Price Optimization & Digital Engagement Lead Casey's Q1 2020 Initiatives

ANKENY, Iowa — Two months into his role as president and CEO of Casey's General Stores Inc., Darren Rebelez has had a front-row seat to the retailer's value creation plan in action. Chief among the highlights from the first few days of his tenure was the rollout of a new e-commerce platform and mobile app.

"I've had an opportunity to review the value creation plan and feel that all the components of the plan are the appropriate areas that we should focus our attention on in the near term," Rebelez said during Casey's first- quarter fiscal year 2020 earnings call, held Sept. 10.

"As I review the plan, it was clear the intent was to deliver strong annual earnings per share and EBITDA growth while increasing return on invested capital. I am confident that the plan will collectively deliver on this expectation," he added.

Eighteen months after launching the value creation plan, Casey's reached several key milestones in the first quarter of fiscal 2020. The plan is a roadmap to drive store growth and increase company value through its fiscal year 2021, as Convenience Store News previously reported.

One major component of the plan is the retailer's fleet card program, which launched in late October 2018. Today, it has more than 2,000 new accounts with approximately 11,000 new cards issued.

"Although the utilization of these cards ramped up slower than we expected, it has gained momentum lately as we focused additional resources around the program," Rebelez said. "In addition, we continue to engage universal card providers as part of the overall approach to our fleet card strategy."

Total fleet gallons in the first quarter grew approximately 9 percent compared to a year ago.

"We remain optimistic about the potential of the overall fleet program going forward," Rebelez noted. 

Price Optimization

Price optimization is another major component of the value creation plan. As the CEO explained, this initiative will allow Casey's to leverage the sales data generated from its store network combined with market data to make centralized, rules-based pricing decisions at the pump and in-store. The retailer anticipates it will improve gross profit dollars across all categories.

Casey's completed the implementation of PriceAdvantage at all its convenience stores to assist in fuel price optimization earlier this calendar year. During Q1 2020, the chain began integrating the tool directly with its point-of-sale system.

"This will give us greater agility in adjusting retail prices in response to the ever-changing fuel environment," Rebelez explained, adding that Casey's anticipates completing this phase by the end of the month.

Inside the stores, Casey's has tapped dunnhumby for a price optimization platform for its grocery and prepared foods categories. During the first quarter, Casey's rolled out the platform to the center store and will continue to roll it out to the rest of the store during the second quarter.

"After completing a successful test-and-learn pilot in the fourth quarter of last fiscal year, we've created six distinct geographic prizing zones," said Rebelez. "The pilot provided an incremental lift in revenue and gross profit vs. a control group."

Digital Engagement

Digital engagement — yet another major component of Casey's value creation plan — checked off two key boxes during Q1: the integration of a new e-commerce website and the rollout of a new mobile app.

"This platform provides an enhanced guest experience by streamlining the ordering and checkout process and allowing the guests to pay online," Rebelez explained. "In addition, the system automatically engages cross-sell opportunities for the guests during every order."

Currently, more than 28 percent of the retailer's pizza orders are transacted online, up from approximately 18 percent a year ago.

"These new tools will provide opportunities for us to better understand the buying preferences of our guests. We're currently in the process of building out our consumer insights and analytics team to better leverage these data and insights," Rebelez reported.

Casey's will continue along its digital engagement journey in the second quarter as it begins the process of launching a loyalty program.

As Rebelez detailed, the retailer will start with an employee pilot, followed by a pilot in a select geography. Casey's will then apply the learnings from those pilots to a national introduction.

"We are confident this approach will enable us to provide the best experience for our guests upon the full launch of the program," he said. "The integration of the new suite of digital platforms for our guests will create a seamless experience, both online and in-store, that enhances our digital capabilities and facilitates personalized marketing and rewards.

"This digital platform allows us to gain a better understanding of our guests' shopping behavior, to better serve them. We expect this platform will increase our average basket size and drive additional traffic," he added.

Under the final piece of its value creation plan, Casey's is prioritizing "investments with attractive return profiles, including our value creation programs, as well as disciplined store growth through new store construction and strategic acquisition opportunities," Rebelez said.

As of April 30, Ankeny-based Casey's operated 2,146 convenience stores across 16 states. The company is No. 8 on the 2019 Convenience Store News Top 100 ranking.