Kwik Trip, Cumberland Farms Leaders Present Their Visions of the Future

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Kwik Trip, Cumberland Farms Leaders Present Their Visions of the Future

By Don Longo, Convenience Store News - 02/23/2012

MIAMI BEACH, Fla. -- The leaders of two of the largest convenience store chains kicked off this year's NACS Leadership Forum, the annual gathering of top executives in the convenience store industry, by sharing their visions of the future for the convenience and fuel retailing industry.

Donald Zietlow, president and CEO of Kwik Trip Inc., the 385-store operator of Kwik Trip and Kwik Star convenience stores based in La Crosse, Wis., gave a brief history of the family-owned company that shares 40 percent of its pre-tax profits with its employees -- or "co-workers," as Zietlow refers to Kwik Trip's associates. He was followed by Ari Haseotes, president and COO of Cumberland Farms, the 600-store convenience chain based in Framingham, Mass.

Both men discussed their companies' current status and presented their visions of the future.

Zietlow noted that Kwik Trip has unbelievably dedicated employees -- worker turnover was only 23.6 percent last year and shrink was a company-record low of 0.25 percent -- due to its profit sharing and Convenience Store Investment (CSI) plan that makes workers the owners of every new store the company builds. The chief executive also extolled other unique Kwik Trip competitive strengths, including:

• Operating its own distribution warehouse, kitchen/commissary, bakery, dairy and food safety lab, which have made the retailer less reliant on -- and in some cases eliminated -- direct store vendors, helping to improve gross margins;
• Shifting from a reliance on cigarette and fuel sales to a company driven by commodities sales. The retailer sells dominant amounts of butter, milk, fruit, vegetables, juice drinks, eggs, bread and other commodities at prices that are "more competitive than a Walmart, a Sam's Club, a Costco," he said.
• Daily delivery to all stores, allowing the company to turn its inventory every 16 weeks or three times per year.

Haseotes described Cumberland Farms as a company in the midst of transition, but one that has developed a long-term plan to succeed in the convenience and fuel retailing business. Its strategy starts with differentiation, and began with the development of a new logo, new fresh foods and a new food-centric store model, as well as a significant investment in upgrading the physical layouts of its stores.

Like Kwik Trip, Cumberland Farms' new strategy is to become less dependent on tobacco, while increasing its focus on foodservice, dairy and dispensed beverages. Also like Kwik Trip, the company is looking at natural gas, both compressed natural gas (CNG) and liquefied natural gas (LNG), as potential alternative fuels for both growth and staying power.

The NACS Leadership Forum continues today and tomorrow.