Thinking Inside The Box

GPM Investments fine-tunes its branding as it goes into acquisition mode

Over the past decade, the Fas Mart and Shore Stop convenience store chains have been on a roller coaster ride.

Today, GPM Investments owns the 210-plus stores that make up the Fas Mart and Shore Stop portfolio. But back in 2001, the stores were in bankruptcy when a group of investors — including current GPM Investments CEO Arie Kotler — purchased the company, with restructuring being its first priority. Over the next few years, the new owners closed some underperforming locations and acquired stores from Connecticut-based convenience retailer DB Marts.

The convenience store chains saw more changes when Kotler exited the company by the beginning of 2006. Fast forward five years later to 2011, however, and Kotler and his partner bought back control. Now, a full 10 years after emerging from bankruptcy, a solid leadership team is at the helm as GPM Investments enters acquisition mode with guns blazing.

"Since then, we have grown and today, big picture, we are an over $1-billion revenue company," Kotler said. "We invested a lot of money — in the millions — to grow this company. That is our mode right now. We have made a lot of changes over the past year since we came back; we appointed Chris Giacobone to chief operating officer and Bill Reilly [vice president of marketing] joined us a few months ago."

In total, the company currently operates more than 210 c-stores and counts 332 dealer locations. The footprint breaks down to 65 percent Fas Mart, 35 percent Shore Stop, with Shore Stop stores located primarily along the shore in Virginia, Maryland and Delaware. Fas Mart stores can be found in Virginia (its largest presence), North Carolina, Tennessee, New Jersey, Pennsylvania and Connecticut. The stores carry Valero, BP, Marathon and Exxon branded gasoline.

"We are the largest distributor of Valero [branded gasoline] on the East Coast and the second-largest distributor to the entire United States by both volume and store count," Kotler noted.

And GPM Investments is not stopping there. The company has been putting all its ducks in a row and is ready to embark on a major acquisition path.

Giacobone moving to the COO position was just one move to help the company grow. He joined the retailer as part of the DB Marts acquisition in 2005 where he was vice president of operations. Coming onboard at Fas Mart/Shore Stop, Giacobone took the title of vice president of market development, fuels and facilities. He relocated to the Richmond, Va., headquarters in 2008 and began overseeing fuels, facilities, environmental, real estate and market development. Giacobone took over operations and marketing this February.

In May, Reilly joined GPM Investments as vice president of marketing to help define the company's marketing strategy — particularly in foodservice and with a special focus on dispensed beverages.

"With the company being so focused on growth through acquisitions, it was important to develop a platform so that we can absorb these new companies as we grow as a company," Reilly said. "The branding is the primary position."

Moving forward, the brand of the future will be Fas Mart. "That's the box. Inside the box, we will have proprietary brands that we control ourselves," he noted, adding that the proprietary brands will include the company's coffee, fountain drink and food programs.

GPM Investments is finalizing its proprietary coffee program, to be called Perfect Harvest Coffee Co. For its fountain program, the company has developed a brand, "Thirsty?"

Foodservice is also at the top of the company's priority list. Fas Mart is known for its "fresh, never frozen" fried chicken — not surprising coming from a southern company. It is the dominant offering in the 54 kitchens the company operates and is also getting a makeover, so to speak.

"I am working in R&D with my team in developing a proprietary, more robust offer; a more diverse offer in addition to our fried chicken to attract different customers," Reilly explained. "We will build off the success of the fresh chicken program. Stay tuned for menu development."

That being said, GPM Investments understands some national brands may come along with any acquisitions. And that's OK, too. The company has approximately 15 stores where it operates the Subway brand. "We have a very good relationship with Subway as a company itself," Reilly said. "We will use that brand where space allows and where we can get approvals."

Reilly is a fitting choice to lead the foodservice charge. He has an extensive culinary background, including a degree from Johnson & Wales University in Providence, R.I. He worked in the foodservice arena with Marriott and Disney. He's also spent 16 years on the retail side, including 10 years with convenience foodservice innovator Sheetz Inc.

"I do like the challenge," Reilly said.

Changes will not be exclusive to new acquisitions, as there are plans to upgrade existing stores as well. "Aside from acquisition mode, you also need to refurbish some of your stores and invest in some of the stores," Kotler explained. To that end, GPM Investments is switching all its stores to LED lighting and refreshing the exteriors with fresh paint and resurfaced parking lots.

"The main reason we brought Bill here was to try to transition from being dependent upon cigarettes and fuel, like most of us retailers are, and shift that focus to foodservice," Giacobone said. "We have some great concepts that we haven't redeveloped in quite some time, so we are looking to upgrade our facilities; transition to a more foodservice, dispensed-beverage strategy."

SIGHTS SET

On the acquisition front, the company has a platform firmly in place to grow. GPM Investments has its sights set on the Mid-Atlantic and Southeast regions, Kotler said, adding, "We really like the South." That means everywhere from Richmond, Va., to North and South Carolina and further south. The company would also entertain opportunities in the Washington, D.C.-Maryland area.

One thing the company is not entertaining, though, is a timeline or an end-goal store count.

"We have a team here with expertise in marketing and expertise in operations. What I bring to the table is expertise in putting together problematic deals, but we are not going to overpay because you can see what happens to the other guys who do that. They all end up in Chapter 11 at the end of the day," Kotler said. "We believe, because of our platform, we can easily capture another 200 locations within our footprint. Integration-wise, for example, we have one of the best IT [information technology] platforms."

GPM Investments also has several efficiencies in place that will allow the company to add more convenience stores with little overhead, explained Giacobone.

"In terms of operations, we run like a machine," Kotler added. "We run a tight operation."

Running that machine are the company's employees — from the management team in headquarters to each store-level employee. And even evaluating the employees is getting a makeover. In early 2013, GPM Investments will be abandoning its old employee review system and instituting a new process that is purely employee-based.

"It will have nothing to do with how long you have been here or what quartile you fall into," Giacobone said. "It is purely based on performance."

One aspect of that performance is the company's new suggestive selling program, which has been in place for approximately six months. Through the program, the company asks sales associates to suggest several items to customers to purchase. Since its inception, there are a number of sales associates who are upselling more than 60 percent of customers.

"This week, we will hit one million items that have been sold through suggestive selling since the program began," Kotler said.

Fas Mart and Shore Stop stores do not rely solely on the suggestive selling program to move products off the shelves. "We are bringing more products to our stores. We are searching the market and looking for items that people really need for daily use," Kotler said. "We are making them price attractive. Instead of selling a few of them in the store for a higher price, we decided to go the other way — reduce prices and keep them on the shelves."

One such item is antibacterial wipes. The c-stores have been selling large-sized units for 99 cents, and the customer response has been overwhelming. According to Reilly, he recently placed an order for its third shipment since the promotion began three months ago.

"The key to this whole thing that makes us a little unique is that it is not a cheap product at a cheap price," Giacobone said. "It is a great product at a cheap price. We are giving the value to our customers."

That customer base is poised to grow as GPM Investments grows. While some c-store retailers are putting shovel to dirt and building from the ground up to expand their footprint, GPM Investments is sharpening its focus on acquisitions.

"To build a site today, it takes longer and it's more expensive. It's really not worth it in this environment," said Kotler. "We want to be good at what we are doing. We are not developers. We are operators of convenience stores and gas stations. We are retailers."