Instead of its usual three-day convention, Chevron hosted a two-day business summit for its franchisee and company owned businesses last month, to discuss the state of the economy and best practices for flourishing in hard times. Key economists spoke on the state of the industry, alternative energy, climate change and the future of fossil fuels.
“We’ve been through this before,” Shariq Yosufzai, president of Chevron Global Marking, said of the difficult economy. He stressed that despite tough economic times, Chevron’s market share is up and the company had record earnings in 2008, which gave it the means to navigate the recession. He also credited global marketing with helping the Chevron thrive.
Highlights of the summit included Phil Lempert, a consumer trend tracker, who said trends show consumers want lower prices, local and fresh products, greater variety and better service. From a c-store perspective, consumers want quality products and strong communication. He encouraged operators to get to know their consumers, and to determine and capitalize on pending trends.
Going the ExtraMile
Robert Reich, the U.S. Secretary of Labor under President Bill Clinton, gave a keynote speech where he predicted a slow economic recovery. He stressed that a recession is an optimal time to try new imaginative strategies because there is less pressure to meet huge sales numbers, since everyone’s business is down.
Chevron is doing just that by rolling out its new ExtraGood To Go (EGTG) offering through its ExtraMile c-store concept this summer.
Current and future ExtraMile stores will be united under consistent standards, including uniform signage, consistent offerings and a new EGTG food program.
“ExtraMile provides high standards, good service, a bright, clean inviting environment and all the right products,” said Danny Roden, Chevron’s vice president of global marketing for the Americas region. “To compete with hypermarkets and supermarkets we wanted to provide our retailers with a complete store offering, to maximize their profitability at the station.”
Chevron operates about 9,000 sites in the U.S. including some 7,000 Chevron locations and more than 2,000 Texaco sites. There currently are 150 franchisee and more than 250 company-operated ExtraMile stores, which are all being converted to include the new EGTG look and standards by Aug. 1.
“We plan to add about 100 ExtraMile stores a year for the next two years. So we’ll have 650 locations, a mixture of franchisee and company operated locations,” Roden said.
Roden expects a strong destination foodservice offering like ExtraGood To Go to become a big part of the focus at ExtraMile stores.
“As we launched ExtraMile, we knew one of the areas we needed to take to the next level was our food offering,” Roden said. “We’ve gone with some high end and roller grill elements, and we’re emphasizing brands consumers know.”
As part of the improved foodservice offering, EGTG’s theme is carried throughout the store, starting the moment consumers enter the lot. Banners at the gas islands showcase beauty shots of food products available inside the store and feature interchangeable panels that can be changed to introduce new items.
Illuminated window signs for EGTG signal that foodservice is available from early morning to late at night, and matching banners at each store’s main entrance greets consumers with additional messages about daypart offerings and new products. The matching signage helps the stores flow thematically, from the coffee area to the foodservice section.
“We want the customer to say, ‘EGTG, I’ve seen that at the coffee bar,’ and make that association with fresh foods,” said Nancy Cabell, a franchise program consultant for Chevron.
The menu board is made with magnetic strips, so numbers can slide in and out easily, which is important in a franchise environment where pricing may differ between stores.
The foodservice area features a set of core products that will be identical at every store, although flavors may vary according to location. Stores will offer a new, brightly lit European design food warmer with Don Miguel Monster Taquitos on the top shelf, Foster Farms Corn Dogs on the middle shelf and Ruiz Tornados products on the bottom. An adjacent two-foot roller grill will feature Johnsonville links. All sausage varieties also have a designated spot on the roller grill that will be consistent from store to store. All items are precooked, so everything a customer sees is ready to eat.
“In our food warmer in the past there was a lot of flexibility, so much so, there wasn’t enough consistency,” said Don Tovar, U.S. foodservice, category manager for Chevron. “We have now streamlined the offering to include our best-selling products.”
Where space provides, new iced coffee machines are being added next to the fountain beverage machines, appealing to a growing consumer demand. “About 70% of stores will carry iced coffee. I think that’s a huge growth opportunity because many customers have been asking for it,” Tovar said.
Good to Go
In phase two, already in testing, the company is optimizing fresh foods and heat-and-eat offerings, which may include everything from White Castle cheeseburgers to fresh deli sandwiches, pita pockets, wrap products and fresh fruit. Here too, stores have more flexibility in what they offer.
“In this second phase we’re adding at least 15 SKUs of heat-and-eat and fresh food, but in terms of overall assortment capability we’re increasing it by 30-35%,” Tovar said.
“We need products here that will appeal to customers other than our high frequency, heavy c-store user. A double hardboiled egg, pre-peeled with a wedge of cheese is one of our best sellers right now.”
Many ExtraMile stores also received enhanced lighting around the food offerings to give the stores a clean, open feeling. Spotlights on the items and menus allow consumers to clearly see the products .
Blue “thought bubbles” dot freezer doors and dangle from the ceiling, part of a brand messaging campaign called “Need it Now,” strategically placed to build purchase intent for immediate consumable products. “We want to relate to the shopper with a bit of humor and sell the message that we have what you need, when you need it,” Cabell said.
From concept to implementation the company has faced an aggressive schedule to convert all existing ExtraMile stores to the new look in time for a fall marketing campaign, including radio and promotions.
The downturn in the economy is a good time to regroup and rebuild the business, when more consumers are opting to shop at c-stores over more expensive coffee shops or restaurants. “It sends a strong signal to our customers and our franchisees that this is important and that we are going to focus on making the investment,” Cabell said.
“And that gives us the platform to start communicating with investors.”