Parkland Establishes Three-Pronged Diversification Strategy

CALGARY, Alberta — In the convenience store business, diversification is a critical opportunity to be even stickier with customers and a chance to continue growing the relationship with them, Ian White, senior vice president of strategic marketing and innovation for Parkland Corp., said during the company's recent Investor Day. 

Serving 25 geographies, Parkland bases its retailing strategy on evolving customer needs and holds these fundamental beliefs:

• Convenience is a highly resilient sector within retail due to prime locations and formats that can pivot quickly;
• Evolve the offer into a retail destination, underpinned by differentiated food offers, strong proprietary brands, and a frictionless customer experience; and
• Investments in convenience will benefit the company twofold: improve the productivity of its existing network and meet the needs of the emerging customer.

"Looking ahead, customers continue to tell us that they want choice. They don't want to be overwhelmed by choices, but they want to do business with us in a way that's convenient for them," White explained. "Convenience is a sum-of-all-parts game — it's not just about having the best offer or the best brand, it's about how all of these elements come together to create a unique and differentiated value proposition."

Between 2022 and 2025, Parkland plans to invest $1.5 billion across the three core components of its diversification strategy:

1. Convenience

Among the company's plans are to grow its proprietary brands, improve site productivity, launch standalone c-stores, expand its flagship On the Run convenience store brand, and grow in the electric vehicle (EV) charging space.

Parkland aims to grow the On the Run c-store banner by improving site productivity to drive organic growth. Key productivity improvement initiatives include:

• Leverage merchandise category analytics, market intelligence and performance management;
• Implement new programs — delivery with Skip the Dishes and DoorDash, and the launch of a new food-for-later frozen program and a new coffee program;
• Optimize store layout, planograms and inventory management through digitization; and
• Operational execution and continuous improvement. 

By 2025, Parkland aims to have built significant scale with the On the Run brand and is targeting 1,000 North American locations through its company-owned network, dealer network, and standalone locations. It is targeting 50-plus standalone c-stores in the next three years, with several openings planned for the first half of 2022.

Parkland acquired the license for exclusive use of the On the Run trademark in the majority of U.S. states last year. With the license, the company intends to expand the On the Run brand across the country to create a unified North American convenience store brand, as previously reported by Convenience Store News.

EV charging will also be a focal point for the operator. It is a natural extension for On the Run, according to Darren Smart, senior vice president of strategy and corporate development.

"Fuel demand is resilient and growing in some markets, but EVs are here to stay," he said. "In this new growth segment, it provides opportunity to grow charging with the On the Run brand."

While EV penetration varies widely by region, Parkland is currently focusing on the British Columbia market in Canada, which has the highest EV adoption. The company will install ultra-fast chargers at 25 strategic sites along major highways, marking the first step in creating an on-route network that will serve customers on longer journeys who need to recharge, according to Smart.

Ramping up its commitment to innovative mobility solutions such as EV, Parkland is sponsoring "The Electric Fueling Station of the Future" design competition. Run by Electric Autonomy Canada, the contest invites the architectural and design communities to envision groundbreaking concepts that may serve as a blueprint for future EV fueling stations alongside integrated, value-added customer experiences.

2. Food

Food is a natural adjacency in the convenience retailing business and one that Parkland is successful in, White pointed out. Today, more than 200 On the Run locations in Canada and 75 percent of U.S. locations feature various food offers.

"When we bought the On the Run brand and business, we revitalized the logo and look and feel of the décor, but customers also wanted better-quality food. So, we found the most operationally efficient way to deliver a quality food offer to customers. In-store, we offer made-fresh food prepared. We're also currently investigating a fresh from frozen concept and lastly, we offer frozen food as a take-home, whole-meal replacement," the executive said.

While Parkland is not opposed to building out its own proprietary food offers, it does see significant opportunity in acquiring or partnering with food brands to grow its capabilities for multiple reasons. For one, already-built programs have capabilities that are quickly scalable, such as brand loyalty, menu development, customer insights and trends, food quality, safety and distribution, and capable teams, White pointed out.

3. Digital

Parkland has set an ambitious goal of reaching 7 million Journie Rewards members. As of now, membership stands at 2.5 million active members at 1,200-plus locations in Canada, with plans to roll out the program across the United States and international markets.