Couche-Tard's Global Footprint Helps It Navigate Coronavirus

LAVAL, Quebec — Alimentation Couche-Tard Inc. revealed how its global footprint is helping the company navigate the COVID-19 pandemic in a recent business update.

The Canada-based retailer said it is mitigating actions to adapt its business through capital allocation and cost containment in order to preserve and continue to grow value for its employees, customers and shareholders.

Couche-Tard has taken measures aimed at right-sizing non-critical capital expenditures, marketing and promotional expenses and various professional fees, in addition to:

• Making adjustments to store hours and shifts based on the analysis of data from labor models;
• Sharing best practices across business units;
• Frequent scenario modeling to optimize decision-making and minimize business risks; and
• Requiring authorization by a member of the executive team for all hiring related to non-store vacancies and for all business travel.

The global retailer also has leveraged its Global Procurement Team — which has frequent contact with key vendors to discuss possible issues in the supply chain — to identify areas of potential shortages and put remediation plans in place. Then, leveraging its Private Brands team, the company worked to source key items and ensure their availability for customers and employees. To date, there have been few meaningful out-of-stocks across its network, according to Couche-Tard.

On the fuel side, its Global Fuels Team has been active in securing fuel supply through key suppliers, while managing sourcing opportunities.

Impact on Store Performance

In Europe, shopping behavior largely started to change during the second week of March, as the World Health Organization officially declared on March 11 that the novel coronavirus had reached a state of pandemic. In North America, the impact on shopping trends was similar but lagged that of Europe by one week.

Informed by their early learnings, Couche-Tard's teams in Europe recommended adjustments to the in-store assortment, which allowed stores in North America to better anticipate the changes in shopping behavior and the items that could see greater demand, the company reported in its business update.

Across Couche-Tard's network, sites have remained open throughout most of the countries and regions in which it operates, as fuel retailers and convenience stores are deemed essential businesses. Here's how COVID-19 is affecting store performance:

Fuel

Volumes declined rapidly during the first few weeks that followed the implementation of restrictive measures across the different regions, but stabilized during April and began to see a gradual improvement in the latter part of the month. Fuel margins overall have benefited from the rapid and steep declines in crude pricing.

Merchandise

Sales benefited from pantry-stocking in the early days of the crisis. Starting in mid-March, merchandise sales decreased due to reduced customer traffic, but were mostly stable in their decline week-over-week since then. Overall, a higher average basket has helped offset a portion of the lost customer visits.

Demand has been greater for alcohol, tobacco products, basic staples, canned and dry goods, and cleaning and sanitation products. This has helped mitigate the negative impact from lower demand in the prepared food category.

Laval-based Couche-Tard has more than 16,000 sites across 26 countries and regions. Its global brand is Circle K.