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JERSEY CITY, N.J. -- Who are the authorities on the future of the convenience store industry and what can you learn from them? In this series of exclusive one-on-one interviews with c-store industry leaders, Convenience Store News Editor-in-Chief Don Longo explores the more important trends and issues facing the convenience store industry.
This month, Longo interviews Jay Ricker, chairman of Anderson, Ind.-based Ricker Oil, a family-owned firm with 49 convenience stores in Indiana. In 2008, Ricker purchased the Indianapolis BP/ampm stores. A former chairman of NACS, Ricker's company won CSNews' Grand Spirit Award for Community Outreach in 2010.
Longo: What do you consider to be the most important trends influencing retailing today?
Ricker: One of the things I'm concerned about is the future of fuels. I think we, as an industry, need to take a leadership position in determining the predominant fuels used down the road. I personally think natural gas is a logical fuel to start blending into the supply mix. America has abundant supplies of natural gas. Cars can be converted over to natural gas relatively easily. It's cleaner burning and better for environment.
I'm also concerned about inflation and what it's doing to all businesses. And gasoline prices are making it worse. If gas goes to $4 per gallon, it's really going to cause price increases everywhere and impact sales inside the store.
And I'm concerned about how much the Fed continues to borrow and about what we do about our nation's deficit spending.
Longo: Please comment on the most important issues relating to the convenience store industry and how these specifically impact Ricker Oil?
Ricker: A huge issue for the convenience store industry is whether customers at the pumps come into the store. Do we have the right products? A retailer has got to be on top of what customers want because everything changes so quickly. Prepaid products are a good example of how we supply the products customers want. What's going to be next? I don't know, but we must stay on top with both the right products and the right sized options for our customers. I saw a lot of new products at last year's NACS Show, but the products you haven't seen before weren't from the big suppliers, they were from the smaller guys.
Another big issue for the convenience store industry and our company is swipe fee reform. The banks are scrambling like crazy to overturn the gains we made last year (passage of the Durbin swipe fee reform amendment). We have a great story to tell and we have the moral high ground but the fight isn't over yet.
And we're all concerned about tobacco regulation and taxation. Tobacco products, whether they are cigarettes, smokeless, cigars, are very important to our industry. There's still a huge number of adult smokers out there and we're the chosen place for them to buy their tobacco products.
Longo: As a BP dealer, your company was directly affected by the negative publicity of last year's oil spill. What did you do as a company to offset the negative press? More importantly, what did you learn for the future?
Ricker: The number one thing I focused on was to make sure consumers understood the stores are owned and operated by an individual businessperson who lives and contributes to that community. My situation was somewhat unique because the stores were run by BP up until we purchased them two years ago. We had to communicate, communicate, communicate. In the final analysis, we took some hits, depending on the demographics of a specific store's trading area, but we are not suffering any long-term ill effects. One of the lasting lessons of the whole BP spill is the importance of making sure all the consumers know we are a local company. That is one of the things that gets you the business.
Longo: What other trends are impacting Ricker Oil and how are you responding to them?
Ricker: Healthy eating and buying local are two big trends. People are changing their eating habits and it's very important that we offer these products and that they are packaged properly for our class of trade. Healthy products have been tried in the past and quite frankly they haven't sold.
We're currently going through a new store design. We haven't built stores in a couple of years as we've digested our acquisitions. But now we feel it is important to have a consistent exterior look to all our stores. We also know you don't need a 4,000-sq.-ft. store in a small town but you do need one in a metro or highway location.
We think we've come up with a simple, cost-effective building design that doesn't look cheap. It's a classic look and it stands the test of time. We're took the BP Connects and ampms we acquired in Indianapolis and we have retrofit them to look like the rest of the Ricker Oil stores. It's important to build our brand.
Longo: The challenge to build closer connections with shoppers is a mandate before all retailers today. How have you traditionally marketed Ricker's offerings to consumers and what's different about how you do it now?
Ricker: We market in all the traditional ways, but now we also have hired someone to handle all our social media. We have a large Facebook following now. But the question is: Is it driving our business? How do we use it to get more people through the door?
I was talking to Brad Call of Maverik and he said, "there's so much technology out there it almost gives you a headache." This is a huge area for our industry to get our arms around. We've made it a focus to utilize social media and use it to give back to the community. We recently came up with prizes for customers if they bring new people to our Facebook site. I know just enough about "apps" to be dangerous. We're really pushing Facebook and apps now.
Longo: Please discuss the role manufacturers play in today's convenience store industry and how has the retailer-supplier relationship evolved over the past five years? How is it likely to change in the next five years?
Ricker: I think we are well-served by manufacturers and wholesalers today. We're viewed as a very important retail channel because we have a very unique customer. Our customer purchases so much of their stuff for immediate consumption, unlike grocery store customers. For example, if you're a candy company, you can sell to other channels of retailing, but only the c-store customer is looking to buy an immediately consumable candy bar. So we are the primary place for them to sell that candy bar to.
As for the future, I like what Joe DePinto of 7-Eleven is trying to do to make the supply chain more efficient. He's trying to get suppliers to consolidate deliveries so that fewer trucks have to go to each store each week. It underscores the importance of fresh foods and making multiple deliveries during the week. Nobody but a handful of retailers are good at that today.
I think it's inevitable that we are going to see more fresh food. Wholesalers are investing in more refrigerated loading docks. To justify making more deliveries, wholesalers are going to want to sell us more products. I would buy more from a wholesaler if that could help justify three deliveries per week instead of one.
Longo: Switching gears, what are the foremost non-industry specific retailing issues that are on your mind?
Ricker: I think the big concern is inflation. I am concerned that gas prices will keep rising. I also worry about what I call the "Californization" of the country. For example, it is so much more difficult to get a store built today in suburban Indianapolis because of all the red tape. The impact fees we pay now are triple what we used to pay. And the methodology they use to come up with those fees is flawed for convenience stores because they count trips twice, both coming into and leaving the c-stores.