Just a few years ago, Fas Mart was facing financial uncertainty. With 170 stores, the Mechanicsville, Va.-based chain, which also operates Shore Stop stores, was forced into Chapter 11. But what was a difficult period in the company’s history actually closed peacefully allowing the Mid-Atlantic marketer to begin creating a fresh tale.
Fas Mart was acquired by GPM Investments and has since flourished by re-examining how it was going to market and forming strong partnerships, which gave it a chance to set itself apart from its competition on the ultra-competitive East Coast market. And one of those partnerships was with Convenience Store Decisions‘ 2006 Chain of the Year, Valero Energy Corp.
“As we emerged from bankruptcy, we were looking for a unified brand,” said Russ Quick, Fas Mart’s vice president of marketing. “Valero’s brand had no market presence on the Eastern Seaboard at that time, so we were going to be the largest Valero marketer, which gave us a point of distinction and differentiation from our competitors. We put together a deal that worked for both parties and we’re very pleased with our branding. Today, we’re Valero’s largest gasoline dealer.”
GPM Investments is growing. It has 146 company-operated-Fas Mart and Shore Stop stores with 62 dealers in six states, and it continues to expand through acquisitions, most recently purchasing Sweet Oil and DB Marts. Most of its locations fly the Valero teal and yellow flag at the pumps, while maintaining Fas Mart and Shore Stop names on the convenience stores.
As GPM Investments sought a way to capture new customers, it didn’t look at invading channels like grocery and mass merchandisers as the enemyit recognized they had strong strategies and decided to take a cue for themselves.
Quick explained that Wal-Mart understands its customers and has mastered the Key Value Index (KVI) philosophy. KVI is what a consumer perceives a product’s cost should be before they buy it. GPM also began applying this strategy to its stores by using dairy, cigarettes and packaged beverages as traffic drivers.
“Customers know what they paid for their last gallon of milk, their last pack of cigarettes and their last gallon of gas. If you know those KVIs and how they pertain to your customers, you can leverage those items to drive customers to your stores,” said Quick, who explained that his company prices some categories in line with supermarkets rather than other convenience stores. “We make money on the items they don’t have a value index associated with, like single-serve beverages. We’re not value priced on immediate consumption products, but we’re extremely value priced on future consumption products, where consumers hold their KVI. We leverage cigarettes, dairy and packaged beverages to maximize our return. There are other categories where consumers have KVIs, but those are the ones that drive consumers to our stores. That’s how we go to market.”
Aside from being a destination for customers’ dairy, cigarettes and packaged beverages, gas plays a strong hand in driving customers to Fas Mart and Shore Stop lots.
“Our pricing on dairy, packaged beverages and cigarettes is how we go to market, but our gas pricing plays a big role in it, too,” Quick added. “The Valero brand we fly has a strong brand equity and it gains more equity as it continues to thrive on the East Coast, so we’re pleased with that partnership. We’re going to continue to grow as long as the business model is right. It’s easy for us because of our relationships on the East Coast with our vendor partners.”