Walking the Path

While some people spend a lifetime trying to realize their calling, Alain Bouchard, chief executive officer, president and chairman of Alimentation Couche-Tard Inc., knew his destiny after just two years in convenience retailing.

His moment of revelation came while driving home one night from the Perrette Dairy store he was managing at the time, north of Montreal. Weary from working 80-hour weeks, the 20-year-old questioned if this was really the life he wanted. He began to play back his time in the industry, and after only a few frames, his answer was, "yes."

That was the first and last time Bouchard looked back. His celebrated career has been in the fast lane ever since, steered by an entrepreneurial spirit and the willingness to walk the same path as those he oversees. At age 58, the former interim store manager now leads the largest chain of company-operated convenience stores in North America -- a network of more than 5,600 stores across the U.S. and Canada, and growing.

This fall, he was inducted into the Convenience Store News Hall of Fame, an honor he described as "the ultimate accolade." The morning of his induction ceremony, he granted CSNews an interview to talk about his and Couche-Tard's successes.

It was immediately apparent that despite his many achievements, Bouchard remains humble, a trait he no doubt acquired working his way up from the bottom. His office in Laval, Quebec, is understated, with a view overlooking the parking lot. Indeed, the company's drab office building on a busy commercial avenue hardly befits a $12 billion retailing powerhouse. But rather than upgrade to something a bit fancier, Bouchard chooses instead to invest in his stores.

He finds it difficult to talk about himself, preferring to discuss business, the stores or his people. When asked if he considers himself a great leader, his response is, "I hope so.

"I have allergies to big egos," Bouchard said. "I think ego is something we have in our genes; we have to have it. But, some have such big egos that it overwhelms all their skills."

He credits much of his success to his ability to delegate certain tasks to those he admits are better at them. "I'm more of a generalist type of man," he said. "I have some specific skills on the real estate and operations side, but I've been humble enough to identify people who were better than I am, and that's made me successful. It's as simple as that."

Bouchard founded Couche-Tard with three partners -- Real Plourde, executive vice president and COO; Richard Fortin, executive vice president and CFO; and Jacques D'Amours, vice president of administration. The four remain a tightly knit team still today.

In Plourde's opinion, this camaraderie has been possible because Bouchard is a leader who shares the power, rather than keeping it all for himself. "The four of us respect each other, and there's a lot of trust among us," he said. "Each of us brings value to our partnership, and we're always on the same track for what we want to accomplish."

Plourde also praised Bouchard for being "a leader in action," often on the road talking with managers and associates, and asking customers for their thoughts. And it isn't all for appearances. "He's a good listener, and he really tries to understand," he said.

One associate, when describing Bouchard's leadership style, remarked that he's the type of manager who "walks the path." Bouchard, however, sees this as nothing extraordinary.

"I go down to see my real estate people, and go up to see our accounting group. If I'm looking for someone or something, I go to see that person first," he explained. "And often, I meet someone else on my way there, so that's good, too."

Making an Impact

Bouchard was drawn to convenience retailing from an early age, captivated by the ever-evolving relationship between the retailer and the consumer. When he was about 15 years old, he and his two best friends would hang around outside a tobacco and snack shop in Baie Comeau, on Quebec's North Shore. He saw that the little store sold hot dogs, burgers and sandwiches, and he started to get ideas for a new business.

A few years later, before he was even out of his teens, his convenience career began as an interim store manager with Perrette Dairy Ltd. In this role, he was responsible for taking over nonperforming stores and bringing them back up to standards.

"I did many experiments around new products, cleanliness, and the basics of retailing, and it worked out well. I really enjoyed watching how the consumer was moving in our stores, reacting to the placement of products and new product introductions," he recalled. "Since then, I've always loved this industry. It became my life."

Bouchard advanced at Perrette, becoming supervisor and ultimately, district director, supervising the opening of 80 stores and developing the Perrette network. From 1973 to 1976, he joined Provigo, Provi-Soir division, and organized and supervised the opening of 70 Provi-Soir convenience stores. For the next four years, he operated a Provi-Soir franchise in St.-Jerome until 1980, when he opened the first Couche-Tard.

Under Bouchard's leadership, Couche-Tard has grown through a dazzling series of acquisitions, including the Perrette and Provi-Soir stores of his younger days, other Canadian c-store chains and numerous American properties, including the venerable Dairy Mart chain. Its largest purchase came in 2003, when the company acquired the U.S. c-store chain Circle K, landing more than 1,600 corporate stores in 16 states.

Given the company's appetite for acquisition, Couche-Tard continues to make headlines in the U.S., having purchased an additional 420 stores within the last fiscal year.

"We are buying the good assets," Bouchard said. "I have shelves full of books that come from the merchant bankers telling me I should buy this and buy that. But it's not about store count, it's about the quality. We are very disciplined in our approach."

Through its expansion, Couche-Tard has remained completely focused on fostering the relationship between retailer and consumer, and Bouchard said the company's success has everything to do with its openness to "adapt the box to the consumer."

"In the early days, there was a message that other retailers had in their [news] releases about tailoring their stores to the markets, so I tested that in some of our stores and found people do act differently when you adapt your stores to them," he said.

Now nearing its 10th year, the chain's IMPACT program -- short for Innovation, Marketing, People, Alimentation, Couche-Tard -- is built upon this strategy of customizing stores for the local demographics. Every year since 1998, about 450 stores are remodeled to create a more appealing ambience; increase high-margin sales; and align the merchandise and service mix with the socioeconomic and cultural uniqueness of that community.

"It's quite a big task," Bouchard said, one that requires input from a team of specialists in marketing, merchandising, real-estate services, interior design and operations. "On one side of the screen, we put the portfolio options. On the other side of the screen, we have the store demographics. And then in the middle, we have the footprint. We ask, 'What would fit in this box?' If the customer base is more senior, we focus on coffee, bakery items and seating. If it's a highway store, the offer is focused on grab-and-go. We have A, B and C types of remodels depending on the store's demographics, and what we want to achieve in terms of a return-on- investment," he continued.

To date, the IMPACT program in Canada is 80 percent finished, while in the U.S., where the chain continues to acquire new stores, completion is at 33 percent. Bouchard, however, pointed out that Couche-Tard's evolution is not limited to this program alone.

"We, as a group here, think our business should evolve weekly. That's not a question of choice. We have to evolve," he said. "I was giving a presentation 10 years ago to the financial community, and the people in the boardroom were drinking soft drinks and coffee. Today, they are drinking water and energy drinks. That's quite a big change."

A Culture of Sharing

Fortunately for Couche-Tard, its decentralized operations make the company well-suited to react to change. The business is divided into nine geographic units: eastern Canada (Quebec), central Canada (Ontario), western Canada; and in the U.S., the Midwest, Great Lakes, West Coast, Arizona, Southeast, and the Florida/Gulf region. Each division is managed by a vice president of operations, and the established rule of thumb is that no division oversees more than 500 stores.

Decentralization is the only way to build a company where the model is to adapt to the local communities, Bouchard maintained, adding, "If you try to do that in a big, centralized office, it won't be successful. Being decentralized is a big, big thing for us."

One of the major advantages of the structure is that the divisions benefit from one anothers' initiatives. Using a central business intelligence system and the NACS category standards, sharing is done through market reviews every four weeks via video conference, as well as periodic topic discussions and an annual strategic meeting.

Plourde likens the structure to having nine research and development teams. "It's then our job to share ideas and exchange the best practices between us," he noted.

Although it is rare, Bouchard admitted that egos get in the way at times and there may be a bit of resistance by a division to adopt the ideas of another. When that happens, he said the division is given two opportunities to heed the suggestion, and then, it's imposed.

For the most part, however, he said ideas flow freely between the divisions, and to ensure it stays that way, Couche-Tard invests massively in travel, not only for its executive team, but also for its vice presidents, regional directors and market managers.

"I was certainly against spending too much money on traveling in the beginning. But, I discovered soon after our entry into the United States that that's the only way we can transfer the company culture and the different skills and expertise of our people," Bouchard said. "Today, we spend a lot on travel, and I'm proud of that."

With a visionary like Bouchard at the helm, risk-taking is also an integral part of the Couche-Tard culture. The Hall of Famer's only warning to his employees is to not go too fast, especially since the company has the luxury of owning a large number of stores, which presents an ideal scenario for testing. He learned this lesson the hard way in 2003, when upon having success with a food concept in one store, it was quickly rolled out to all the divisions.

"We opened too many, and we had to write off a lot of money," he recalled, noting that today, Couche-Tard continues to try a lot of new things, but at a more calculated pace.

"The consumer is the jury out there. We offer something, and sometimes it works and sometimes it doesn't. We are investing a lot of money that's waste money," Bouchard said. "But, we are lucky enough that eventually, we get the right recipe."

Jean Elie, a member of Couche-Tard's board of directors for the past eight years, lauded Bouchard as a focused, determined individual who measures his risks very well and is rigorous in his analysis of every situation. "He'll never unduly expose the company, but he'll take a measured risk," Elie said. "And when he looks at acquisitions, which has been a large part of our growth, he looks at all the assets, but he also always looks at the management because he understands that this business is run by people.

"This is one of the most intimate businesses," he continued. "You have to be very close to your market and to your customers, and Alain is very close to his operations."

Increasing Value

When Couche-Tard was founded, Bouchard said that he and his partners expected big things, but none of them could have foreseen the company as it stands today -- a chain more than 5,600 stores strong, with the backing of a 45,000-member family, that saw its 15th year of uninterrupted financial growth in fiscal year 2007.

Compared to the overall industry, Couche-Tard is certainly planted in the top tier among the industry's best retailers, but Bouchard sees an even more promising future.

The company will continue placing most of its focus on increasing the value of the box. "We are good at managing the merchandise sales, and I think we will improve our skills there," he said, adding that expanding its fresh foodservice offering is a must.

Bouchard is particularly bullish over a new store model being designed by the chain's Quebec division that's dedicated to home meal replacement in the lunch and dinner dayparts. "It's linked with a couple of stores we have open in subway stations, where 40 to 45 percent of our sales in those stores are foodservice," he said. "Certainly, foodservice is a big opportunity, but it's also a big challenge, so we have to continue to test different products and ways of doing things."

Although he couldn't provide details, Bouchard said Couche-Tard is eyeing a central commissary approach as opposed to made on premises. The company currently has third-party commissaries -- in many cases, more than one -- serving each of its divisions.

Couche-Tard's future also holds further growth through acquisitions. This year's plan calls for the purchase of 200 to 300 stores, but if a bigger opportunity comes along, the company would certainly seize it, he said. Its acquisition strategy follows two routes -- tuck-in acquisitions within existing Couche-Tard markets, and entry into new areas.

Eventually, Bouchard foresees Couche-Tard claiming a 10-percent market share in North America, which would total between 14,000 and 15,000 stores.

"We think the convenience store industry needs strong leaders, more than one, and we expect that we will end up among three or four operators with large market shares, and hopefully, we will be dedicated c-store operators," he said, noting that if three or four companies controlled 30 percent of the total market share, the industry would have greater power and influence to create efficiencies in the product supply chain.

While nearly tripling the current store count is a substantial goal, Plourde said one thing he's learned in his 20-plus years of working alongside Bouchard is to never doubt his partner's aspirations. "I've always been the skeptic. When Alain said we will be No. 1 in Quebec, I thought that was very optimistic. But, a few years later, we were there.

"Then, at another time, he said we'll be No. 1 in Canada, and that's happened," he said.

"Now, when Alain says something, I don't doubt it. I say, 'Let's get ready.'"

Bouchard is ready to take the company he founded to the next level. He foresees a convenience store industry that will keep changing as consumers modify their behavior and as new, more advanced technologies continue to emerge.

"Couche-Tard intends to remain a player -- a very active player," Bouchard said, quickly adding that he intends to do the same. "I'm certainly not prepared to retire soon. I like what I do, and feel I have a good 10 years ahead of me."
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