and moved some consultants out of field assignments to help develop new processes to assist its marketers and retailers.

"The ExtraMile franchise concept complements our strong forecourt offering and provides competitive differentiation in the market," said Knuth. ExtraMile started as a pilot test in Seattle two years ago, and has been expanded to Southern California. More than 150 ExtraMile locations are expected to be in operation by the end of the year, said Knuth of the franchise program that is currently an exclusive offering in select California and Washington company-owned and -operated c-stores as well as eligible Chevron direct-served, retailer-owned and retailer-operated sites.

CSNews had the opportunity to interview three of the key people behind the development of the ExtraMile program: Ian Noble, manager, franchise concept development and alliances; Scott Lystad, national franchise sales manager; and Jim Meynink, general manager, franchise development.

"The key to the success of ExtraMile is execution and consistency," said Noble. Chevron offered franchise contracts to 26 of the first 28 stores in the ExtraMile program. Of those 26, 21 signed the contract immediately and two of the remaining five are currently coming back as frachisees, said Noble. "We are working on 70 contracts now in the greater Los Angeles area," added Scott Lystad, national franchise sales manager.

"That's a huge amount to take on in the first year," said Jim Meynink, who cautioned that the company wants to take expansion slowly to ensure stage and deliver on its commitments and maintain execution.

Like the forecourt refresh program, ExtraMile is also scaleable for all sizes of stores. The key elements of the concepts can fit a 600-square-foot unit up to a 2,800-square-foot location, said Meynink.

The ExtraMile prototype is centered around serving the heavy c-store user with four key categories: HydroZone (energy drinks, functional beverages, etc.); food (hot and cold sandwiches); coffee (upscale Van Houtte coffees); and tobacco (a consistent back bar program that reduces out-of-stocks). Cost to retrofit to an ExtraMile format ranges from $90,000 to $170,000 depending on the age and size of the current site.

Because execution is so important, Chevron developed a program called EM Stars as a motivational tool for employees. The program includes mystery shopper visits that review a 120-question checklist related to various customer service and operational functions. "We give them incentives in the form of recognition and cash rewards to drive proper execution," said Meynink. "Our belief is that if you execute every single day, everywhere, you'll beat the competition."

Measured expansion next year will bring ExtraMile to other California markets (San Diego, Sacramento, San Francisco, and San Jose) and Portland, Ore.

"We have to earn the right to grow," added Meynink.

Alternative Fuels
Roden also promised that Chevron would be a leader in meeting the growing demand for energy worldwide. In the past year, the company rolled out new Ultra Low Sulfur Diesel fuel and has invested in the development of other alternatives to gasoline, including biofuels. Recognizing the increased demand for diesel fuel, the company is improving its terminal infrastructure and has entered into a joint venture to develop a clean burning diesel for commercial and consumer use.

Acknowledging that "there are a lot of moving parts in the alternative fuels area," Roden, who serves as chairperson of the API (American Petroleum Institute) Marketing Committee, said that the entire industry needs to work together to help shape national energy policy. "This is not a competitive issue and it's not an oil company issue," he said. "It's a U.S. economy and consumer issue."

With ethanol consuming a whopping 20 percent of the nation's corn crop, Chevron is already looking at the next generation of alternative fuels, said Roden, adding, "We will have the products the marketplace demands today and into the future."