Pillars of Amazon's Success

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Pillars of Amazon's Success

By Don Longo, Convenience Store News - 05/11/2009
By Don Longo

It's going to cost the convenience store industry billions of dollars to become compliant with new Payment Card Industry (PCI) mandates. Despite lower fuel prices, credit card transaction fees will siphon off another $8 billion from c-stores' bottom lines this year. The punitive federal excise tax increase on tobacco, which went into effect April 1, will not only accelerate the decline in cigarette sales (with many predicting an immediate 6-8 percent decline in volume), but also hurt sales of other products in the store that are usually purchased with a pack of smokes.

Sky high gas prices, which depressed in-store sales (not to mention drove up credit card fees), have come down to earth this year, but no one really expects fuel prices to stay this low for long. Even if fuel prices remain relatively low, most experts believe consumers are driving less or switching to more fuel-efficient vehicles -- so stations will pump less gas again this year.

Despite all the gloom we've been hearing from retailers over the past few weeks -- coming to a head last month with the start of the federal tobacco tax increase -- I am convinced the c-store industry will emerge more successful than ever -- if perhaps more streamlined.

That's because in our reporting on companies and developments around the industry, we see enough retailers doing the right things to weather the storm. Just look at the cover stories of CSNews' past few issues and you'll see great examples from Cumberland Farms, Casey's, Wawa -- or this month's cover subject, Scott Hartman of Rutter's -- on how to stay focused on the important things and embrace change.

Embracing change and obsessing over customers is part of the corporate soul of successful retailers. That was obvious in our interview last month with Wawa CEO Howard Stoeckel. However, from time to time, it is valuable to look outside the c-store industry for examples that can serve as a measuring stick for our own efforts.

Amazon.com is one of the biggest retail success stories of the past decade. The online retailer reported an 18-percent gain in first quarter sales despite the recession. In his letter to shareholders in the company's just released annual report, founder and CEO Jeff Bezos sums up a philosophy every retailer should live by:

"In this turbulent global economy, our fundamental approach remains the same," wrote Bezos. "Stay heads down, focused on the long term and obsessed over customers. Long-term thinking levers our existing abilities and lets us do new things we couldn't otherwise contemplate."

He goes on: "Seek instant gratification -- or the elusive promise of it -- and chances are you'll find a crowd there ahead of you. Long-term orientation interacts well with customer obsession. If we can identify a customer need, and if we can further develop conviction that the need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution."

Bezos calls the process "working backwards" from customer needs rather than a "skills-forward approach that says, 'We are really good at X. What else can we do with X?'" While useful, the skills-forward approach doesn't enable a company to develop fresh skills or capabilities. It becomes outmoded. "Working backwards from customer needs often demands that we acquire new competencies and exercise new muscles, never mind how uncomfortable and awkward-feeling those first steps might be," he said.

This philosophy, along with a strong conviction that customers want low prices, vast selection and fast, convenient delivery, form the pillars of Amazon's success.

Despite all the very real challenges faced by convenience store retailers today, I remain convinced there are many c-store retailers who are staying focused -- even obsessed -- with customer needs and are embracing change so that they will achieve long-term success.