QuikTrip's Market Jumping
Published in CSP Daily News
How bold leaps have come to define the convenience store retailer
TULSA, Okla. -- Those who've studied QuikTrip over the years say one of its more unique moves is to leapfrog markets, entering areas literally two or three states from home base. Many dominant regional players, such as Kwik Trip, Sheetz and, until recently, Wawa, have opted to stay close to established distribution networks, ensuring a secure supply of products that represent their brands.
One of QuikTrip's earliest expansions from its Tulsa base was into Kansas City, Mo., and Wichita, Kan., in the 1970s and then into Iowa. In 1986, it would make even bolder leaps to Atlanta and St. Louis. And over the past decade or so, it jumped time zones into Arizona with Phoenix and Tucson.
Two factors seem to be in play, according to Jim Fisher, CEO of Houston-based site-analysis firm IMST Corp.:
- Population Density: Having worked with QuikTrip as a supplier in the 1970s and 1980s and then as an observer of the chain over the years, Fisher told CSP Daily News that at one point in QT's history, management decided metro areas were the way to go. Its business model of hiring quality employees and paying them substantially higher-than-industry wages, along with its attention to service and operational excellence, meant high baselines, higher-than-average volumes and foot traffic.
- New Markets: QT sought out markets that had yet to experience the QuikTrip formula--everything from its forecourt presence to its c-store offer and its enthusiastic employees. "QuikTrip has successfully seen that in markets that have a low level of operational prowess, they can come in groups of 10 [stores], then 20, then 30," Fisher said. "If you look at Phoenix, for example, it had no new growth for years. The city was abandoned as far as new retail growth."
Fisher goes on to describe many of these markets as formerly controlled by the major oil companies, many of which were said to have practiced an aggressive gasoline-pricing strategy called "redlining" that kept major-oil company-ops king of the corners.
With the major-oil retreat from retail over the past five years and a new set of mostly jobber-class owners, "the days of redlining are gone," Fisher said. Without the majors supplementing prolonged gas-price wars, new frontiers are opening up simply because, "In the eyes of QuikTrip, that old major-oil infrastructure is not their competition."
Atlanta was one area QuikTrip successfully entered, prevailing over an established but possibly outdated major-oil retail presence. Phoenix and Tucson presented more competitive challenges. According to Fisher, QuikTrip identified the markets as underserved just after Houston-based ConocoPhillips, which ran Circle K before Canadian retailer Alimentation Couche-Tard, made that historic industry purchase. Soon after, the Diamond Shamrock brand, which would ultimately become San Antonio-based Valero, would stake its claim. Several rounds of new builds and pricing battles would occur in those markets before the dust settled.
No one essentially lies down for QuikTrip, Fisher said, emphasizing that competitors of comparable offers do well against QuikTrip. "But if those corners already had top-notch stores with multiple MPDs and foodservice, then the price of real estate would have been too high and would have kept QuikTrip out."
For more on how QuikTrip has achieved fuel and inside sales dominance, see the March 2013 issue of CSP Magazine.