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    A Day at the Trade Show

    "I love that display," said Dave McComas, president and CEO of GPM Investments, the firm that owns Fas Mart and Shore Stop c-stores, pointing to a spinner rack of snacks at the Frito Lay booth during the retailer's seventh annual Trade Show, held in late February. "These snacks are selling so well that we could put them in the back of the store and still sell a ton of them."

    "I love that display," said Dave McComas, president and CEO of GPM Investments, the firm that owns Fas Mart and Shore Stop c-stores, pointing to a spinner rack of snacks at the Frito Lay booth during the retailer's seventh annual Trade Show, held in late February. "These snacks are selling so well that we could put them in the back of the store and still sell a ton of them."

    Convenience Store News was pleased to have the opportunity to go behind the scenes, following McComas around during the three-day company event that included over 500 people from the stores and home office, as well as about 80 vendors.

    The event offered Fas Mart an opportunity to outline its vision and strategy for the year to all its people and supplier partners; provide award recognition to outstanding employees and vendors; offer training seminars on key product categories; and a trade show where store managers could write orders and meet vendor representatives face-to-face.

    CSNews caught up with McComas the first morning of the show outside the conference center at the Williamsburg Lodge in Williamsbur, Va. Dressed in casual checked shirt and tan windbreaker, McComas greeted bus loads of associates from Fas Mart and Shore Stop stores in various regions – many of them debarking to loud music and chanting, "We are Shore Stop (or Fas Mart) … We are the best!"

    McComas enthusiastically greeted every employee – some with a hug – but acknowledged that getting to know every associate is getting more difficult as the regional c-store chain keeps growing. Even before the recent acquisition of petroleum jobber Sweet Oil last month, Fas Mart/Shore Stop had grown to more than 153 stores in Virginia, Delaware, Maryland, North Carolina and Connecticut.

    Upon entering the lobby, employees were met by life-size cut-outs of iconic movie legends, such as James Dean and Marilyn Monroe – keeping with the Hollywood theme of the Trade Show: "Make It a Blockbuster Year – 2007."

    After a brief orientation, which basically amounted to reminding everyone to use common sense and have a good time, McComas returned to his hotel room to finalize recipients of the chain's employee awards, including the coveted President's Award. (Each winner gets a star plaque made by the same company that creates the real stars on the Walk of Fame on Hollywood Blvd., said McComas.

    While McComas changed into a tuxedo ("You won't see me in tails very often," said the down-to-earth executive), we chatted with David Eisenberg. Eisenberg has been a board member of GPM Investments since it was bought out of bankruptcy on March 20, 2003 by the Israeli firm, GMUL, which eventually sold a 51 percent share of itself to another Israeli firm, Petro Group Ltd. of Tel Aviv, led by pioneering retailer Levi Kushner, an executive credited with bringing modern U.S. retailing techniques to Israel.

    Eisenberg, who has worked for several retailing chains, credits the company's owners for providing strategic guidance as well as the capital investment necessary to upgrade technology and expand into new markets. "They are not involved in the day-to-day operations at all," he said, but they are knowledgeable owners.

    At the evening's opening session, McComas talked about how far Fas Mart/Shore Stop has come in just a few short years. Since emerging from Chapter 11 in 2003, the retailer's profits have steadily improved from $4 million that year to $4.7 million in 2004, $9.7 million in 2005 and $12 million in 2006. And, he proclaimed this year's targeted profit goal of $15.6 million within reach "if we deliver on our brand promise 24/7.

    "Today, our balance sheet is carrying zero debt," said McComas.

    Besides the financial muscle to make acquisitions, the company is also investing in its current base of stores. This year, the retailer has upped its capital investment budget to $6 million, from last year's $3.6 million in capital spending. That money will be used for various upgrades, such as installing new, 42-inch wide-screen, electronic menu boards in 20 stores this Spring, adding a second roller grill in 120 stores, and refreshing the look of the checkout, cold vault and exterior of existing stores.

    The following day, we worked the trade show floor, where vendors of all types present their show specials to Fas Mart's store managers. "So, what's new this year, guys?" McComas asked the representatives manning the booth for Don Miguel Mexican foods, who showed him a new burrito with an 8-hour holding time. "Great," said McComas, pointing to a jalapeño burrito. "Save this one. I want to try it at 5 p.m."

    McComas said he will visit every vendor booth, asking what's new and thanking them for their support. At the Met-Rx booth, McComas remarked, "We can double the sales if we merchandised nutrition bars better." Sixty percent of all nutrition bars are sold in the morning with coffee. "You've got to provide racks by the coffee area," he told the reps.

    At the Kellogg's booth, McComas looked over the Go Tarts meal replacement bars. "And, we need permanent merchandising racking for stuff like this to sit by our coffee pots," he added.

    Every store manager is also expected to visit each booth, and even has to sign-in at every seminar and trade show booth. Vendors are more-than-gently encouraged to have special trade show offers. McComas agreed that for vendors, the Trade Show is almost like a focus group for them to gather input on their products and quality of service.

    McComas has worked in the c-store industry since he was 17 years old, starting at 7-Eleven, all over the country and in Mexico. He came to Fas Mart just before the Chapter 11 filing in 2003, and was fortunate that the new owners asked him to stay on and run the company post-bankruptcy.

    "I always said that if I ever get to the position where I am the guy in charge, the company is going to be a friendly place to work," said McComas. "People will enjoy their jobs and working here and, as much as possible, this would be a place free of the political stuff at other companies."

    Of course, Fas Mart's zero debt status won't last long – not with three potential acquisitions in the pipeline, according to McComas. At presstime, CSNews Online was first in the industry to report that Fas Mart parent, Petro Group, had signed an agreement to purchase an additional 60 gas stations and convenience stores in the U.S. The acquired properties posted $130 million in sales in 2006.

    Fas Mart is in a good position today as it has some critical mass, said one industry observer. However, competition in its markets is fierce and the retailer must keep growing. The question is: can it grow fast enough to prevent itself from being acquired by a larger retailer? The observer wondered if Fas Mart has the resources to compete with the likes of The Pantry, which even McComas acknowledged is "paying something like 8, 9 times EBITDA" for acquisitions.

    Fas Mart By the Numbers
    Picking up on the "Blockbuster" theme, Fas Mart senior vice president marketing Russ Quick took the stage outfitted in a white tuxedo a la James Bond to hand out "Oscars" – awards to employees and vendors of the year. He also discussed the chain's key sales initiatives and goals for 2007, including rolling out the new loyalty card program tested in Shore Stop stores last year, to all stores; plans to follow-up a phenomenal year in cigarettes and OTP with another strong year in both categories;and build on the success of its multi-vendor endcap program in the snacks category.

    "One of our strategic objectives is to make our best customers even better," said Quick. He said this will be possible through expansion of the company's new loyalty card program (see sidebar, page 53). "We can create better value, increase market basket and transaction counts, as well as deliver a blockbuster brand experience," he added.

    Quick spoke about some of the company's strategies for achieving a 5.8 percent sales gain this year. In candy, the focus will be on candy with fountain promos. In snacks, the retailer is putting a new meat snacks counter box in 133 stores.

    "We feel our counters are cluttered," said Quick. "We are going to move single cigars off the counter and onto a fixture in the store," he said of the OTP category.

    For foodservice, the company has an aggressive sales gain planned by expanding its home meal replacement offerings, simplifying execution and adding new healthier offerings to the menu. Meanwhile, in dispensed beverages, the company is testing new flavor shot machines, which were first installed last December.

    Cigarettes remain Fas Mart's top dollar sales category and second highest profit category, said Quick. "We continue to have the lowest price per pack in the market when you buy three," said Quick, who added that the retailer was taking over its reordering process from its distributor in an attempt to reduce out-of-stocks. "We will focus on three-pack sales — we want to grow that to 25 percent of our sales," he noted.

    Packaged beverages is the top profit category for the chain. The retailer continues to expand the energy drink category – "Energy juices and tea now have one full door," said Quick. The secret to the categories' success: "we price off of the supermarkets' pricing to build home consumption sales, and we have very competitive take home promos, particular two-fers."

    In beer, the company hopes for a 3.7 percent sales gain this year by concentrating on the premium craft and import categories where margins are higher. The retailer will pare down non-moving beer SKUs, replacing them with high-profit energy drinks.

    Integrated Marketing & Loyalty
    The core objectives of Fas Mart's 2007 marketing plan are to:
    • Drive new customer traffic;
    • Increase customer loyalty and shopper frequency;
    • Drive top of mind awareness; and,
    • Enhance brand equity with a warmer image, without losing its heritage for speed.

    Currently, 73 sites (54 Shore Stops and 19 Fas Mart's) utilize the loyalty card program, and all new stores will get it. Currently, 145,000 customers are loyalty card holders, with the average spend of $5.38 versus $4.29 for non-loyalty customer. The program was recently enhanced with new award levels – silver, gold and platinum – to provide greater incentive to shop, including cents off per gallon of gas purchases. In addition, there will be an employee training program that will include certification to ensure that all employees can communicate the benefits of the loyalty program to customers.

    A longer term goal of the loyalty program is to be able to mine the customer data collected and send out electronic promotions.

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