We recently caught up with Ryan Levins, convenience retailing manager for Imperial Oil Limited, to discuss how On the Run sites are adapting to meet the high demand for value in today’s tough c-gas climate. Here’s a sneak peak of what we discussed:
CCentral: Consumer advertising has been one of the key elements in building the success of the On the Run brand. How do you see this brand, and the brand offering, evolving in the next three to five years?
Ryan Levins: In the next three to five years, I see the brand doing just that: evolving. When we introduced the On the Run brand and brand offering to Canadian consumers over a decade ago, the offer was quite different than what it is today. We had our own foodservice program, stores were bigger, and we did relatively little to promote our brand beyond the footprint of our locations. Today, our foodservice offering is largely Tim Hortons, we have the right-sized stores to properly balance space-to-sales, and we are actively telling consumers about our value proposition through a variety of media. We feel that our brand is well positioned in the marketplace today, and we will continue to refine our offer to win the business of consumers moving forward.
CCentral: Co-locating with Tim Hortons has been a huge traffic driver. How has it affected in-store traffic, along with customer purchasing habits? What form do you see foodservice taking at On the Run in the future?
RL: When you combine top-tier brands like Esso, Tim Hortons, On the Run, and Royal Bank in one location, consumers value that, and that value translates into increased in-store traffic. By co-locating with Tim Hortons, customers have the opportunity to buy more items in one location than they would at a stand-alone restaurant or a convenience store without Canada’s favourite quick service restaurant … and many of them do! There is a synergy in co-locating with Tim Hortons that benefits all parties, and that is why we are looking to build on this strength of our value proposition into the future. We are three years into our renewed agreement that will have us adding 175 more Tim Hortons locations at Esso-branded sites over a 10-year period, not to mention the significant number of renovations that we are jointly undertaking at existing locations. Foodservice is the growth engine of the c-store business, and we could not be happier with our association with Tim Hortons and our growth plans for the future.
CCentral: Triple-threat sites incorporating convenience, gas and car wash are finding success in the competitive marketplace. What role do these sites play in your network, especially when it comes to increasing throughput efficiency?
RL: There is no doubt that these triple-threat sites are finding success out there, and that is why we strive for the quadruple threat by including Tim Hortons offers in addition to convenience stores, gas and car washes. The capital and operating expenses required to own a service station are extremely high. In order to make that investment pay off, you need to maximize the gross margin dollars of every square foot on that property. Consumers are so busy nowadays that they value economizing their trips. If we can offer them a clean and convenient location where they can fuel and clean their cars, grab something to eat for now and some fill-in grocery items for later, and take out cash from a trusted Royal Bank ATM all in one stop, then we can’t help but increase throughput efficiency. So that is what we strive to do, and why the majority of our company-owned network has a convenience store, a Tim Hortons offer, a Royal Bank ATM, and a car wash, all headlined by the quality fuel that the Esso brand has represented since the 1940s.
CCentral: As onsite operational costs continue to increase, what are you doing to respond to those challenges?
RL: We have a long history of relentlessly pursuing operating efficiencies. On the facility side of things, we have advanced energy management systems that regulate the use of utilities and we are employing LED lighting to conserve energy, too. We invest in preventative maintenance programs to limit both real and opportunity costs of downtime. On the human resource side of things, we map out the most efficient use of labour hours and we eliminate low-value work. With all of that said and done, I continue to believe that one of the best ways to respond to the challenge of rising operational costs is to sell more stuff at good prices and maximize gross margin dollars.
The convenience retailing business is a fascinating one. It is fast paced, challenging, multi-faceted, and full of good, quality people. It is a great industry to be a part of and I look forward to an exciting future ahead.
For more from our interview with Ryan Levins, and to see additional photography, check out the September 2013 issue of YCM.