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A little more than two years ago, when we spoke to BP's convenience store executives about the long-term future of the company's retail sites, they were solidly behind their strategy to market the 30-year-old ampm brand, with its emphasis on traditional convenience foods and promotions west of the Rockies, and the newer Connect brand featuring its Wild Bean Cafe concept east of the Rockies. Indeed, in early 2006, BP developed a plan to franchise the then-5-year-old Connect and Wild Bean Cafe concepts.
But, BP's building of ampm stores in Chicago last year revealed a seismic shift in strategy. Their success led to the November announcement detailing BP's plans to sell the vast majority of its company-owned and -operated c-stores to franchisees, who will rebrand approximately 300 Connect stores to ampm. Some will be sold to dealers and jobbers. The transition is expected to take two years. (Franchise agreements will be for 20 years.)
Last month, CSNews interviewed Fiona MacLeod, BP's president of convenience retail in the U.S. and Latin America. "This decision was driven by customer research -- customers telling us the ampm offer is what they want," MacLeod said. "We didn't just sit in our office and say 'Hey, it'd be great to make the stores all ampm.'''
"Customers wanted a fun, inviting atmosphere in the stores, the ability to get food and coffee around the clock and to interact with the store in a way they could get in and out quickly, or, if they wanted to hang out and [customize] food with our condiment bar, they could do that too."
The ampm and Connect offers evolved in the past couple of years, bringing them closer together, MacLeod noted. "We also realized that running two separate c-store brands can sometimes be a distraction and there is significant value in knowing your customers and serving them through a single national brand. That, along with the franchisees' entrepreneurial spirit and connection to the local communities, made us excited about the growth of franchising and ampm.
"The name has 94 percent brand recognition in the West," she added, "while people in the East told us 'ampm' is intuitive. To them it would mean getting food and services 24 hours a day. It all made sense."
Consumer reaction to the ampm stores in Chicago has been overwhelmingly positive, MacLeod said. "We are still getting our loyal Connect customers who had come in for their Wild Bean Cafe coffee and pastries, but we also are attracting many more customers who had not been coming in for the Connect offer. We needed to keep the fresh, clean feel of Connect, but bring in the fun, relaxed atmosphere and the 24-hour hot foods offer of ampm."
The typical ampm store -- there are 940 company-operated and franchised units now, carrying 2,200 SKUs -- features an expanded fountain, coffee and food offer, significant cooler space and a roomy checkout counter area. On the menu: "baked, grilled and chilled edibles," such as 1/2-pound cheeseburgers, hot dogs, corn dogs and a range of bakery items, all merchandised at self-serve stations. The stores sell ampm-branded coffee (the same brew as Wild Bean Cafe-branded coffee) and 24 different fountain drinks with a choice of cubed or "crunch" ice.
Going forward, retail pricing at the rebranded ampm stores will depend on the market, but the chain will adhere to the brand's reputation for bundling and value pricing. A recent promotion: A three-meat Italian stuffed baguette for $1.29.
"We have customers who eat breakfast, lunch and dinner from ampm," MacLeod said. "It's really in line with our brand position of 'Too Much Good Stuff.'"
Stores in the West will sell ARCO-branded gasoline; those in the East will continue to fly the BP motor fuels flag. When the conversions are complete, the company expects franchisees to operate 1,300 to 1,400 ampm stores.
To support the new coast-to-coast ampm brand, BP's retail arm will be structured in a way that has worked well in the West, MacLeod said. Franchisee business consultants, working in the field with 15 to 25 stores depending on geography, will offer franchisees marketing, merchandising and other support. They will be the franchisees' primary point of contact with a small BP corporate staff, based in La Palma, Calif.
The restructuring and move to franchisees will mean the closing of the BP's Naperville, Ill., retail office. Some 9,500 c-store positions will be eliminated, although the new franchisees are expected to hire most of those employees. Additionally, some 350 support staff positions will be eliminated, with the new business largely field-based to be closer to the consumer and franchisee, MacLeod said.
The Future of ampm
Like current ampm franchisees, new operators will carry a core set of products that customers can expect to see in every ampm across the country, but have flexibility to tailor their sets with ethnic foods and other products their local customers want. MacLeod hopes to set up an informal franchisee council to review new products and programs, and possibly contribute innovative ideas to the system.
"We will emphasize chainwide programs and promotions, a main driver of the ampm brand, " MacLeod said. "The current ampm advertising is very fun and resonates with the customer. So, under that umbrella, we want to run promotions with our prepared foods and coffee, as well as run plenty of advertising in the East to build brand awareness."
After the stores are converted, MacLeod expects the chain to grow through continued expansion in new marketing areas, with some possible help from a new jobber-franchisee program. "We've had a lot of interest from people in other markets, looking to bring the ampm brand there," she said. "And we're developing a BP-branded jobber/supply franchise program in markets outside our current convenience marketing areas. Within existing convenience marketing areas -- Cincinnati and Orlando, Fla. for instance -- the model will be jobber-supplied franchisees, which will help us launch the ampm franchise there."
MacLeod said she expects the chain will pursue more private label products, but noted self-distribution is not a strategic priority now.
Also, don't expect BP to hop on the "super c-store" bandwagon. "We see a strong continued need for an acceptable-sized store for customer to get gasoline, foodservice and coffee -- a breakfast item or a burger in the evening -- customize it and get in and out quickly," she said.