hopping around with valero

It’s no surprise that Valero has made its own dent in the industry. Convenience Store Decisions‘ 2006 Chain of the Year recipient is an American success story. What started as a small company—armed only with some ambition and business savvy—has grown to unfathomable proportions over the past six years.

With 18 refineries, a throughput of 3.3 million barrels per day and more than $80 billion in annual revenues, Valero is not only a fuel powerhouse, but also a highly coveted brand name with which to be associated. Enter Li’l Cricket.

Based in Spartanburg, S.C., Li’l Cricket is a 90-store operation that has been running strong since it’s inception in 1982. Li’l Cricket has earned a name for itself within its market for being a convenience store chain that offers customers an extensive variety of low-priced goods and merchandise—such as 2-liter bottled of soda for a $1.09— inexpensive cigarettes and quality Columbian coffees for only 25 cents. On top of that, the store offers competitively priced gasoline products.

Three years ago, Li’l Cricket—who was already operating more than a few gasoline brands—started searching for other suppliers to upgrade its fuel image. The chain, which featured primarily ConocoPhillips (and still offers the brand at a handful of locations), approached Valero and arranged for 39 of its convenience stores to be converted to the fast-growing petroleum company.

The company is so satisfied with the partnership, it is considering re-branding several more of its locations to the Valero brand in the coming years.

To this day Li’l Cricket operates the only Valero-branded stores in South Carolina. Entering an unfamiliar gas market wasn’t easy—especially when it came to building a new customer base for an unknown brand of gasoline. But, according to Terry Lehman, Li’l Cricket’s senior vice president, the Valero name went a long way in getting the chain through the process.

“Valero has always been very open to suggestions from us. They are easy to talk to about decisions and opportunities that can be mutually beneficial.”— Terry Lehman, Li’l Cricket’s senior vice president

“The Valero brand offers a clean, sharp image,” Lehman said. “That, along with its very competitive pricing, helped us increase volume at our locations and offset the turmoil that typically comes when you switch gasoline brands.”

Since Li’l Cricket began carrying the Valero brand, the two companies have been working at helping customers recognize both brand names. To that end, Valero has brought in an array of fresh marketing plans that change regularly— most of which revolving around its proprietary credit card. Valero also took a lot of initiative helping Li’l Cricket with billboards and other types of advertising in the market area to lure in a stronger volume of customers.

“Valero has always been very open to suggestions from us,” Lehman said. “They are very easy to talk to about decisions and opportunities that can be mutually beneficial to both of us.”

For the first two years of the partnership,things went well for both companies. Valero was growing by leaps and bounds on its own, acquiring new refineries and earning itself a coveted spot among the nation’s powerhouses within the highly aggressive petroleum market. Li’l Cricket was also benefiting from the partnership with increased store volumes, partially thanks to combining their popular stores with the competitively priced Valero brand.

The Katrina Effect
Despite strong sales and growth for the two companies in the initial years of the partnership, both Li’l Cricket and Valero found themselves in the same painful position as other gas stations in August 2005—in the damaging grip of Hurricane Katrina. With supplies being cut off and refineries and pipelines deemed out of commission, chains all over the country were in constant fear of running out of product. Once consumers found out about the threat, many of them eagerly topped-off their gas tanks, causing storeowners to fret about their access to supplies. This led to enormous spikes in fuel prices.

Gasoline outages were also threatening markets all over the country, but fortunately for Li’l Cricket, Valero was prepared. Years prior to Katrina, Valero began constructing itself into a corporate giant, starting with the acquisition of Exxon’s Benicia refinery in 2000. From there, it acquired over a dozen additional refineries, building itself into one of the largest refiners in the nation. Because of its ample refineries in the U.S. and its driven business ethic, Valero was able to continue the flow of supplies to chains like Li’l Cricket.

“Thanks to Valero, we were able to keep all of our locations open and stocked with gasoline most of the time.” Lehman said. “They went above and beyond to get product to us through various sources and means.”

Despite being able to provide enough gasoline to it’s branded network, many of those stores still had problems keeping up with panicked customers. Valero, however, was able to help chains like Li’l Cricket stay functional by providing a consistent supply of fuel. Looking back, Lehman described the severity of Li’l Cricket’s shortages only as “medium,” thanks to Valero.

“Of course, due to the pipelines being down we still experienced some outages,” Lehman said, “When the pipelines came back up after three or four days, Valero stepped right up to get product available for us at our major terminals.”

Because of Valero’s ability to supply more product than any of the competitors, Li’l Cricket found its sales actually increasing during a time when many stations were running out of product to sell. A year later, gasoline supply may not be as much of an issue as it once was, but price per gallon certainly still is. Despite that, Li’l Cricket finds itself holding steady gasoline sales while it waves the Valero brand.

“Our relationship with Valero has been very effective and has resulted in improved store and gasoline conditions, as well as overall sales,” Lehman said. “To this day, they are very quick to help resolve an issue we have, and I would recommend Valero to any marketer.”

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