The CEO looks to deliver industry-leading category management solutions to its retailer partners and consistently leverage cost for its 45,000 customers.
Core-Mark is one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America. It offers a full range of products, marketing programs and technology solutions to approximately 45,000 retail locations in the U.S. and Canada through 32 distribution centers.
Scott E. McPherson, president and CEO of the South San Francisco-Calif-based company, discussed the wholesaler’s commitment to convenience stores, foodservice and new technology with Convenience Store Decisions.
CSD: What was the biggest realization you had stepping into the CEO role for Core-Mark last year?
SM: The day I stepped into the role of CEO I realized the incredible responsibility and privilege it was to lead Core-Mark’s 8,436 team members. I have emblazoned this number in the heads of the leadership team at Core-Mark and challenged them to work together in creating a company whereby every employees feels valued and understands the role they play in meeting the needs of our more than 45,000 customers.
I also realized that to achieve those aims in the context of today’s business environment, we would have to continuously prove to ourselves and others our ability to gain meaningful market share and margins, deliver industry-leading category management solutions to our retailers and consistently leverage cost. It is executing these strategic priorities that will provide a bright future for our employees, our customers and our invested shareholders.
CSD: Retailers needs are constantly evolving. How does Core-Mark evolve to help meet retailers’ needs?
SM: Our team at Core-Mark is constantly monitoring trends within the industry and looking for ways to deliver a competitive advantage to our retail partners. Whether its foodservice solutions, technology and loyalty innovation or revamping a retailer’s strategy based on a demographic assessment, we are constantly striving to keep our customers on the cutting edge.
Additionally, we have a core group of retailers that we meet with annually to discuss industry trends and retailer needs. This group is comprised of CEO’s and senior executives from both larger and smaller convenience retailers, and provides a valuable forum for our leadership team to hear from our customers, and discuss both the issues and opportunities facing our industry today.
As an example, many of our smaller customers do not have category managers, and even for our chains that do have category managers, their teams are often challenged with managing many categories at a high level. Many do not have access to syndicated or demographic data to help them maximize their sales on a store by store basis. We’ve built an entire department around solving this need for our independent customers, and for filling the gaps in data and category management that our chains may have as well. This represents a significant investment for Core-Mark, but it is part of our overall value proposition for our customers. We help them succeed in ways that a traditional supplier cannot or would not.
CSD: What is the biggest opportunity today for convenience store owners to grow sales?
SM: What we are able to see in our extensive data sets and through our category management engagements that I referenced previously, is that maximizing sales truly does come down to individual opportunities on a store by store, neighborhood by neighborhood basis. But in a broader sense, I believe each retailer needs to decide what their store will be a destination for–and then they must excel at that. We see broad trends, of course.
Fresh food, coffee, fountain are all expanding areas designed to meet consumer demands and pull in customers. Wherever you choose to play in these areas or others, the key is to differentiate yourself to your customers and from your competition. Successful retailers understand their customer demographic, the diverse demands of their specific customer base, and develop a committed strategy of differentiation.
CSD: How is automation/technology changing how products are brought to market?
SM: If you look at what technology is doing in and around our channel it is apparent that many are trying to stake their claim to “convenience.” They may be doing it through frictionless checkout, last mile delivery solutions, or touching the customer via digital strategies. Regardless of how it is expressed, in today’s environment, “convenience” is key and where many want to play.
From a wholesale perspective, we are working to provide innovative alternatives to our retailers around ordering solutions, category management expertise to capitalize on today’s hyper-changing customer product demands, and even digital loyalty options for our independent retailers. I believe the key for the wholesaler and for our retail partners is to throw out our traditional methods of resonating with consumers and to look at the landscape through a new lens. Every retail location is different, but clear macro trends are emerging, and it’s critical that we at Core-Mark are working with our retail partners to ensure we are offering cutting edge product solutions, including automation and technology options designed to meet the needs of their end consumer.
CSD: Looking ahead five years, and 10 years, how do you see retail changing? What will convenience stores need to do to stay successful?
SM: I see changing consumer behavior and technology playing a major role in how convenience store customers shop. If you take for example technology, you can see that many segments of retail are rapidly moving beyond brick-and-mortar locations. Other channels have seen the impact of what the Internet and companies like Amazon could do in their space, and we are now seeing Amazon stepping into the convenience space as well with brick and mortar locations, but with a higher level of technology.
You can certainly see our channel responding with scan-and-go technology, as well others working to develop a frictionless experience for their shoppers. Today’s consumer is also highly engaged in the digital space as a function of loyalty, and you see this being increasingly utilized by retailers within our channel. This is also a space in which we are prepared to help our customers succeed, where many do not have the resources to develop a digital platform for themselves. At the end of the day, we as an industry, will have to continue to re-define what convenience looks like to remain relevant to both today’s as well as tomorrow’s convenience-seeking consumer.
CSD: As someone that looks at convenience stores logistically, but also understands the enormous challenges c-stores face financially, what do you think c-stores do best? What do you think can be improved?
SM: As an industry, the name is appropriate: convenience store. As a channel, convenience stores generally deliver on just that…convenience! Some are very specialized in what they provide, others balanced, and others nearly function as restaurants, but as a group of roughly 155,000 locations, we are great at providing for consumers their urgent wants and needs.
Although as an industry we certainly provide take home solutions, the vast majority of the volume is on single serve, immediate consumption, with over 80% of the products purchased being used or consumed within an hour, and roughly 65% is consumed immediately, according to the National Association of Convenience Stores (NACS).
So whether that product is a made-to-order sandwich, a pizza slice, a fountain drink, or a pack of cigarettes, c-stores provide the convenience of location and quick transactions for a massive base of consumers who need a brief respite from their day. It is said that c-stores are “destinations between destinations” and I agree with that sentiment.
As it relates to opportunities for the channel, I believe an improved consistency in the quality of daily execution would serve the industry well, as it does not take many bad experiences to have a customer decide that someone else can take their money just as easily. The final piece for me that goes hand in hand with great execution and customer service, is having an eye on the future. What is going to impact this industry, and your location this year, in five years, in 10 years and how will you adapt to those changes to insure your future success as a convenience retailer? Perhaps the answer lies in the destination. As an industry, c-stores need to be both convenient and a worthy destination experience for today’s high-expectation consumers.