Kwik Trip Phasing Out Tobacco Outlet Plus Stores
LA CROSSE, Wis. — In this murky tobacco era, how do you ensure a solid future for 39 tobacco-focused stores and their corresponding 200-plus employees? If you’re a convenience store company named Kwik Trip Inc., you convert them to “express” versions of your 450-plus traditional convenience stores.
As of March, La Crosse-based Kwik Trip transitioned five of its 39 Tobacco Outlet Plus (TOP) adult-only stores to its newest venture — dubbed Kwik Trip Express in Wisconsin and Kwik Star Express in Iowa.
These former TOP stores, four of which are in Wisconsin and one in Iowa, were chosen to be part of the first conversion phase because they were already equipped with gas operations and therefore made for the smoothest transition and evaluation, according to Terry Schmitz, zone leader for TOP and the new Kwik Trip/Kwik Star Express stores. The majority of TOP stores do not sell gas.
“We wanted to see what we could fit in the various footprints — the first five [express stores] ranging from 2,000 to 2,500 square feet,” Schmitz told Convenience Store News in an exclusive interview.
Kwik Trip found that the express stores (which unlike the former TOP stores are no longer age-restricted) could hold its full selection of tobacco products. These products are now sold in a non-self-serve fashion with the exception of premium cigars, which are sold out of a walk-in humidor.
In addition to the full tobacco selection, the initial five converted express stores contain a two-door fresh food case, a meat cooler, fresh bakery case, bread endcap, coffee counter, fountain soda display, enlarged area of cooler doors, beer cave, and an inline freezer section that is similar to what is found in the company’s full-size convenience stores, only on a reduced scale.
“We can still do all the tobacco we are doing right now in our TOP stores; we can still take care of all those guests from behind the counter. But, in addition, we now also offer bananas, potatoes, bread, onions, chips, orange juice, and fresh and frozen foods, to name a few,” Schmitz explained.
For the TOP division, given its parent company, the transition to this new express model has so far proven to be a natural conversion.
“It made a big difference that we already have our own bakery, commissary, dairy and warehouse for distribution. [They] probably distribute about 90 percent of the products in our stores,” Schmitz said, referring to Kwik Trip’s well-known vertical integration business model. “Beer and liquor and Frito-Lay chips are just about the only items we use an outside vendor for.”
Kwik Trip also stamps its own cigarettes in its three states of operation: Wisconsin, Iowa and Minnesota.
“We eliminate of lot of third-party labor,” Schmitz added. “It’s typically very difficult and costly to do a conversion of this magnitude, but having the product selection already in our warehouse made it a lot easier.”
THE KEY DIFFERENCES
As the “express” name suggests, the in-store footprint of the express stores is much smaller than the retailer’s traditional Kwik Trip and Kwik Star convenience stores — approximately 2,500 square feet of selling space vs. approximately 5,500 square feet, respectively.
One area the express stores have not borrowed thus far from the larger c-stores is hot food.
“There is so much labor involved with hot food, and we wanted to keep that equation out of it for now. We wanted to control our labor,” Schmitz said. “It doesn’t mean, down the road, we won’t consider it.”
Instead, Kwik Trip Express and Kwik Star Express currently carry fresh grab-and-go meal items. This includes fresh sandwiches, fresh salads (think noodle and potato salads), yogurt and cheese.
In conjunction with the smaller in-store footprint, the express stores likewise have a smaller forecourt operation. Express gas operations feature about six fuel dispensers vs. the typical 18.
The big idea behind the conversion, according to Schmitz, is to increase business and work on better margins than a tobacco-only business produces, such as the 6-percent gross profit on cigarettes it was making in Wisconsin TOP stores and 8-percent gross profit on cigarettes in Iowa TOP stores.
An added bonus seems to be the customer reaction and increased foot traffic.
“With a tobacco-only store, you limit yourself to the number of guests that walk through your doors,” acknowledged Schmitz. “As we are converting our tobacco stores to express stores, guests we never had before are coming inside, simply because of the name change, and they’re telling us that. There is clearly a stigma involved with the word ‘tobacco’ and now that is eliminated.”
With the first phase of conversions completed, the plan is to move all remaining TOP stores out of strip malls and relocate them to sites with gas operations, or build fueling stations on existing TOP properties that will allow for that. The targeted timeline for project completion is the next five years.