Amateurs work until they get it right. Professionals work until they can’t get it wrong. It’s this philosophy that is driving Chevron to display its professional prowess as it prepares for the nationwide rollout of its Image Refresh marketing program.
Chevron’s 2006 Image Refresh was developed to build on the successes of its popular Hallmark 21 image. The San Ramon, Calif.-based oil company pulled together the strongest components of Hallmark 21 to create a program that evolves its brand image in a way that will modernize facilities and ultimately enhance the bottom line. It has been piloting the program at 44 units (12 company operated and 32 dealer operated) for the past year in northern California and Seattle, and will start rolling it out nationally early next year. The first six markets in the rollout are Alabama, Arizona, California, Florida, Hawaii and Texas.
“Research shows that a key reason customers consider switching brands or gas stations is to try a new, more appealing site, so the Refresh Campaign offers a perfect opportunity to strengthen brand loyalty in existing customers as well as reintroduce Chevron to new customers,” said Shariq Yosufzai, president of Chevron Global Marketing.
Among the highlights of Image Refresh are:
- A flexible image system that adapts to any site.
- An array of choices regarding component selection and a variety of upgrades,”each designed to meet individual marketing needs,” said Danny Roden, vicepresident of North America Marketing for Chevron Products Co.
- Unique retail fixture components designed to improve the customer experienceand differentiate the Chevron brand from the competition.
- Financial incentives to help maintain and enhance the facility upgrade.
“Our historic name, legacy programs and continued reputation have led our customersto expect high quality products and services from us,” Yosufzai said. “ImageRefresh is about revitalizing our facilities and brand image by leveraging ournew, more contemporary Chevron logo. We are trying to extend the modernizedfeel across every element that touches customers.”
Image Refresh primarily focuses on updating the forecourt fueling area. The design complements a wide variety of backcourt marketing strategies, including proprietary dealer and jobberowned c-stores, quick-serve restaurants and other approved chain store brands.
Image is Everything
The major new elements of the program consists ofa multicolored blue and white canopy that features a lit fascia with blue downlightingfor a greater visual impact at night, new canopy returns with accent lighting,round canopy pole cladding, a new trash valet designed for improved customerconvenience, a new Chevron logo and canopy hallmark and illuminated pump spannersand unlit valances that provide a more open feeling.
Chevron also has a new pump design that is cleaner and free of clutter andunnecessary graphics, which fits in with the company’s overall plan to makethe unit more inviting to women. All of the forecourt components pumps,canopy, trash receptacles and pollsare slightly rounded, a departurefrom its previous design, which emphasized a box look.
Projecting long-term needs and cost considerations were an integral part of the pump design, explained David Fitzgerald, project manager of the Image Refresh program. Chevron is making a single-hose pump available to marketers, which is cheaper to purchase and maintain. BP, for example, introduced upscale pumps a few years ago, but eventually had to drop the requirement because they were too costly.
The single-hose offering is also a preemptive move in advance of California’s2010 requirement to have all pumps be single-hose.
The lighting is another area that was overhauled with both cost and the female demographic in mind. The new units are much brighterilluminating the entire lotwhich makes the facility safer. Plus, utilizing new technology, only two florescent light bulbs are needed versus 72 in previous models, and it is focused on high-traffic areas on the lot, such as the space right in front of the pumps.
“It’s cheaper from an operations cost because less energy is needed to lightthe equipment and there are fewer bulbs to replace,” said Steve Tom, developmentsupervisor for Image Refresh. “Depending on the number of pumps, some sitesare seeing as much as a 15% to 20% reduction in energy costs.”
One entirely new and effective feature is the “gourmet giveaway,” which isa fuel island offering affixed to trash receptacles that includes towels andwasher fluid for customers. Two sides of the unit are used to advertise promotions,such as the Chevron’s Techron additive.
Chevron is also initiating Image Refresh smartly, carefully considering marketers that recently converted to the brand or upgraded a site to Hallmark 21. It designed the program so marketers can reuse components like pricing displays and trash receptacles.
Making Image Refresh available to virtually all store sizes was a strategic decision Chevron made to get its logo on as many canopies as possible and increase distribution points.
“If we could only offer Image Refresh to stores that were 3,000 square feetor larger, only about 10% to 15% of existing marketers would be eligible,” saidIan Noble, Chevron’s manager of franchise concept development and alliances.”But because it is scaleable, we can get it into virtually all of our brandedmarketers and attract a wide range of unbranded marketers that may not be eligiblefor other companies’ programs.”
Depending on a number of variableslocal ordinances or the need for special equipmenta conversion can take anywhere from one to seven months once the paperwork is signed. Once marketers are approved for Image Refresh, they have 18 months from June 1, 2006 to complete upgrades.
Chevron expects the program to take up to five years to refresh approximately 7,500 Chevron retail locations in North America. By contrast, Hallmark 21 took 12 years to rollout.
The decision to stagger the rollout to a small number of markets at a time was another strategic decision made by the oil company. By doing so, it is hoping to avoid running up a demand for approved contractors to do the retrofits and a shortage of materials to complete them. Call it a lesson learned.
“We learned from our own experiences and from watching the cleanup from Hurricane Katrina that when there is a shortage of materials and contractors to complete a project, the price for both becomes extremely expensive,” Fitzgerald said. “Our plan is to manage this process efficiently to keep costs down to benefit our marketers.”
In advance of market rollouts, Chevron is holding regional seminars with marketers to explain the process. “The purpose is to get everyone on the same page and go over the requirements step-by-step,” Tom said. “This also gives us an opportunity to answer all of their questions face-to-face.”
To oversee the retrofits, Chevron has hired several Image Refresh program coordinators that will oversee the retrofits, verify and approve upgrades and manage reimbursement paperwork.
Going the Extra Mile
If Image Refresh was the only thing Chevron wasdoing, it would probably be enough to stay competitive in the allimportant fightfor fuel dollars. But the firm is already looking to take the program a stepfurther.
During the fourth quarter, Chevron plans to launch a package for small marketersin the one to five store range that will allow them to upgrade to a retailingsolution that includes both Image Refresh and the company’s burgeoning ExtraMile convenience store concept.
“It’s a powerful brand offering for an independent marketer, enabling t
hem to compete effectively with other big brands in high-volume and rural markets,” Roden said.
“Extra Mile is a chance to offer consistency with other Chevron stores and take advantage of our dry goods supply chain, merchandising planograms and core foodservice program. It’s an immediate upscale convenience offering.”
Fitzgerald stressed that branded marketers are still free to have any conveniencestore brand they chose as part of Image Refresh, which steers clear of the backcourt,with one exception: Previous Chevron Food Marts had a blue banner above thedoor. “Under the new design, we are moving to a white banner, and the purposeof that is to separate the backcourt from the new forecourt design, which utilizesblue across the canopy,” he explained.
The Extra Mile package might be too good for smaller chain store owners to pass up. It offers a host of upscale food items, a gourmet coffee bar and would give them access to McLane Distributing for grocery and dry goods. As a small operator, it’s a constant uphill battle to achieve economies of scale and attract the attention of major distributors in order to get a decent wholesale price.
Plus, Chevron is constantly driving innovative programs aided by its deep coffers. It has the resources to test new concepts and pull the plug if they don’t catch on. For example, the site of the first California Image Refresh is the same unit the company tested its Foodini’s home-meal replacement concept five years ago. The foodservice program failed to catch on and was shut down in 2002.
Noble referred to the Seattle test pilot as Chevron’s ” laboratory to test and create new things to see if they hit the mark,” he said. “This allows us to get an offering wrought with substance so it’s not just another oil company box. The industry is littered with those. We want to be special.”
One new section featured in Extra Mile that is turning out to be special is HydraZone, which is an open-air cooler stocked with bottled water, isotonics and energy drinks. It is located just inside the front doors facing the checkout counter, a few feet from the cash registers. It was developed strictly to capture customers’ attention when they walk in the store and boost impulse sales.
“Our first concern when we added HydraZone was that it would cannibalize coolersales from the back of the store,” Roden said. “But tests showed no drop offat all in cooler sales. Instead, it increased sales of bottled water considerably.”
Chevron is bolstering its commitment to innovation at a good time, especiallyin California where retailing powerhouses Tesco and Japan’s Family Mart aregrowing convenience concepts. Family Mart now has about a half-dozen Famimastores in the Los Angeles suburbs (see CSD‘s August cover story “Allin the Family”) and Tesco will launch its Fresh & Easy concept in the samemarket in early 2007 (see CSD‘s May cover story “Tesco Prepares for itsU.S. Invasion”).
“Both convenience stores and supermarkets should be worried,” warned Roden, who has considerable experience dealing with hypermart penetration while working in Europe. “I’m not sure people understand just how fierce a competitor Tesco is going be. They have money and they are committed to the market at any cost. That’s a dangerous proposition.”
One of Tesco’s first steps after announcing plans to move into the U.S. market was to build a warehouse and start developing a supply infrastructure. That project is expected to wrap up by the end of the year. Once they get stores up and running, there is going to be considerable stress on small marketers and mom-and-pop stores.
“There is a danger that small operators are going to be become dinosaurs unableto compete with the likes of Tesco and Wal-Mart,” Roden said. “That’s one ofthe reason we think the combination of Extra Mile and Image Refresh can givesmall marketers some ammunition to fight back not only with a powerful brandoffering, but also with a solid credit card base and considerable company support.”
Plus, Extra Mile marketers can participate in a retail program with an established set of standards and a consistent image.
“When customers have a great experience at a clean, friendly convenience store, they remain loyal to the brand,” said Wayne Klahs, Chevron’s vice president of global management solutions. “The idea behind Extra Mile is to offer that consistency on a large scale so customers know they can walk into any Extra Mile store and expect that same friendly experience. This also has tremendous value for operators who become part of a network with a growing base of loyal consumers.”
Investing in this new image means nothing if store employees fail to maintain the look and provide outstanding customer service. Chevron has contracted a third party to test every program store monthly and grade on 120 different points ranging from store cleanliness and service to how well stores receive deliveries. Grades are made public to all stores so managers are aware of their standing in the network.
“The goal is to measure our level of execution and benchmark our level of operational performance,” said Noble.
However, managers receive incentives based on performance, which “hopefully generates some friendly competition among managers and pushes them to consistently perform to the best of their abilities,” Noble said.
