Core-Mark's Plan for Growth

Wells Fargo 'Fireside Chats,' Part 4: Core-Mark International

Published in CSP Daily News

By
Samantha Oller, Senior Editor/Special Projects Coordinator

Core-Mark

ATLANTA -- As part of her "fireside chats" with major convenience store chains at the 2013 NACS Show, Bonnie Herzog of Wells Fargo Securities LLC also sat down with Tom Perkins, CEO of distributor Core-Mark International to discuss growth plans and strategy for the company.

Core-Mark serves more than 29,000 c-store, drug and other small-format retail locations in the United States and Canada, with 28 distribution centers and headquarters in South San Francisco, Calif.

In a research note on the sit-down discussion, Herzog, who serves as managing director of beverage, tobacco and convenience store research at Wells Fargo, shared Core-Mark's four main growth strategies: vendor consolidation, increased relevancy to retailers, focused marketing for independents and acquisitions. Perkins explained to Herzog that the company's priorities for cash begins with acquisitions, followed by dividends, share buybacks and speculative inventory buys.

  • Acquisitions. Core-Mark hopes to grow its footprint east of the Mississippi, said Perkins, and leverage its core competencies across North America. To this end, over the past seven years, the distributor has acquired five distributors and opened a warehouse in Toronto and in Tampa.
  • Vendor consolidation. Core-Mark aims to help c-stores maximize their delivery efficiency, said Herzog. This lowers the cost of goods for c-stores by removing the logistics of more deliveries. Additional benefits include greater inventory turns, in-store fill rates and stock levels. "Transaction costs are reduced as well as the store manager isn't checking in orders multiple times a day," said Herzog.
  • Increased relevance. As another growth strategy, Core-Mark is working on optimizing its assortment to better meet consumer demands—for example, in fresh food. To accomplish this, the distributor is replacing its traditional trailers with tri-temp models that offer frozen, chilled and ambient storage to handle various food offerings. "It services fresh produce to over 8,000 customers and has about 9,000 customers on its fresh and local program with which it's seen much success," said Herzog.
  • Focused marketing for independents. With 63% of c-stores run by independent operators, Core-Mark believes it can play a key role in supplying category management expertise—for example, helping these retailers better understand customer demographics, maximizing assortment and mastering pricing.

Core-Mark offers a full range of products, marketing programs and technology solutions. It services traditional convenience retailers, grocers, drug, liquor and specialty stores and other stores that carry convenience products.

Click here to view the other Fireside Chat reports.

Keywords: 
consumer trends, trends
Samantha Oller By Samantha Oller, Senior Editor/Special Projects Coordinator
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