on the road with kwik trip

In her continued quest to speakwith retailers excelling in their markets of operations, CSD publisher Shahla Hebets traveled to La Crosse,Wis., to meet with Steve Loehr, vicepresident of operations support forKwik Trip Inc.

Loehr is a savvy industry veteranwith many years of service to Kwik Tripand the convenience store industry.His efforts through the years were oneof the deciding factors in choosingKwik Trip as Convenience StoreDecisions‘ Chain of the Year in 2004.

Personal accolades aside, KwikTrip has established itself as an intelligent company. Loehr is quick to creditemployees for the company’s stronggrowth through the years.

The company, founded in 1965,operates more than 350 stores underbrands such as Kwik Trip, Kwik Starand Tobacco Outlet throughoutWisconsin, Minnesota and Iowa. Plus,it operates a massive 150,000square-foot distribution center inWisconsin complete with its own fleetof semis to service each of its storesaround the clock. It’s this commitmentto customer service and employeesthat has positioned Kwik Trip as aleading retailer in its markets.

“One of our slogans is to be thebest of the best,” Loehr said. “We area humble, down-to-earth organizationthat always believes we can do better,so we never get complacent. As aresult, we are constantly improving ourcommitment to customers andemployees.”

CSD: What section of thestore do you see as yourmost successful?
Loehr: Our foodserviceoffering has been ourmost successful program.We know we could haveprospered for severalmore years by just selling”Cokes and smokes,” butwe knew we were going tohit a wall if we didn’t havea strong foodservice offering. It takes a great dealof planning, and when youhave 300+ stores it takesa lot of capital expenseand trial and error. Evenwith the best of intentions, some things don’twork, but we are smartenough to say, “let’schange it.” Our owner (Don Zietlow) is avisionary who rarely talks about what hashappened in the past. He talks about whatlies ahead because you can’t change whathas already happened, but you can alwaysdo better in the future.

CSD: What is your best-selling foodserviceproduct?
Loehr: Kwik Trip’s line of hamburgers isamong our top sellers. We have $1 burgerswhere consumers can purchase two burgersfor $2. Our roller grill is also very strong. Weanticipate that our new pizza product will bea powerful seller as well.

CSD: What products have generated bettersales than you anticipated?
Loehr: I think we were slow to get into theenergy drink market. We carried only a fewproducts, and they were expensive. We thought, “What consumer is going to pay foran energy drink?” Now, we are resettingstore displays to add new energy items.

CSD: What new c-store product is of particular interest to you and why?
Loehr: We are more focused on line extensions versus new products. For instance,we’d like to add a seasonal salad to ourfresh salad offerings. We’d also like to addnew soup varieties and to expand ourfrozen food and fresh sections.

CSD: What current industry trends are of interestto Kwik Trip?
Loehr: Every year we travel to see what other markets are doing. This year we will visit convenience stores in London because Europe is ahead of us in many ways with respect to convenience offerings, and this is particularly true in fresh and hot foods. We know companies like Tesco are coming to the U.S., and we need to be ahead of companies of this size and influence. We ask ourselves, “What can we do in our stores tomimic successful operations abroad?” Asa result, we feel we’re in front of thesechanges and ideally positioned for success.

CSD: What does Kwik Trip do to stayahead of the competition?
Loehr: I think being hands-on and notbeing reluctant to change. We actually welcome change, and we never take anythingfor granted. We study what’s happening inthe marketplace and we seek out industrytrends. Most importantly, we listen to ourcustomers. A lot of credit also has to goto our many strong supplier partners thattalk to us about the trends they see out inthe field and offer tips on how we canimprove the business. These combinedefforts aid in our ability to stay ahead ofthe competition.

CSD: From a consumer perspective, whatdo you think makes the Kwik Trip unique?
Loehr: We are unique because much of ourmanagement experience is based on thesupermarket industry. As a result, we look atwhat we sell through the eyes of the customer. We do 10 to 12 different focus groupsin various cities across the country to gainconsumer insight, and we receive feedbackfrom our employees as well. Through ourown focus groups, we ask customers directlywhat kind of products we should carry, whatprice they would expect to pay for productsand what products they are looking for in a c-store. In addition, we ask employees to perform taste tests of products that we offer toprovide comments. The purpose of both is toreally look at convenience shopping throughthe customers’ eyes. This helps us be successful with the customer, and we have thevertical integration to deliver the kind of products our customers are seeking.

CSD: What do you see as the biggestopportunity for the c-store channel?
Loehr: I think, ironically, the big box storestrying to get into the c-store business creates an opportunity because we are confident we can do convenience better than theycan. Our locations are better, our prices arethe same or better, and I anticipate that wecan combat the “big guy” by doing thingsquicker. The WalMarts and the Tescos areour future competition as opposed to otherc-stores. It comes down to attracting consumers and competing on the level of true convenience. This type of strategy and focusdoesn’t happen overnight—it’s an evolution,not a revolution.

CSD: Credit card fees have been eatingaway at profitability. What have you done inyour stores to reduce credit expense?
Loehr: Our second most frequently usedcredit cards outside of MasterCard and Visaare Kwik Trip cards. We administer the KwikTrip card, including taking the risk on thecredit, and our cost to do this program isabout one-third the expense of standardcredit card fees. This year our credit cardcost will be approximately $18 million, andbecause credit card fees are based on a percentage of the purchase as opposed to onthe transaction, we could be paying more onthe fees than we are making on the purchase. As a result, we really push gettingcustomers to purchase the card, and we give them a $25 free gas card as an incentive. This approach greatly aids our expense.

At the same time, we are large supporters of NACS and its ongoing battle to bring asuit against the credit card companies.

CSD: How do you keep your employeesmotivated?
Loehr: Our mission statement reads that wetreat our customers, suppliers and co-workers the way that we’d like to be treated. It’snot just something we say and don’t practice. We try to live it everyday. We care aboutour co-workers—that’s agood place to start, andthen we listen. We compensate them for their effortsand pay a better wage thanthe average employer in thearea. If our employees staywith us for one year, thenthey receive end-of-yearprofit sharing.

Recently, our ownershared a story about anemployee that received aprofit sharing year-endbonus. The employee was asingle dad with two daughters. The daughters wrote aletter saying that becauseof the bonus check theirdad was able to purchase a bed, and it wasthe first time the girls had ever slept in abed. We later amended our mission statement to read, “Treat others the way that
youwould like to be treated and make a difference in someone’s life.”

CSD: What do you think the c-store business will look like 10 years from now?
Loehr: I think the industry is going to be a lotsmaller. I believe that there will be fewer players in the market, but the players will bestronger. The stores that survive will be, on thewhole, more powerful. We are experiencing agreat deal of acquisition in the conveniencemarket, and smaller, less competitive storesare going out of business because they can’tcompete with the larger players. Our industry,in general, is really positioned to grow, however,because of the demands on everyone’s timeand the need for convenience.

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