Speedway Looks to Stand Out

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Speedway Looks to Stand Out

By Linda Lisanti, Convenience Store News - 10/11/2011

ENON, Ohio -- Speedway LLC may have a new name and be part of a newly formed company, but it's the convenience retailer's long-time focus on delivering friendly, fast service and a consistent brand identity that has made it so successful in the Chicago market.

"Chicago is not only one of the largest metro markets in the country, but it is the largest metro market Speedway operates in across our seven states," said Tony Kenney, president of the Enon, Ohio-based company that has stores in Illinois, Indiana, Kentucky, Michigan, Ohio, West Virginia and Wisconsin. "Chicago is a great transportation fuels market, and one of our focus areas."

Speedway, a wholly owned subsidiary of the newly spun-off Marathon Petroleum Corp. (NYSE:MPC), entered the Chicago market in 1983 through its acquisition of Checker Oil. Since then, the Midwest c-store chain has continued to build new ground-up locations here, rebuild existing stores and make acquisitions -- most recently, 23 former Gas City locations.

One of Speedway's five division offices is located in Chicago. In store count alone, Speedway is the second-largest player in the Chicago DMA market with 169 stores, according to TDLinx data as of this August. 7-Eleven Inc. has the biggest presence at 366 locations, TDLinx figures show.

Kenney said there are several reasons why Chicago is an advantageous market for Speedway. The first being that Marathon Petroleum has a strong infrastructure in the area, so Speedway has access to the transportation fuels it needs to supply its sites.

Another benefit of Chicago, he said, is it's an extremely large market that's highly fragmented. Independents account for 1,827 of the c-stores in the Chicago DMA market, per TDLinx.

"There is a lack of brand leadership where someone clearly stands out," Kenney explained. "There's a niche there that Speedway can take advantage of. We are working hard every day to be the brand that stands out. We believe there's an opportunity to seize that role."

Compared to its Chicago competitors, Speedway brings the ability to consistently execute its programs, according to Kenney. Because all of its stores are company-owned and -operated, when the retailer does marketing promotions or new programs, it can execute them immediately and consistently across the chain. "We use this to our advantage to execute at a higher quality and more consistent level, to really have our brand resonate with consumers," he said.

Rather than localize, Speedway strives to deliver a consistent brand identity everywhere it does business. "Whether you're in Chicago or traveling through Kentucky, you're hopefully going to go into Speedway and find the same friendly, fast service; the same foodservice offering; the same cleanliness and well-lit facilities; and the same loyalty program," said Kenney.

If the chain is running a Speedy Rewards promotion in Chicago, that same promotion will be available in Columbus, Ohio, too. "We hope this consistency will help consumers identify Speedway," he added. "When they see our stores, they'll think 'I know what they stand for; I can trust the brand.'"

Of course, each market presents its own challenges. The Chicago market can be a very expensive market, from labor costs to the tax structure to real estate values. These cost and investment challenges certainly don't preclude Speedway from looking at Chicago as "a great place to be and a great place to grow," Kenney said. "What it does mean, though, is that we have to be more disciplined in doing our due diligence when looking at growth opportunities here."

Beyond the Windy City

Chainwide, Speedway's vision is to be "the customers' first choice for value and convenience." To accomplish this, the retailer has been focusing on five key areas in 2011:

• People -- This continues to be the company's No. 1 focus area in terms of maintaining its commitment to recruit, train and provide development opportunities for all employees. As Kenney stressed, this goes a long way in driving consistency across the chain.

• Foodservice -- Speedway still believes this is a huge opportunity. Kenney said the Fresh from the Oven program is coming along well, though he admits he's a hard guy to please.

Calling it "a solid program" and "a good quality foodservice offering," he's especially pleased with the attention being given to cleanliness and all the aspects that go around being a good foodservice operator. "If you're not doing the basics to build that trust with customers, then you're not in the game," he said. "We're doing that very well."

Where he would like to see Speedway improve is consumer awareness. "Our challenge is making people aware that Speedway has a foodservice offering and that it's high quality and provides a value. We're working on that," Kenney said. "I'm not disappointed by any means. We have a nice upside, and I'm very encouraged about our prospects."

• Loyalty program -- Speedway continues to leverage its proprietary loyalty program, Speedy Rewards, to provide benefits its customers want and enjoy. Now in the market for seven-plus years, Kenney maintains that Speedy Rewards is best-in-class in the industry.

To ensure it stays ahead, the chain is moving to a new technology platform that will allow it to utilize more advanced customer relationship management (CRM) techniques -- also known as one-to-one marketing. This next generation is being built out now.

"If you don't ever buy energy drinks, I'm not going to give you an offer for an energy drink. I'm going to give you an offer that's relevant to you. Nothing upsets me more than when I get an offer on something I'll never buy or eat, and it's because the machine is just spitting out random coupons," Kenney explained."We're upping the level of sophistication in our program. Now, we're going to take attributes of our customers and build programs to reward them around the things they enjoy. It's about being relevant."

• Supply chain efficiency -- This is a focus area not only for Speedway, but the convenience channel as a whole, said Kenney. There are huge opportunities to extract efficiencies, from ordering products and reducing out-of-stocks, to managing working capital and tracking inventory levels. Speedway is implementing technology to improve across all these facets.

• Value -- "We're certainly selling the same products as everyone else. There's nothing unique in our product. What differentiates us is our ability to deliver consistency and value," Kenney said. "Value is not just in terms of offering the lowest price."

By focusing on key areas such as these, Speedway continues to be a prominent player in Chicago as well as its other Midwest markets. For the third consecutive year, Speedway was named the highest-ranked gasoline brand in the nation in the annual Harris Poll EquiTrend survey, which asks consumers to rank fuel brands in a variety of categories.

Kenney is quite proud of this accomplishment, and he's also excited about Speedway's future now that it's part of the newly spun-off Marathon Petroleum. Instead of being part of a big, fully integrated company like Marathon Oil Corp. was, the new downstream company is highly focused, more nimble and will continue to benefit from the synergies created by the three billion gallons of transportation fuels Speedway sells annually all the way up to the refineries, he said.

"There's a commitment to invest to grow Speedway in our existing markets and to look for opportunities in other markets," he said. "What excites me is that the spinoff provides an opportunity for Speedway to play a more important role in the new company."