Economy, branding and establishing valuable wholesale partnerships figure prominently in indies' minds.
There isn’t anything easy about running a small store—or even a small chain. But ask many independent retailers if they’d have it any other way and you’d get a firm “no.” “You have a lot better control over what’s going on in your store, and you can be a little more efficient operational- wise in your store to make sure things are done as they’re supposed to,” says Brooks Blair, owner and operator of Bells Ferry Texaco.
Blair’s store is in Acworth, Ga., about 35 miles northwest of Atlanta. Acworth, population about 20,000, is the picture of small-town America, a characteristic Blair looks for in his best employees.
“Hopefully, if you compare the independent with some of the big company stores, normally they’re run a little bit better, and your personnel are a little bit more friendly,” he says. “And that’s one of the things that over the years I’ve personally tried to do is make sure that I’ve got the best employee I can have on the front line, because that is the customer’s perception of my store.”
This year has been a difficult one for Blair, who saw business shrink by almost 40%. His core customer base has been hit harder. With home remodeling and new construction down significantly, Blair has had to say goodbye to some of his most loyal customers. Laborers and contractors once accounted for the bulk of his business.
Nevertheless, Blair remains emboldened and undeterred. He is an independent retailer, a class of trade that accounts for about 70% of the approximately 145,000 U.S. convenience stores. But even in this rank of one- to 10-store operators, there are many subdivisions, from franchisees to licensees to dealers to true independents, who carry their own brand at both the forecourt and back.
Since 1983, Blair, a grandfather of eight, has struggled to keep up with his large-chain competitors and their ability to leverage their petroleum business. Because Blair is a small-volume pumper, if he buys a load of gasoline on a day when prices jump 4 to 5 cents, he simply cannot compete with larger rivals who buy daily, and certainly those who leverage their scale by buying at an OPIS-plus low fixed markup.
“With the credit-card fees, you have to be mindful of what you have in the ground and look at it and say, ‘Do I lose money on every gallon that I sell?’ Or do I just have to suck it up and say, ‘Well, I’m not competitive, but at least I’m not losing money’?” he says.
Something that’s actually helped Blair in this down economy has been lottery, ironically. It turns out his store has become quite the destination for folks looking for a little luck. In fact, Blair has seen his lottery profits grow as he adds more high-dollar tickets.
“I did notice a few years ago, lottery would only come out with a $5 or $10 ticket periodically,” he says. “They weren’t just an everyday ticket. But I did notice that whenever they did, boy, they sold like crazy. Just as quick as you could put them in, people were buying them. So I thought I’d add a second slot and add another $10 ticket … and my sales jumped.”
Three years ago, the owners of six Convenient Food Marts in Lake County, Ohio, bought themselves out of their branded contracts, and they’ve never looked back. Angela Broski of the newly minted RediGo Food Marts says the transition has allowed the stores to retain their independent, neighborhood identities, but also leverage the buying power of a retail chain.
“Each store is very unique. It’s all about their neighborhoods,” she says. “We have six stores in six different neighborhoods so they cater to their neighbors. They cater to their customers. The things we have in common are obviously groceries, milk and ice cream, but not all my stores carry Goya. Not all my stores carry Little Debbie. As a group, we’re obviously catering to the entire community.”
Gasoline drove Broski to rebrand her stores. Convenient Food Marts was filing for bankruptcy, and the six RediGo owners saw their opportunity to become independent. Not only did they rebrand, but they also replaced old pumps, Broski says. “All of our sites had the old-style gas pumps, and none of us were branded,” she says. “We had to come into the 20th century.
“It was all about buying power. We went to the negotiating table with a gas supplier and from there we just decided to change our name and rebrand ourselves. And what we do is basically a buying convenience for us. It allows us to negotiate better rates with all of our vendors as a group.”
Each store is owner-operated, with the name and vendors shared. A separate entity owns the name and the trademark, and each store, as well as the LLC, have their own bank accounts. The RediGo Food Mart LLC bank account is used to manage all the advertising dollars, another benefit of organizing in a buying group. Broski no longer owns and operates her store; rather, she manages the day-to-day goings-on of the LLC.
“We advertise. We do our own signage. We advertise in the newspaper, we advertise on the radio. As independents, you can’t do that. It costs too much. When you’re advertising six locations, it works,” Broski says.
Gary and Debbie Armentrout, owners of Quik Mart & More, Steubenville, Ohio, started out in gasoline wholesale. Twenty-five years ago, one of the locations they delivered to came up for sale. Then, 10 years later, they added a second. They waited a few more years, and today they’re up to seven stores.
“[Being independent] is harder now than what it was, just because of the economy,” Gary says. His wife, Debbie, chimes in, saying, “We take pride. [Our stores] are very clean. … We try to stay really on top of what comes in and out of the stores.”
Despite today’s volatile economy, Gary and Debbie always have their eyes open for their next retail purchase. A solid relationship with their bank and a consistent record affords them the ability to branch out. “If it’s a reasonable location, we’ll look at it,” Gary says. “But yes, we do want to grow. We’re at seven stores, and we’re not done yet.”
BUILDING A BRAND
When Blair first started out in the convenience industry, his store was branded Amoco. Of course, when BP merged with Amoco in 1998, his store turned its colors from red and blue to green and yellow, and along with it, its name. With BP’s recent shedding of locations, Blair faced another tough decision: To which name would he trust his business of almost 30 years? “I’m branded Texaco,” he says. “Moving to Texaco has been more difficult than what I had hoped. Brand recognition hasn’t quite been accepted the way I had wanted it to. I think down the road, [Texaco] will be expanding, and possibly there will be a little bit better support for us. It’s been a little hard for us to transition here. Basically, all I can go on is my people.”
Blair knows there isn’t much differentiating him from his major competitors down the street: “Everybody has the same products.” But he also knows that he’s got exceptional employees. In the past four years, he’s had minimum turnover. The two or three people who have left his ranks have expressed interest in moving up the ladder: “I have one store; there isn’t anywhere to move.
“It has been difficult, but I have been extremely fortunate to have good, dependable people, friendly people. I hope that continues for a while, at least. At least until we get through some of these tough economic times,” he says.
For Broski and RediGo Food Marts, building a brand has been the main goal from the beginning. On the gasoline front, three of the company’s stores are branded Marathon, and the other three are unbranded. The company hired a consultancy initially to help with the name and logo, but as with Blair in Georgia, the success of branding efforts has hinged on the folks who own the stores. They were initially very concerned that their loyal customer base would bypass the new RediGo Food Marts, assuming that the stores had changed hands.
So the company put together a strategic marketing plan that involved putting a name and face on each store. Today, the result of that effort still smiles through the computer screen on the company’s corporate Web site. A collection of almost 230 years of c-store experience is captured in one photo of all the owners in the RediGo group.
“Our customers know us,” and that’s the most important thing, Broski says.
The Armentrouts are relying on in-store loyalty programs to boost their brand. They’ve created a Quik Mart & More coffee card, which offers a free eighth cup of coffee after seven purchases. And again, they point to their managers and employees as being their best source of differentiation.
“The managers know what the customers want before they even come to the counter,” Debbie says. “The managers just do a really nice job with all the stores.”
Finding good vendor and wholesale partners can be an invaluable tool on the independent’s belt. Gary and Debbie recently switched their grocery wholesaler to A.J. Silberman because “we bend over backwards for our customers, and they bend over backwards for us,” Gary says. “We have a very good relationship with their foodservice guy.”
The relationship is so good, in fact, that the Armentrouts really beefed up their foodservice offerings, so to speak. They’ve added an extensive roller-grill program as well as Piccadilly Circus Pizza.
“We’re very pleased,” Debbie says. “We’re kind of first in bringing new items into the stores, and new food programs. But you know you don’t just make it on gas anymore. A.J. Silberman, our new grocery supplier, had a lot of opportunities for us.”
Establishing those key vendor partnerships has been just one of the reasons RediGo Food Marts experiences so few distribution problems: “Our major suppliers are all in common,” Broski says. “Our milk supplier, our grocery supplier, our deli supplier, our gas supplier—those we all have in common. So when we promote items, we’re all promoting the same item. And that goes a long way.”
Blair spends a lot more one-on-one time with his vendors these days. He says the economic downturn has actually made him a better businessman. His new hands-on approach allows him to be more in tune with what’s going on in the marketplace, just through conversations he has with the partners he’s chosen.
“I’m probably spending more time here than I was five years ago, just because I want to talk to the vendors,” he says. “I want to see what’s out there. I ask them, ‘Am I competitive? Is there something I need to change to make me a better retailer?’ A lot of the relationships I’ve established in all these years have helped me in the long run. I talk to them on a regular basis just to kind of stay abreast of what’s going on. That’s basically all I can do.”
“My being here, I can see what’s happening a little better than someone telling me or looking at a report,” Blair continues. “That’s one of the advantages of being and independent. I try to be up front as much as I can so I can just talk. I like to try and take an interest in my customers, and over the years I have developed some real good friendships with those families. I’ve seen their children grow up.”
Being First to Market?
Brooks Blair of Bells Ferry Inc. Texaco is reluctant to be the first: “I’ve been trying to be mindful of my inventories. We have people coming in the store once or twice a week and they’ve got this new product that is absolutely going to set the world on fire. … I don’t know anything about that product. I don’t know whether it will or will not sell. So I’m very reluctant to do deals like that. As a matter of fact, I’ve stopped them.”
Angela Broski of RediGo Food Marts is pretty aggressive, especially if there is strong marketing and a known brand behind it: “There are certain new products that not everyone will participate in. We try to make sure when we’re introducing a new product and we’re going to advertise that new product that it’s a product that’s going to work in all stores. … So when we promote new products we try products that are coming from … the big companies.”
Debbie Armentrout of Quik Mart & More relies on her wholesaler rep: “Our rep helps us clear off space. He finds out what’s not working in that area and he’ll pull the old [product] off and put the new one in.”