Sustainable, Renewable. . .Retail!

How Chevron's ExtraMile is making a splash through bottled water

Published in CSP Daily News

[Editor's Note: Chevron's ExtraMile stores won this year's CSP-Service Intelligence Mystery Shop. This is the last of three CSP Daily News stores looking at the concept and why it is succeeding. We also asked industry expert Gerald Lewis to offer his thoughts on how this Big Oil company has been able to develop and operate some really great stores.]

OAK BROOK, Ill. -- How many times have convenience-store clients asked their consultants and designers to help them find a silver bulleta new product, idea or design that no one else had thought of; some [image-nocss] great new thing that would propel them into leadership? And how many times have those same experts (me included) told them that there is no such thing? Well, Chevron has proved us all wrong!

What is this fantastic silver bullet? It's water. Yes, the success of Chevron's ExtraMile program, featured in this month's CSP magazine, is largely based on a prominent store merchandising section called HydraZone. This features chilled bottled water and other noncarbonated flavored waters, such as energy drinks and teas, in a manner that Chevron's marketing chief calls sexy.

[For complete results of the mystery shop and more about ExtraMile, watch for the August issue of CSP magazine. And watch for an interview with Chevron executives Shariq Yosufzai and Danny Roden next week on CSPTV.]

How did Chevron execs come up with this amazing discovery? They looked at the numbers to find out what they were already doing welland then did it better. And what is the lesson that this teaches us? It is that success frequently starts by identifying what you can already do well and profitably, rather than by chasing after elusive magic ideas that you don't know how to do, and that have usually been triedand failedbefore. The secret is then to figure out how to do it better than the competition and to make the commitment to keep doing it better and better. If you can do it with waterthe most basic commodity in the worldthen how many other opportunities do you have?

While most oil companies, like all energy suppliers, are seriously involved in developing renewable and sustainable energy sources, Chevron has, in fact, developed a renewable and sustainable retail program. But it did not come easy. They flirted a few years ago with a home-meal-replacement concept called Foodini's. This involved building large stores staffed by lots of employees and offering an extensive line of take-home meals. It was a concept that was difficult to run, hard to control and virtually impossible to roll out to the Chevron network.

But, unlike many of the major oil companies who are getting out of retail, Chevron learned from this experience and, rather than being discouraged, developed a well-thought-out program that is within their capabilities. By running company-operated stores in each market they enter, they have the capability to offer ExtraMile franchises to their dealers, providing them an opportunity to enhance their business, while maintaining a consistent shopping experience for their customers. And, since ExtraMile can be retrofitted into facilities as small as 500 square feet, Chevron is able to get to the required critical mass of outlets needed to promote the brand effectively as it rolls the concept out on a market-by-market basis.

What opportunities are there for today's c-store operators to harness this type of thinking to enhance their business?

First, you should take a fresh look at your own numbers. What are you doing well and profitably that you could do better? Does it have the potential to have a significant impact on your bottom line? Do you have the capability to do it? Are you prepared to make the commitment to make it happen?Second, stay tuned for new market developments. On a recent trip to England, I was once again reminded of how the population density there enables an array of wonderful packaged fresh foods to be prepared off site and delivered through a cold-chain and sold in the stores the same day. Tesco will try to do this here. If they are successful, this type of opportunity may well open up for you. So stay tuned, but don't hold your breath. Water is easier.