Scott Hartman Steps Into Chairman's Role

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Scott Hartman Steps Into Chairman's Role

Like many boys nearing their teen years, Scott Hartman's 12th summer was a memorable one. That year, the incoming chairman of the National Association of Convenience Stores got his first taste of convenience retailing, working in his family's stores. It was an experience he repeated for the next 11 years.

Part of the third generation of family management operating York, Pa.-based Rutter's Holdings Inc., which includes CHR Corp.'s 51 Rutter's Farm Stores, Rutter's Dairy Inc. and M&G Reality, a real estate management company, Hartman is now president and CEO of Rutter's Holdings Inc. and CHR.

A graduate of George Washington University -- he earned his MBA from Duke University -- he worked as a senior manager in Price Waterhouse's Consulting Practice before returning to the family business in 1990.

He has served on the NACS board of directors since 1998, and was instrumental in the success of NACS' technology standards committee in the mid-1990s. His many other industry and civic affiliations past and present include: chairman and president of the Petroleum Convenience Alliance for Technology Standards, chairman of the Pennsylvania Convenience Store Council (1999 to 2002), vice chairman of the Pennsylvania Food Merchants Association, chairman of the Responsible Tobacco Sales Certification Program, director of Memorial Hospital and director of the American Red Cross York Chapter.

We recently spoke with Hartman about his thoughts on the industry's challenges and possibilities for the next year.

What do you believe are the c-store industry’s biggest challenges today?

There are four key issues I see: maturing stores, competitors everywhere, technology hurdles and ridiculous credit-card fees. Our industry is as dynamic and changing as it has ever been. While at the same time, we are facing the challenge of reaching a maturity stage, with many stores 20 to 30 years old.

Convenience customers are coveted by every competitor we have. Hardly a day goes by that another channel of trade announces that it wants convenience store customers. It is old news that grocery stores and Wal-Marts want our customers, but the list most recently added the likes of Home Depot and it is not going to end. These competitors are big, well-financed and facing stiff competition within their own channel. Channel blur is everywhere. Everyone wants to sell gas and 20-ounce sodas.

To keep our customers and grow, we need to know our customers better than anyone else. Our industry clearly lags in this area compared with the technology being used by other channels.

The credit card fees our industry is paying are ridiculous. The cost justification by the card companies for such fees I don’t believe can be substantiated. We pay more in fees for "plastic" transactions to the banks than we as retailers make for handling the fuel products. As the average price of gasoline continues to rise, the financial impact of the fees is devastating to the industry’s profits. How our industry can address this issue is a huge challenge.

What are your thoughts on ways to approach those challenges?

The changes required to keep meeting our customers’ needs require significant capital from the retailer to keep pace. It also requires increasing technology savvy within the organization. The success of our fellow retailers is critically dependent on our ability to generate and reinvest enough capital in the stores’ infrastructure to keep them current and fresh. With the increasing age of our industry and the store infrastructure, that is a critical challenge for many operators.

On top of that, many operators are first-generation entrepreneurs and are approaching retirement. The conflict of investing capital in a business that may be sold can cause lots of heartache. It is really not an option, we must keep reinvesting or you will be forced to get out by the competition.

Technology is everywhere in our stores. Although the cost of new technology is steep for many operators, I believe the ability to understand how to use and support it effectively is even a bigger challenge. Our industry clearly needs more, better-educated technology personnel to continue to enter our employment ranks to support our customers’ expectations for speed and new services.

[In the area of credit card fees,] NACS has been a key organizer of the Merchants Payments Coalition (MPC). Teri Richman, senior vice president of NACS, is secretary of MPC and has been very active in forging an alliance of similar business interests to make credit-card fees a front-and-center issue for the banks, courts and legislators. Retailer and NACS support of the alliance initiatives is one important step toward any resolution of the "plastic fee crisis" our P&Ls are incurring.

What would you say are the industry’s biggest strengths?

Our industry’s biggest strength is its ability to adapt to the customer. Many retail and service industry business models started with a great idea but failed to keep up with the changing customer. Companies like Montgomery Ward, Kmart and Howard Johnson's come to mind.

The demographics of the world and the United States are and will continue to be changing. Our industry is an early adapter of so many innovative ideas. For example, look at how quickly a concept like ATMs and prepaids have become mainstream in c-stores. Our closeness to our customers, entrepreneurial management skills and willingness to take risks make the c-store industry the envy of so many other industries. We never want to lose this spirit.

What are you most looking forward to as NACS chairman?

As chairman, I’m enthusiastic about the opportunity to meet more retail and supplier members involved in our industry and to try to channel their ideas and energies into making our industry more profitable. NACS truly is a great organization that has so many bright people associated with it that as chairman I hope I can simply help to facilitate their involvement and ideas. There is a challenge around every corner and I believe there is also someone with a great solution to address it. We just need to find them and I’ll be in the hunt this next year.

What do you bring to the role that is uniquely "you"?

The c-store industry runs in my veins, like it is a part of my DNA. For whatever reason, perhaps the fact that I’ve really spent the majority of my life around c-stores, I simply have a passion, a drive to be involved and to try to help the industry.

Although my many years of involvement with NACS has clearly helped my company become better, I suppose my passion comes from the opportunity to work with so many nice people, whether it be fellow retailers, suppliers or the NACS staff. I feel a personal drive to do what is necessary to help make sure our industry stays healthy and remains a viable channel of trade. NACS has my personal commitment to help however I can this next year.

Do you have a pet issue you’d like to see addressed?

Technology has been my passion since my years at Price Waterhouse when I had the opportunity to be on the front edge of the PC revolution. I consulted with many different industries and saw how they utilized new technologies to run a better business and make more money. Since returning to the industry in 1990, I’ve been, as some would say, a zealot for the technology cause.

I still think that too many operators view new technologies as an expense rather than an opportunity. I really believe that we have the most complex technology infrastructure of any industry I’ve seen. I often challenge people to find me a more complex industry. Bringing our industry together to help simplify our many system interfaces, to help enhance our employees’ technology skills and to have technology solutions to meet our customer’s needs has been and will continue to be a place where I’ll dedicate my energies.

How have you and Rutter's Farm Stores benefited from being members of NACS?

Both Rutter's and I have benefited greatly by our association with NACS. We have participated in so many conventions and educational offers that I could not begin to count them. For me, it boils down to a simple philosophy, hang around smart people long enough and something is bound to rub off. Our listening and learning from the industries’ best and brightest has paid dividends to Rutter’s many times over.

Since getting involved with NACS, what achievements do you think the organization can be most proud of?

I’m very proud of the way that NACS has helped the technology community come together through the years. From my personal technology involvement with NACS, I now have technology friends all over the United States and around the globe.

When I got involved with the early NACS automation forums in Atlanta in the early 1990’s, there were less than 100 people attending the forum. As I pushed our industry for technology standards and the need to work together to achieve common efficiencies, I’ve watched the industry technology community organize, meet at many locations at their own expense and ultimately grow into a NACStech that had 1,400 attendees this past year. Participating in the industry tech initiatives has provided me with so many close friends and has given me personal rewards I’ll cherish forever. I truly hope the tech efforts will yield financial rewards for all NACS members for years to come.

Considering your new duties, do you expect your role in the day-to-day activities at Rutter’s Farm Stores to change much?

I know I’ll be on the road a great deal during the next year as the chairmanship requires; however, I’ve always been a very mobile executive and I can attribute these skills to my Price Waterhouse days when I’d be on the road consulting four to five days a week. I have a superstar management team that has put up with my business travels for many years and I am very confident they won’t skip a beat with me gone. The other superstars are my wife, Cathy, and my two children, Sara and Christopher. They have been critical to my personal success. Their continued understanding of my travel schedule will also make the next year a very fun one to look forward to. In a nutshell, status quo on the company and home front.

Can you give us a few words about outgoing Chairman Bill Douglass?

When I think of Bill Douglass, I think of a consummate professional. He is a great listener, exceptionally bright and his quiet-yet-firm demeanor makes him a true pleasure to be around. Bill took all his NACS responsibilities, which included the large task of finding a replacement for Kerley LeBoeuf, with a calm hand and vision any board of directors would relish. Bravo to Bill and his wife, Joan, for a great year as NACS chairman and first lady.