Delighting More Customers Key to Corner Store’s Growth

SAN ANTONIO -- As CST Brands Inc. moves further out of the shadow of its former Valero Energy Corp. parent, the young publicly-held convenience store chain hosted its first CST Trade Show here this week. Close to 800 Corner Store unit, area and zone managers, as well as store support executives, gathered in San Antonio Monday and Tuesday, Jan. 20-21, for two days of education, product sourcing and networking under the theme: “Delight More Customers Every Day.”

In a series of private interviews with CSNews Online during the show, CST’s top executives, CEO Kim Bowers, Chief Marketing Officer Hal Adams and Chief Operating Officer Tony Bartys, discussed the key areas of focus for the retailer, which was spun off from oil refiner Valero just nine months ago.

“Our core purpose is to ‘Delight More Customers Every Day,’” said Bowers. “It’s our mission statement. It’s who we are and where we want to go. If we can do this, we will be the most successful convenience store company out there.”

Bowers, who served as senior vice president, general counsel at Valero before being chosen as chief executive of the new freestanding retail entity, told CSNews Online that she was excited about the challenge of growing Corner Store, which operates 1,040 stores in the United States and more than 800 in Canada. The retailer plans to open 38 stores this year (30 in the U.S.). The number of U.S. openings in 2014 will be the most in a single year for Corner Store.

However, new store growth alone is not going to enable the retailer to meet its goals. “We currently serve a half-billion customers a year. If we’re going to reach our goal of serving 600 million customers, we have to focus on growing our customers at our legacy stores,” said Bowers. “New store growth is not enough to move the needle with as big a base as we have.”

Corner Store’s new prototype is one of the best-looking convenience store designs in the nation. The retailer’s new store in the Houston-Sugar Land-Baytown metropolitan area in Texas was the winner for Best Interior Design in the 2013 Convenience Store News Store Design Contest. Currently, about 60 of the retailer’s stores are built to this modern 4,500- to 5,500-square-foot model.

“We have more than 1,000 legacy stores. They are not the shiny new stores, but they are successful,” said Bowers. “Our new stores are lovely and really important to us, but our legacy stores are critically important as well.”

To get more out of its legacy stores, Corner Store is counting on its people -- 10 percent of its store managers have been with the company 20 years or more -- and delivering better customer service to drive customer growth.

Educational seminars at the CST Trade Show focused on customer service, foodservice and merchandising. Store managers representing all 650 Corner Stores in Texas, Louisiana, Arkansas and Oklahoma, were bussed and flown in to San Antonio for the first time in company history to attend seminars and share best practices across the company. A similar event for western division stores was held in Phoenix two weeks earlier.

The second day of the event focused on a trade show where managers could buy directly for their stores from company suppliers.

Like many other industry leaders, Bowers feels foodservice is critical to the retailer’s growth. “We have a lot of energy focused on fresh initiatives,” she said, noting that the company has added a new director of foodservice in Rich Poye.

CMO Adams pointed out that Corner Store’s foodservice is “solid in the morning daypart, but how do we go beyond breakfast?” He said the retailer needs to broaden its menu to encourage sales throughout the day. “For example, we’re adding several items, including an afternoon snack item,” he said.

Adams also sees a big opportunity for Corner Store to refocus on some of the old-time staples of the convenience store business -- selling milk, eggs, bread and other fill-in grocery items. “As supermarkets have gotten bigger and bigger, our class of trade is going to regain the opportunity for fill-in grocery sales,” he predicted.

Private label is another area in which Corner Store plans to grow. The retailer’s proprietary Fresh Choices brand is used on about 185 items sold in the store and with nearly 300 total store-brand SKUs, Corner Store goes deeper into private label than almost any other c-store company.

“We share a home market with H-E-B, which has the highest penetration of private label in the grocery market. Our hometown consumer base is very familiar with private label and we know how to make store brands look like national brands,” said Adams.

One of Corner Store’s biggest challenges, according to Bowers, is getting out from under Valero’s teal-colored banner. “We are basically a new company with our yellow Corner Store brand,” she said.

But there are more than 6,000 Valero-branded sites in the U.S. “The teal image [of Valero] is very, very strong,” noted Adams. “Our new store design motif is yellow, but are customers seeing past the canopy to the store itself?”

The retailer is currently conducting a consumer study in Houston to determine the success of the company’s messaging of the Corner Store brand there. “If we are doing it well, we’ll take that communication strategy to other markets,” Adams said. Corner Store has roughly 150 stores in Houston.

Because new stores are not required to sell Valero fuel, some of the 30 units expected to open this year may feature a different fuel brand. In fact, one store currently under construction in south Texas will sell a new “Corner Store” fuel brand.

Along with all the changes in merchandising and branding comes a need to hire the right people to execute the strategy, noted COO Bartys.

“Foodservice, for instance, requires us to find a different type of talent, and to train them and keep them employed with us,” said Bartys, who foresees a greater need for specialization at the store level among both managers and associates.

For Bartys and his operations team, though, the biggest challenge in the year ahead is opening a company-record number of stores. “Last year, we opened 15 stores with aplomb. This year, we are going to open 30 and some regions like Houston will be getting a lot of new stores.”

Adams pointed out that Bowers has brought about a change in culture at the former oil company subsidiary. “Kim visited 100 stores in her first 100 days with us and she instituted a new program called ‘Corner Store Time’ in which all store support employees must work two days a year in a store, and all members of the executive leadership team must work five days – and our bonuses depend on it,” he said.

Bowers has made it clear that the stores come first. Another early decision was renaming the company’s corporate office to the CST Service Center.

“She is all about making sure we [at the service center] make things easy for the stores,” said Adams. “Nobody is more important than the people in the stores working face-to-face with our customers every day.”