Couche-Tard Zeros In on Key Synergies From Holiday Cos. Acquisition

LAVAL, Quebec — One year after officially adding the Holiday Cos. retail network to its portfolio, Alimentation Couche-Tard Inc. continues to reap benefits in the form of "reverse synergies" from the acquisition. 

"In the last several months, our dedicated teams have been piloting programs across the network based on Holiday's grab-and-go food offer, Holiday's store layouts, design practices, some unique promotional activities and marketing models," Couche-Tard President and CEO Brian Hannasch reported during the convenience store retailer's third-quarter fiscal 2019 earnings call, held March 20. 

"While we are very pleased with the integration so far, what's most important is the outstanding people who serve our customers every day in the newly formed Northern Tier business unit," Hannasch added. 

Now, Couche-Tard is ready to move beyond the pilot phase and introduce some of these programs to scale into its heritage program.

Hannasch cited five key areas of focus in terms of reverse synergies: 

1. Center store. Center store and the Smart Value program is a Holiday strength, according to the CEO. The program takes almost every in-store category, except for the cold vault, and offers "2-for" deals on a rotating schedule with "very clear communication, strong supplier support, great value for the customer and a very rigorous optimization of both total margin and overall basket," he explained. "We are rolling out that program throughout the U.S. and preparing to do the same in Canada."

2. Private-label beef jerky. A top seller in Holiday locations, Couche-Tard has kept the branding of Holiday's private-label beef jerky and rolled it out nationally in the United States. The product has become a top 10 SKU very quickly.

3. Store layout. "Holiday has a very thoughtful store layout in which they target and direct the customers through the food and impulse categories," Hannasch explained. Couche-Tard is retrofitting a number of its traditional Circle K sites to the Holiday flow to gauge the impact. "There will be a lot of learnings there, I think," he said.

4. Food programs. Couche-Tard, the parent company of Circle K, is piloting six Holiday food programs in different places throughout the U.S.

5. Labor model. Hannasch said Holiday has a very rigorous approach to labor that Couche-Tard will begin rolling out on a staggered basis across North America in the first quarter of fiscal 2020. "All of our countries have labor models, but the detailed time studies that Holiday brings to the table is going to allow us to significantly improve our approach to allocating labor," he said. "It's a big deal. It give us more control of our labor to make sure we are optimizing the customer experience, while at the same time making sure we have very clear visibility to activities at the store and the associated costs for those activities."

Alimentation Couche-Tard is based in Laval. As of Feb. 3, its network comprised 9,933 convenience stores throughout North America, including 8,662 stores with fuel. Its North American network consists of 19 business units, including 15 in the United States covering 48 states, and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the United States.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of Feb. 3, its European network comprised 2,709 stores, the majority of which offer fuel and convenience products, while the others are unmanned automated fuel stations that only offer road transportation fuel.

In addition, under licensing agreements, more than 2,100 stores are operated under the Circle K banner in 14 other countries.