LONDON – Understanding the consumer completely underpins Alimentation Couche-Tard’s convenience store strategy, according to Alain Bouchard, president and CEO.
Delivering the keynote address at the NACS Insight Convenience Summit – Europe, Bouchard said that when he launched his first store in Quebec in 1980, he discovered how the consumer walked the store and enjoyed learning the business. “I learned the business early in my life — I’ve only worked in convenience stores, I don’t know much about other businesses,” he said.
Bouchard told delegates the business had faced several crossroads in its history, such as the acquisition of the Canadian convenience chain, Mac’s, with more than 1,000 stores. At the time Couche-Tard itself operated 600 stores. It was at this juncture that Couche-Tard decided to decentralize — a move Bouchard described as “the most important decision in the company’s history.”
The change removed the first tier of management from the business, but retained operators, and split the operation into a number of divisions, each comprising 300 to 650 stores. Once the divisions increase to 700 stores, they are split up again and then continue to grow, said Bouchard. He also highlighted the company’s growth by acquisition. Couche-Tard’s stores range in size from 1,000 to 5,000 square feet and divisions have a mix of store sizes. The flexible format means it can adapt, said Bouchard.
Then in 2003, Couche-Tard acquired Circle K, comprising 1,600 company-owned stores and another 500–600 licensed stores in the United States plus 3,000 stores overseas, mainly in Asia. “We doubled the company again — we’ve done that three times in our history,” Bouchard said. “What helped us strike the deal was that we liked retail and visited the [Circle K] stores.”
Bouchard revealed how he persevered to visit some 400 stores and talk to Circle K people. “Eventually we won because of that. We knew all the details and were able to adapt our offer.” He said he will be challenging Couche-Tard’s new CEO-to-be to double the size of the business in the coming years, while he takes up the role of executive chairman, responsible for acquisition.
Speaking of the company’s latest major acquisition of Statoil, Bouchard said Couche-Tard started to focus on Europe because expansion in Asia was becoming a challenge due to legislative changes and the requirement to partner with local operations. He spent years looking at different acquisitions, travelling across Scandinavia, Northern and Southern Europe, and the UK . Initial interest in Statoil was expressed by letter, he said. And a year and a half later, when Statoil sold part of its business, he reignited the discussions, recognizing the company may find it difficult to sell its remaining share.
“That’s why I called back. We bought the 52% and the minority shareholders. You have to be patient,” he told delegates. “I’m a fisherman, I like to fish. You have to let your line go down and be very patient.”
According to Bouchard, both businesses are complementary. “We are very lean and a flat organization. Statoil comes from a major oil company and are quite well organized and more processed than us. Merging the two organizations has added processes to our way of doing things in North America.”
"Good processes have enabled Statoil to roll out changes across its business quickly and efficiently," said Bouchard, noting that a decentralized structure would have created more challenges.
On industry challenges, Bouchard listed cigarettes, fuel and regulations on sugar, sodium and energy drinks, adding that the company “has a lot of years of experience so we know we can win.”
Couche-Tard’s share of cigarettes in North America has increased from about 50% to 89% but the market was still challenging because consumption is going down and the same consumers are buying electronic cigarettes. “It’s going crazy and growing quite fast,” he said. He added that Couche-Tard has the “best offer of tobacco,” however, it’s not the future. “We have to be very careful with what we have as a product mix and evolve with new products and find the traffic drivers,” he said.
Bouchard said his vision is for the next week — not 10 years — and the trick is to identify what the consumer wants and how they evolve every day. For example, Couche-Tard entered the bakery market too early. “We rolled it out and it was a disaster. You don’t want to be too early, you have to be patient,” he advised. “You also don’t want to be last. There’s a science for when to go in with the right offers and suppliers can help us with that.”
He also commented on how stores are losing traffic due to online versions of newspapers. Stores that used to sell 100 newspapers a day now sell 10, as shoppers have changed to the tablet versions. “We’ve lost the traffic and have to replace it with something.”
Foodservice, he noted, is a must: “If you don’t have foodservice, too bad, you lose.”
Presented with the inaugural International Convenience Leader of the Year Award, Bouchard emphasized the importance of empowerment in his leadership style.
“When you give your people the power of taking their own decisions they discover early the level of decision they can take in their life,, they learn from mistakes and eventually they know if they can get to the next level or not,” he said. “If you believe people can change something, you win.”