A Strategy of Steady Growth

CHS supports its Cenex franchised and Zip Trip stores through proven partnerships, programs and image updates

Cenex, the energy brand owned and operated by Inver Grove Heights, Minn.-based CHS Inc., is expanding the retail side of its business with each passing year. In 2012, the company added more than 50 stores to its franchise network, bringing its total to more than 1,400 Cenex-branded locations in 19 states throughout the Midwest and Pacific Northwest. It also owns and operates 70 Cenex Zip Trip corporate convenience stores.

“Our strategy is to continue a steady pattern of retail growth around our refinery assets,” said Akhtar Hussain, brand marketing manager of refined fuels at CHS. “Also, to continue to offer competitive brand programs in relation to our competition.”

The company remains focused on and dedicated to its Cenex retailers through a variety of proven partnerships and programs, including the recent renewal of its loyalty partnership with Cabela’s through 2019, its Tanks for Thanks community outreach program, and funding provided to those sites upgrading their canopy to LED logos.

The Cabela’s program revolves around the Cabela’s Club Visa Card, where cardholders receive 2 percent of their purchases made at Cenex-branded retail locations as points to redeem at Cabela’s, the outdoor recreation specialty retailer. This not only brings traffic to Cenex locations, but also provides merchants the bonus of processing the transactions at a lower rate than other credit cards, Hussain explained.

“The Cabela’s customer and the Cenex customer have a lot in common, from where they live to their recreational interests. By linking them, we are able to drive business into our Cenex locations, which benefits the merchants,” he said. “On average, the Cabela’s cardholder spends more per transaction and CHS gives the merchant a discount on the credit card processing fees that occur on the Cabela’s Club Visa Card.”

Now in the program’s fourth year, Cenex has seen triple-digit growth in participation as Cabela’s currently has more than 2 million cardholders.

“We have seen tremendous growth each year, and we outfit our retailers with a host of POP [point-of-purchase] communication like pumptoppers, window clings and in-store signage,” Hussain noted. “We also market directly to customers when a new [Cenex] store opens. Any Cabela’s cardholder in the area gets a postcard letting them know a new store opened and highlights the program.”

When CHS first decided to work with a partner, the company researched the most popular incentive programs and found that fuel redemption and discounts were actually low on the list, according to Hussain. CHS also wanted to create a program that wouldn’t require extra work on the part of its retailers and one that would allow the company to extend it across its entire network easily.

“In our research, we found the most popular incentive programs with consumers were airlines, financial banking and specialty retailers. Cabela’s falls into the specialty retailer category,” he said. “All of our [Cenex] retailers opted in and we fund 100 percent of the program. Last year, we gave over $1.5 million in Cabela’s bonus points back to our customers.”

In addition to this loyalty partnership, CHS is in its second year of running the Tanks for Thanks program, a community outreach program that rewards customers for doing good deeds and making their community a better place to live. At Tanks for Thanks.com, customers can submit nominations and each month the company selects 100 of the nominations at random to receive $50 gift cards valid at any Cenex location.

“We have had more than 8,000 nominations and given away more than $150,000 in free fuel,” Hussain said, adding that it’s a three-year program. The company is driving marketing efforts via television ads. The chain has four different commercials that highlight a community-oriented story similar to the nominations it receives through the program.

To further support the growth of its Cenex retailers, CHS is also funding 75 percent of the cost for marketers to upgrade their canopy logo signs to LED. The new signs feature a three-dimensional, back-lit design, which is more energy efficient and more attractive to the customer — especially at night, said Hussain. This promotional offering was available throughout August.

CENEX ZIP TRIP

In addition to its franchise locations, CHS owns and operates 70 stores under the Zip Trip banner in seven states: Washington, Idaho, North Dakota, South Dakota, Wyoming, Montana and Minnesota. Similar to its franchise network, Spokane, Wash.-based Zip Trip is looking to grow in locations where it already has assets and where stores can be served by one of the brand’s refineries. In the past year, Zip Trip added four stores in Montana, according to Ian Johnstone, general manager of Cenex Zip Trip.

“We also have four truck stop operations with a focus on diesel and large trucks,” he said, noting that the Zip Trip chain has been rebranding over the past three years in an effort to coordinate the look and offerings of its stores across the board. “We want to present a look that customers will be familiar with — from the interior and exterior paint colors, to the enhanced fountain and coffee bar.”

Zip Trip is remodeling stores at a rate of one per month and for the first time, it worked through the summer months this year to get it done, said Johnstone.

Inside the stores, the newest changes revolve around foodservice, including f’real milkshake machines where space permits, and enhanced coffee and fountain sections with flavor fusions. Working with its distributor Core-Mark Holding Co., remodeled stores also offer fresh sandwiches and an enhanced breakfast program with warmers on the coffee bar.

“We actually went from 258 products in the sandwich case to less than 100 in order to reduce waste and offer the freshest products possible,” Johnstone said. “We also offer Bob Evans biscuits and gravy — a tremendous product you don’t typically see in a c-store — and oatmeal in the winter months with assorted toppings.”

Zip Trip recently switched to Sara Lee Foodservice’s hot dog roller grill program as well and now offers condiments in a refrigerated condiment case rather than packets. “Our mayonnaise is in chill containers and the ketchup and mustard are in squeeze bottles, so customers can top [not only] their hot dog, but also the sandwiches they buy,” he explained.

The evolution of Zip Trip’s coffee and fountain, as well as its foodservice offerings, is aimed at driving non-cigarette sales. For the first time this year, the chain sold its 32-ounce fountain drinks for 99 cents all summer long rather than just twice per year.

To promote special offerings throughout the store, Zip Trip tested flat-screen television monitors in six of its locations by the fountain and coffee bar. The content switches between specials and the price list for the coffee bar and fountain.

“We liked the increase [we got] in sales of the promoted products so we have, or we will, install the monitors in all 70 stores. Right now, the content is managed by a third party that provides the hardware and software,” said Johnstone. “We send them the content a couple weeks in advance and they develop it.”

The chain will decide whether to move the content creation process in-house once it evaluates the cost effectiveness of both options.

“Our strategy is to continue a steady pattern of retail growth around our refinery assets.” — Akhtar Hussain, CHS Inc.