The Service Station

Convenient and Healthy? PepsiCo to focus on healthier foods, cuts salt

2010-03-23T15:11:00.001-07:00

PepsiCo, largely known for junk-food brands and C-Store stalwarts like Doritos and Pepsi, is setting out to triple its sales of healthier fare in the next decade. PepsiCo Inc. announced the new goal for brands such as Tropicana, Dole, Quaker and Tazo teas on Monday, March 22nd at an investor event. The company also backed its forecast for long-term earnings growth.

Government Pressure to Change
Governments all over the world are exerting pressure on food makers to improve nutrition. Pepsi is also making the case that it's just as much consumer demand that's driving the healthier changes. PepsiCo expects more shoppers to buy based on nutrition as Baby Boomers age and people in developing countries get wealthier. Currently, about 18 percent of PepsiCo's revenue comes from the lines it considers healthier, including Tropicana, Dole, Quaker and Tazo teas. PepsiCo wants to triple the $10 billion in revenue from such brands are producing now to $30 billion by 2020.

That may be a huge boost, but the nutritional food business is still small compared with the company's less-healthy food, now being called "fun for you" foods, like Lay's potato chips and soda, worth $50 billion a year. PepsiCo believes the two businesses require different approaches. The chips, soft drinks and other brands grow quickly and can have many different versions of brands, such as lime-flavored Tostitos. But the nutrition business' brands must not have too many variations so the brand remains the focus, and they must be led by people who have experience in marketing healthier foods.

Making Snacks and Sodas healthier
PepsiCo said Monday it plans to cut sodium in each serving of its key brands by one-fourth in five years. It also set two goals for the next 10 years: to cut the average added sugar per serving in drinks by 25 percent and saturated fat per serving by 15 percent, in addition to adding more whole grains, fruits, vegetables and low-fat dairy into product lines.

Other food makers are announcing similar goals. Last week Kraft Foods Inc. pledged to cut salt in its products sold in North America by an average of 10 percent over the next two years. ConAgra Foods Inc. and Campbell Soup Co. have also announced sodium cuts. Many health leaders have urged food makers to make such changes. First Lady Michelle Obama has made the fight against childhood obesity a top priority. Last week Mrs. Obama asked the nation's largest food makers, at a meeting of the Grocery Manufacturers Association to put less fat, salt and sugar in foods.

Last week, PepsiCo also said it would remove full-calorie sweetened drinks from schools worldwide by 2012. PepsiCo is investing in science to improve nutrition, including developing a new salt and more lower-calorie or zero-calorie sweeteners. The new salt dissolves more quickly in the mouth, so people don't have to eat as much to get the same effect. Pepsi changed the salt's size and crystal structure so the taste on a potato chip stays the same.

At the same time, PepsiCo isn't ignoring its soft-drink business. It’s core soft-drink business, and industrywide though all brands, has been slumping as people switch to healthier juices and teas or limit their purchases in the recession. In order to help the beverage results, the company completed its $7.8 billion acquisition of Pepsi Bottling Group and PepsiAmericas last month.

Getting pinched at the Pump? Gasoline pump prices highest since October 2008

2010-03-23T03:55:00.000-07:00

Does it seem like you and your customers spending more at the pump? Gasoline pump prices lingered at a 17-month high on Monday following a steady climb in recent weeks. Nationwide average retail prices remained flat at $2.82 per gallon, the highest level since October 2008. Prices are up 18.6 cents in the past month, according to AAA and OPIS, the Oil Price Information Service.

That matched the national average in the Energy Information Administration's weekly report, up 3 cents from a week ago and 86 cents above a year ago. California had the highest average pump price — $3.09 a gallon — and the Gulf Coast region was the lowest at $2.69 a gallon. Many experts and the EIA think average gasoline prices will hit $3 or more this spring or summer before easing later in the year. More expensive gasoline blends to cut pollution in the warmer months, and the fact that more drivers take to the road, adding to seasonal demand, should keep pump prices up.

When gas averages $3 per gallon, an average driver using 50 gallons of gasoline a month will spend $150 on fuel. A year ago, prices were at $2 a gallon. The price rise isn’t good news, as it comes as the economy continues its slow recovery from the current recession and deals with stubbornly high unemployment.

US Drivers Not Alone
Pump prices could potentially ease a couple of pennies later this week, since the month long rally in oil prices stalled at the end of last week. The price of crude oil is the major component of the cost of a gallon of gasoline. Crude oil prices gained little ground Monday. The April contract, which expires Monday, rose 57 cents to settle at $81.25 a barrel on the New York Mercantile Exchange. Most of the trading moved to the May contract, which added 63 cents to settle at $81.60. This means there will no large downward move in gasoline prices in the short-term. In London, Brent crude rose 66 cents to settle at $80.54 on the ICE futures exchange, so European drivers are experiencing the same price increases. In other Nymex trading in April contracts, heating oil rose 0.7 cent to settle at $2.0837 a gallon, and gasoline gained 0.06 cent to settle at $2.2562 a gallon.

McDonalds: 4th Quarter shows They are Solid for the Long Run

2010-01-30T12:18:00.000-08:00

This was originally written for Gerson Lehrman Group

Summary:

1) McDonald's Profit is up VS last years Quarter 4 in a difficult environment

2) Discounting by other chains feed into a "Value War" McDonald's is likely to win

3) McDonald's is positioned for long term revenue and profit growth

Analysis:

Strong Quarter
McDonald's reported a quarter where they managed to earn $1.22 Billion dollars with it's home market, the US, being one of the weakest performing parts of the business. The US economy has high unemployment and aggressive price competition occurring from other large players, so McDonald's had a challenging environment to cope with here at home. New initiatives like the McCafe coffee line and the upscale "Angus burger" widened out the menu appeal to consumers who might not be regular McDonald's consumers.

Value Leaders
McDonald's has been entrenched in the "Value" portion of the business for roughly
3 years now, and the McDonald's operational model can sustain this for as long as competitors want to come into the "$1.00 item" arena.

McDonald's has been the driver of "Value" in the QSR Sector, and has consistently offered a good variety of products at the Value level. This has played well in the challenging economic environment of the US, and has forced other players to come in with items to compete at that price point, with Burger King now actively advertising their "Double Cheeseburger" after having steered largely clear of price-oriented competition. McDonalds has cost control and marketing message in the value arena down to a science, and while others may come and try, it seems unlikely they can be dislodged either operationally or perceptually as the value leaders.

Long-term outlook: Good
This shows McDonald's is positioned for long-term revenue and profit growth. When the US recovery hits full swing, McDonald's seems likely to be a prime beneficiary of the increased employment and more confident consumer a recovery will bring, adding strength to strong international results. McDonald's wasn’t afraid to become a "Pricer" early in the down cycle, and has managed that initiative to position itself for greater growth down the road.

Convenience Not Inconvenience

2010-01-24T14:55:00.000-08:00

This was the lead Story in the January 25, 2010 Edition of Condevco's "Meter" Newsletter

Darcee and I were in Pittsburgh over the Christmas Holiday, to spend the Holidays with our extended families. While the circumstances aren’t important, we ended up at about 2:00PM on Christmas Day in a borrowed car heading for a visit. The snow was falling lightly and we Floridians were cold!!

We were hungry and knew our Christmas dinner wasn’t scheduled until about 6:30 that night. We were out in a rural area, no fast-food was around. So, we stopped into a convenience store to see what we could get to tide us over. Not one of the great chains that operate around Pittsburgh; no Sheetz or GetGo was close enough. As we pulled into the little store with two dispensers and 4 parking spots, we weren’t feeling too optimistic about our prospects. Maybe some Twinkies and a Slim Jim...

And, we walked into what the best of convenience can be! Two nice ladies were staffing the store, the one behind the counter dressed as Santa Claus, and freshly made and packed sandwiches (and good!) were in the cooler case for $2.99 each. The other employee offered us cookies from a tray one of her friends had just brought in! The store was clean, the staff was friendly , and it really affirmed what our business is all about.

They made working on Christmas into a gift and not a chore. You couldn't train what was going on there, just nice people who were doing the task they had to complete to the very best of their ability.!

Cumberland Farms Subsidiary Gulf Oil Acquires Brand Rights for Entire U.S.

2010-01-24T12:52:00.001-08:00

Gulf Oil L.P., a wholly owned subsidiary of Cumberland Farms Inc., Is ready to make a significant geographic brand expansion now that the company has acquired all rights, title and interest to the Gulf brand in the U.S. The Gulf brand has been in existence for almost 110 years. For the last 20 years, Gulf-branded gasoline in the continental U.S. has only been available in an 11-state region in the Northeast through a licensing agreement between Gulf Oil L.P.'s parent company and Chevron U.S.A. Inc., according to a news release. The Cumberland Farms subsidiary now controls the right to market the brand throughout the United States and its territories. This acquisition enables Gulf Oil to expand its use of the Gulf brand throughout the U.S. for the first time since it first acquired certain rights to the brand in 1986, the company stated.

Framingham, Mass-based Gulf Oil currently distributes motor fuels through a network of more than 2,000 branded gasoline retail centers and 12 proprietary oil terminals.

With Gulf Oil already supplying roughly 10 percent of the retail fueling stations in its 11-state market region, the petroleum marketer and subsidiary of Cumberland Farms Inc. was approaching saturation -- and feeling some geographic constraints. But with the acquisition of all rights, title and interest to the Gulf brand in the U.S. from Chevron Corp., the fishbowl just became much larger for the company.

For the last 20 years, Gulf-branded gasoline in the continental U.S. has only been available in an 11-state region in the Northeast through a licensing agreement between Gulf Oil L.P.'s parent company and Chevron U.S.A. Inc. The new deal, which became effective Jan. 12th between Chevron and Gulf gives the Massachusetts-based company the right to market the brand throughout the United States and its territories, enabling Gulf Oil to expand its use of the Gulf brand throughout the U.S. for the first time since it first acquired certain rights to the brand in 1986, the company stated.

Looking to add Orphaned Chevron Mid-Atlantic Sites
While Gulf Oil wanted the rights to the mark when it began an overhaul of the brand in 2005, it was when Chevron announced its decision to pull out of 10 mid-Atlantic markets in late 2009 that the pieces fell into place for Gulf to expand its agreements with the major oil company. Gulf decided they wanted to purchase the rights to market the brand in the states where Chevron had announced it was pulling out, and it eventually progressed to the national marketing acquisition.

Super Jobber on the Way?
As for the immediate future, Gulf is looking to pick up stations that lost the Chevron brand in those mid-Atlantic states. It’s a natural extension of the current market area. Gulf has no terminals in that region currently. Primarily, it will focus on the distribution channel in the area to fuel its network growth, rather than real estate or company-operated locations, he added. Gulf is seeking well established, tenured distributors in the new markets it is entering.

Exxon Mobil makes $29B bet on Natural Gas - Buys XTO Energy

2009-12-15T06:47:00.000-08:00

The Company that provides the product to fill your car’s fuel tank now wants to provide the fuel to power the electrical production for your home.

ExxonMobil, The world’s largest publicly traded oil company, agreed to buy XTO Energy in an all-stock deal at a 25 percent premium, a $29 Billion move showing how convinced they are that pressure to curb climate change will mean natural gas, abundant in the US, cleaner than coal and suddenly much easier to reach with new technologies — will become a crucial source of U.S. power.

ExxonMobil, a company that is among the most conservative and profitable in a conservative industry is going headfirst into the market for natural gas, this deal suggests Exxon sees change coming for an energy source best known now for heating homes. The drilling and extraction technology to unlock natural gas from tight rock formations has advanced so rapidly that energy experts have raised their estimates of how much fuel is available by 35 percent in just two years. The emergence of the discovery of massive supplies of natural gas in the U.S. coincides with the nation's focus on cutting greenhouse gas emissions.

Largest Energy Deal in over Four Years

The deal announced late Monday was also the largest for the U.S. energy sector in at least four years and Exxon's biggest acquisition since it bought Mobil Corp. for $75 billion in 1999. The natural gas supply increase and coming climate legislation have been cited by utilities this year as reasons as to why they have shuttered old coal-fired power plants and scrapped plans to build new ones. Already in the news with the controversy at the Copenhagen Climate Change Conference this week, climate legislation would put utilities in the crosshairs, and many are seeking new fuels like natural gas to produce electricity to minimize the economic hit. Just this month, Progress Energy became the latest utility to announce it would close its coal-fired power plants in favor of producing electricity using natural gas.

Exxon Mobil expects global demand for gas to grow 50 percent by 2030. "Natural gas is really well-suited to meet that growing power generation demand, both from the standpoint of its lower environmental impact, but also its capital efficiency and its flexibility," Exxon Mobil chairman and CEO Rex Tillerson told analysts on a conference call.

Other Oil Companies look to get into Natural Gas Market

Through August, utilities used gas to generate 23 percent of the nation's electricity. That figure is up nearly three percentage points from last year. Coal's share was down about 13 percent. Takeover target XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight shale formations. Technology developed over the past decade has made it much cheaper to pull natural gas from those formations.
Monday many energy experts were laying odds as to which natural gas companies would be sold next, and which major oil companies might follow Exxon's lead by snapping them up. European oil firm are already cutting deals with Chesapeake Energy, one of the biggest independent U.S. natural gas companies. Companies like Royal Dutch Shell and Statoil want more exposure to supply in the natural gas fields in the U.S. and the technology to extract gas. Potential takeover targets include big natural gas companies like Chesapeake Energy, Devon Energy and Anadarko.

Exxon is also moving beyond the U.S. to increase their natural gas production. Last week, ExxonMobil gave the go-ahead for a $15 billion natural gas project in Papua New Guinea, a nation just north of Australia. That deal positions ExxonMobil to provide energy to a fuel-hungry China.

Once the XTO deal closes, Exxon said it will be establishing a new organization to manage global development and production of so-called “unconventional resources”. XTO's chairman and founder, Bob Simpson, said his company has the capability of developing the unconventional resources that have given North America more than 100 years' worth of natural gas supplies. This is what Exxon is purchasing in the deal.

The deal was valued at about $31 billion based on Exxon's closing stock price Friday Dec 11th. Exxon shares fell nearly 5 percent on Monday, placing the deal's value closer to $29 billion.

McDonald's to roll out breakfast dollar menu

2009-12-11T07:57:00.001-08:00

McDonald's has announced will begin selling a variety of breakfast items for $1 early next month, a spokeswoman for the world's largest hamburger chain released the plan Thursday.

The move to add to its already popular dollar menu comes as McDonald's tries to fight a decline in U.S. sales, which have slipped following months of success when its cheap eats were a big draw for recession-strapped diners. November sales were down, and McDonald’s blamed the high jobless rate and the economy in general for the decline.

Dollar breakfast items added

Breakfast items to be added to the $1 menu, which already includes eight items for lunch and dinner time, are the company's Sausage McMuffin, a sausage burrito, a sausage biscuit, a small coffee and a hash brown. Some of the items are already sold for a dollar or less at some locations, although prices vary. Franchisees can set prices within limits, and McDonald’s will take that into account. For instance, a restaurant already selling a small coffee for 89 cents will substitute a larger beverage for its Dollar Menu.

Fast-food restaurant chains, which spent recent years expand their early morning business, have seen declining breakfast sales figures from business diners as unemployment climbs. It means fewer workers stop in for coffee and a breakfast sandwich on their way to the office. NPD Group’s market research has shown breakfast traffic fell 2 percent this summer at the nation's fast food restaurants.

At McDonald's, breakfast business is continuing to increase, although growth has slowed this year. McDonald’s has not publicly provided specific figures on its breakfast sales. Analysts feel that Thursday's move should McDonald's strengthen its breakfast business, in which it is still dominant among fast-food chains.

Fast food breakfast competition heats up

The dollar breakfast menu move will also put competitive pressure on McDonald's competitors, many of whom are also rushing to slash menu prices to keep customers, who are ever more reluctant to open their wallets, happy.

Dunkin Donuts is trying out a 99-cent breakfast menu in the Chicago area. Burger King's already has a nationwide breakfast value menu that includes hash browns, a ham omelet sandwich and a french toast stick 3-pak for $1 each.

The Power to Change…

2009-12-11T07:54:00.000-08:00

This was the Feature Article in the Dec 9 Issue of Condevco's "Meter" Newsletter

Last month we talked about Continuous Improvement Process (CIP) in addressing how to approach getting your Chains or Stores ready for the holidays. Can Happy Holidays and Happy Retailing coexist with the current consumer mood and uncertainty facing the US economy? Yes it can, and it’s all about your power to change.

In one of the articles below, McDonald’s experienced only the fourth same-store sales declines in 6 ½ years in November, and they are pointing to overall job weakness as a contributing factor. Chevron is debranding over 1,100 stations in Selected Eastern US markets, and retailers are reporting a mixed bag of results for November sales. Change is occurring all the time.

Really, what this comes down to is this…You have the power to change how your business is doing. For the better or for the worse. The Holidays, whether you celebrate Christmas, Hanukkah, or Kwanzaa at this time of year, tend to reflect one message. The power of change and renewal.

Whether it’s Ebenezer Scrooge in “A Christmas Carol”, George Bailey in “It’s a Wonderful Life”, or Baby New Year, the chance to start over again is what makes the message of these year ending holidays resonate so deeply with people all over the world. This is the time of year that says renewal, redemption, refresh.

“Today is the first day of the rest of your life” is a phrase that popularized that message back in the ‘70’s, although no one seems to know where it first originated. As the holiday shopping season proceeds, and in many parts of the country, the weather gets cold and uninviting, it’s easy to look at this time as just another holiday season to be endured. Continuous Retail Improvement means looking to make a change, whether it’s incremental or sweeping, as soon as you recognize a way to make some aspect of your business better.

Let the Condevco Team help you make a fresh start by instituting Continuous Retail Improvement in your business today. (Click here to Contact us)

Retailers Face the Ghost of Christmas Present -Big Lots Up, Neiman Marcus Down, Others Hurting

2009-12-09T09:48:00.000-08:00

January 2nd, 2009, I posted a blog entry to this Blog titled “The Ghost of Christmas (Just) Past as a little play on the dismal sales season. Click here to Read . At that time, one of the points made was trading down is the reality. I’m following it up now with what the retailers are facing at the moment: The Ghost of Christmas Present.

In the new retailing climate you see that in the last week’s worth of results reporting, Big Lots is up, and Neiman Marcus is down. Closeout retailer Big Lots Inc. posted a better-than-expected quarterly profit, aided by lower freight costs, and raised its outlook for the holiday fourth quarter. The retailer, which specializes in sales of excess inventory from home appliances to toys, also said it would immediately start buying back $150 million of common shares.

Conversely, upscale retailer Neiman Marcus Inc. reported sharply lower quarterly profit as worried consumers continued to avoid luxury items amid a slowdown the company expects will last for some time. Sales at its namesake Neiman Marcus and Bergdorf Goodman stores open for at least a year, or same-store sales, continued to fall, dropping 14.9 percent during the quarter. Overall comparable sales, including its direct marketing segment, declined 13.7 percent.

Neiman Marcus, in a regulatory filing on Wednesday Dec 9th, cited "a challenging economic and retail environment" that it said would likely persist for an "extended period of time." The downward sales trend has continued in the current quarter, it said. Last week the company reported same-store sales at its Neiman Marcus and Bergdorf Goodman stores had fallen 12.7 percent in November, a period that includes the busy holiday shopping weekend following Thanksgiving. Those two store chains account for about 83 percent of the company's revenue. Neiman Marcus said it experienced weak demand across all geographic areas and that its apparel and home decor categories were particularly hard hit.

Value Shopping In

Clearly, the trickle to value shopping has become a stampede.

Big Lots, which shut down its small Internet operation during the third quarter, sells merchandise that others cannot. When manufacturers are left with extra inventory due to a discontinued line or a change in packaging requirements, they call Big Lots, which will buy the merchandise and sell it in its stores at discounted rates. Big Lots has been somewhat insulated from the downturn as shoppers seek its low prices on staples like food or paper towels.

The better-than-expected results came a day after many retailers posted much weaker-than-anticipated November sales as shoppers were keenly focused on bargains. While consumers have been "very stingy" on discretionary purchases, the home category is actually one of the best performers so far in the fourth quarter, according to Big Lots.

Big Lots is reaching out to it’s customers by introducing a loyalty-card program to offer discounts to frequent shoppers during the quarter, which more than 600,000 have already signed up for, Fishman said. Early sales of Christmas seasonal merchandise, such as decorations, were tough in October, but sales of those items are up so far in the current fourth quarter, he said.

Big Lots Profit Jumps
Big Lots net income in the third quarter ended on October 31 rose to $30.3 million, or 37 cents per share, from $12.2 million, or 15 cents per share, a year earlier. Big Lots' third-quarter sales rose 1.3 percent to $1.04 billion, while same-store sales, or sales at its locations open at least two years, fell 0.2 percent.

Big Lots, which has been signing deals to open stores in better locations as other retailers close their doors, said it opened 52 new stores this year -- two more than initially planned for. It is also cutting back on closing stores, and now plans to shut just 30 locations this year instead of 40. Big Lots said it plans to keep opening stores in better spots as such locations are now available and the cost has declined. The company expects to once again open more stores than it closes in fiscal 2010 and beyond.

For the fourth quarter, Big Lots expects earnings per share from continuing operations of $1.09 to $1.14, up from its August forecast of 99 cents to $1.04. The company expects comparable store sales to rise between 1.5 percent and 2.5 percent for the fourth quarter, and said comparable sales rose in that range in November.

Neiman Marcus Experiencing Shrinking Sales and Profits
At the Luxury end of the retailing spectrum, Neiman Marcus said revenue in the fiscal first quarter, ended October 31, fell 11.9 percent to $868.9 million. The privately-held company reported a net profit of $8.5 million, down from $12.9 million a year earlier. Neiman Marcus was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC in October 2005.

As has been the case with rival upscale retailers Saks Inc and Nordstrom Inc Neiman Marcus has maintained tighter inventory controls to avoid having to steeply discount merchandise to get it off shelves. Last year it was not uncommon to see luxury stores slash prices by 70 percent. Neiman Marcus said its comparable inventories were 22.5 percent lower in the quarter than a year earlier. Neiman Marcus wasn’t the only retailer feeling the holiday pain, though.

Slow Start to Holidays as Many Retailers Post Weak Sales
U.S. retailers from Macy's to Costco posted much weaker-than-expected sales for November as shoppers focused only on big bargains at the start of the key holiday selling season. Some, like department store operator Macy's also forecast quarterly earnings below analysts' estimates.

Out of 15 retailers that reported by early Thursday December 3rd, 11 missed analyst estimates, including Costco Wholesale, Children's Place, Walgreen and Hot Topic, according to Thomson Reuters data.

Over the U.S. Thanksgiving weekend, consumers focused mostly on promotional deals and made few impulse purchases as concerns about the economy remained top of mind, analysts and executives said. Shoppers Targeted the featured promotional Items and stayed away from impulse purchases on “Black Friday” and Cyber Monday. Store chains also blamed warm November weather, which kept consumers from buying winter clothes.
On December 3rd, Macy's shares fell 2.7 percent in trading before the market opened, while Costco declined 2.8 percent. Teen retailers Aeropostale and Abercrombie & Fitch also saw their shares sink more than 7 percent after disappointing November results. The November sales results include the day after Thanksgiving, traditionally known as "Black Friday," when retailers offer rock-bottom prices to kick off the holiday shopping season.

Early data on weekend shopping from the U.S. Thanksgiving Day on Nov. 26 through Sunday showed only a slight increase in retail sales from the comparable 2008 period, when consumers were hammered by a deepening recession and credit crisis. As of Black Friday, analysts had forecast a 2.5 percent rise in November sales at stores open one year, according to Thomson Reuters data. But estimates shrank since the weekend, and as of Wednesday, analysts expected a 2.1 percent increase. That would still be the best showing since April 2008 and compares with a 7.8 percent decline in 2008, the worst drop since data started being tracked in 2000.

Retailers Protecting Profits by Controlling Inventories
Even if sales are flat or rise modestly during the holiday season, analysts said retailers should report improved profits because they have cut inventories and pared back costs to avoid the huge discounts they were forced into last year. For example, Victoria's Secret owner Limited Brands forecast a low-to-mid-single-digit decline in December same-store sales, but said it planned to be less promotional this month. The company also posted "significantly" higher November margins, "driven by improvements in each main business," Amie Preston, vice president of investor relations at Limited, said in a recorded message.

Retail sales data are closely watched as consumer spending makes up roughly 70 percent of the U.S. economy. But the figures also give an incomplete picture because many of the retailers that are key holiday destinations, including industry leader Wal-Mart, Best Buy and Amazon.com , do not report monthly sales. Macy's said on Thursday that same-store sales fell a worst-than-expected 6.1 percent during the month. It stood by its forecast calling for quarterly earnings of $1.00 to $1.05 a share, excluding one-time items, but that was still below analysts' expectations.

Teen Retailers Mixed
Abercrombie & Fitch's same-store sales fell 17 percent, far worse than the analysts' average view of a 9.3 percent drop. Also on Wednesday the 3rd, teen clothing retailer Hot Topic posted a worse-than-expected 11.7 percent drop. Aeropostale sales came in slightly worse than expected, with a 7 percent increase. The company's quarterly earnings forecast also disappointed some investors.

Results Vary by Retailer
Costco said same-store sales rose 6 percent, missing the analysts' average estimate of 8.1 percent. Same-store sales at U.S. locations rose 2 percent.
Children's Place posted a 13 percent drop in comparable sales, including online sales, compared with analysts' expectations of a 1 percent rise. "Customers gravitated towards the sale merchandise," a company spokeswoman said in a recorded message.

Walgreen, one of the largest retailers that reports monthly same-store sales figures, on Wednesday posted a 3.9 percent rise for November, below analysts' expectations. The drugstore chain also said Thanksgiving weekend was "notably softer."

On the positive side, Limited posted a better-than-expected 3 percent increase and home furnishings retailer Pier 1 Imports cited a strong Thanksgiving weekend as it reported a 13.7 percent increase in same-store sales for its third quarter ended Nov. 28.

Chevron Withdrawing Brand from Selected Eastern U.S. Markets

2009-12-09T07:46:00.000-08:00

Following the review of its U.S. retail portfolio, Chevron has decided to withdraw its motor fuels operations in some areas of the Eastern United States. As a result, approximately 1,100 independently owned and operated retail stations will be de-branded. They announced this on December 4th. The stations make up roughly 8 percent of its total U.S. sales volumes.

Areas Impacted
Impacted areas include Delaware, Indiana, Kentucky, North Carolina, New Jersey, Maryland, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia, Washington, D.C., and parts of Tennessee, the company stated. Chevron expects to complete the planned market exits by midyear 2010. Chevron expects all of the stations to continue operating under other brands, and has a program in place to assist retailers with the transition, the company stated.

Chevron will continue to supply more than 5,000 Chevron and Texaco branded stations in the Eastern U.S., and will continue to develop and grow its retail presence in other areas of the U. S., according to the company.

Joblessness Hits McDonald’s November Sales in US

2009-12-08T14:08:00.000-08:00

The recession has bitten deeper into consumers, and so the jobless rate and consumer confidence here in the US finally caught up with McDonald's Corp. in November; it seems high unemployment ate into sales.

Still doing better than rivals
The world's largest burger chain is doing better than its competitors, Most of them now aggressively pushing value menus and discounts of their own. The U.S. economy needs to pick up before McDonald’s can expect big improvements. Job growth will be the key to McDonald’s sales increasing.

On Tuesday, McDonald's said sales at restaurants open at least a year fell 0.6 percent in the U.S. This was the second consecutive monthly decline for same store sales, an important indicator of a restaurant chain's vitality. In October the same store sales fell 0.1 percent. November's overseas results were better the weakening dollar translated foreign revenue into more dollars. Outside the US, sales in locations open at least a year rose 0.7 percent.

Early Value Strategy adopter
Because of its size and the early adoption of a “Value” strategy with its increasingly popular dollar menu, McDonald's was an early beneficiary of the recession as families and diners in general traded down from more expensive restaurants. At McDonald’s last November, sales in locations open a year climbed 4.5percent in the U.S. and 7.7 globally. The recession’s length is making hard to maintain that momentum Todays reported results were only the fourth U.S. sales decrease in 6 1/2 years.

Increasing competition from rivals trumpeting their own deeply discounted menus as they adjust to the new consumer mood is also affecting McDonald’s. Taco Bell has a value menu that begins with items for 79 cents, and Wendy's is advertising $2.99 combos. Burger King has also heavily pushed a $1 double cheeseburger, against resistance from it’s own franchisees, that it claims as being a bigger and better value than McDonald's $1 McDouble burger.

Overseas Sales Stronger
In Europe, sales in locations open at least a year rose 2.5 percent, thanks to stronger business in the U.K. and France. But the figures were still short of what had been forecast. In other parts of the world, sales in locations open for at least a year in the Middle East, Africa and Asia/Pacific dropped 1 percent. Last year, the figure for these areas rose 13.2 percent.
Meanwhile, McDonald’s system wide sales — a figured based on results at company owned restaurants as well as those operated by franchise owners — climbed 10.1 percent. Adjusting for foreign currency fluctuations, system wide sales were up 2.3 percent. McDonald’s, based in Oak Brook, Ill., runs more than 32,000 restaurants in more than 100 countries.

Burger King and Franchisees brawl over $1 Double Cheeseburger Promo

2009-11-14T11:39:00.000-08:00

Burger King franchisees sued the burger restaurant chain this week over its $1 double cheeseburger promotion, saying they lose money on the sandwich deal and the company can't set maximum menu prices. The National Franchise Association, which is a group that represents over 80 percent of Burger King's U.S. franchise owners, said the $1 Double Cheeseburger promotion forces restaurant owners to sell the quarter-pound burger at a 10-cent loss at the minimum.

Too expensive to promote

Costs vary according to location, but the $1 double cheeseburger costs franchisees at least $1.10 typically, said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind. who is a spokesman for the association. The actual food costs about 55 cents for the meat, bun, cheese and toppings. The balance of the cost is for expenses such as rent, royalties and worker wages.

After the company tested the $1 deal in markets across the country, the discounted burger went national last month, in spite of the fact that franchise owners, which run 90 percent of the company's 12,000 locations, rejected the product twice before when offered, because of the expense.

A spokeswoman for Burger King, the nation's No. 2 hamburger chain, said the Miami-based company believes the litigation is "without merit," particularly after an earlier appeals court ruling this year showing the company had a right to require franchise owners to participate in its value menu promotions.

Restaurants looking to boost business

Restaurants in general, and particularly fast-food chains, have been slashing menu prices because of the poor economy. McDonald’s the nations #1 Burger chain has been aggressively promoting it’s $1 “Value Menu” for some time.

Restaurant executives at both fast-food and casual dining chains are hoping the deep discounts and combo deals will bring in diners who are spending less when they eat out, and lots have just been staying home altogether.

When the $1 double cheeseburger was announced this fall, analysts felt it could increase visits to Burger King by as much as 20 percent. The lawsuit was filed Tuesday in U.S. District Court in Southern Florida.

Continuous Retail Improvement through the Holidays

2009-11-14T10:30:00.000-08:00

This was the feature article in the Nov 3, 2009 Issue of Condevco's "Meter" Newsletter.

As we begin to get ready for the holiday season, hope springs eternal, or it should. It’s time to look at what we can do to make these holidays happy, for our customers, Associates and our businesses bottom lines.

As we have been discussing, this hasn’t been a banner years for business in general. In our specific business, gasoline prices are rising again, and there is always the possibility of a price spike shocking customers into not spending inside the store, like in the summer of 2008.

As of Friday October 30th Retail gasoline was at its highest average price in over a year. (See the article below) Using the “Sports quote of 2004” according to USA Today, which has become ubiquitous and irritating in ALL phases of conversation by now in 2009; “It is what it is” Gasoline Prices are what they are… But that doesn’t mean you need to let that affect how you get ready for and operate through the holidays inside your store and on your store site. In other words, the things you CAN control.

Wikipedia defines Continuous Improvement Process (CIP, or CI) is a management process whereby delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility. In other words, “It is what it is, but it doesn’t have to be!”

With the holidays approaching and the big retailers having been in full holiday mode for weeks, it’s time to look at where your stores are now, and make the decision to continually improve the retail offering (the infamous “Value Proposition”) straight through to January.

That means keeping any seasonal decorations repaired and cleaned and looking fresh, perhaps a store mini-reset halfway through the season with some new items, and getting your customer service associates to “Buy In” to the fact that the next eight weeks can be the best eight weeks of the year.

Should you start selling Blu-ray players or flat screen TV’s? Probably not, but making sure you have the holiday-themed candy and drinks in the foreground is good. This is an excellent time for new uniforms, painting the curbs, and making sure those nozzles and hoses are clean and working well.

This is a chance to really make a positive impression on your customers. It doesn’t cost much to make a big difference in how “Jolly” your customer’s perception of your stores is.

This is a great time of year for ice sales and fill-in party supplies. ATM’s and Money orders are big services.

Let Darcee and Ron, the team from Condevco help you on the way to Continuous Retail Improvement (Click To Inquire)

Halloween 2009- Scary news on Retail gas prices

2009-10-31T07:53:00.000-07:00

Scary! Retail Gas Prices Hit Highest Level This Year

Retail gasoline prices continued higher Friday to a new peak for the year, forcing consumers to dig deeper into their stretched budgets to pay for fuel.

Natural Gas and Gasoline Higher
Natural gas prices have also been moving up, and have now climbed 16 percent in the past two months — just in time for the winter home heating season to kick in.
Supplies of oil and gas are plentiful, so that’s not why the prices are climbing. Storage points for natural gas are so packed that producers are running out of places to put it. Crude Oil stocks are also well above average levels.

Gasoline prices are now up 17 straight days according to AAA. That is the highest national price average since Oct. 26, 2008. Prices are averaging 5.9 cents higher from a week ago and 14.8 cents from a year ago. The average retail price for gas was $1.686 a gallon last December. Today's price adds about $50 a month on to the monthly gas cost for the gasoline customer compared with then.

Iffy Economic news
This comes at a time when unemployment is at a 26-year high, and consumer confidence is low. The stock market reacted badly to the consumer confidence numbers released on Friday, driving the Dow down almost 250 points on Friday.

Oil prices skyrocketed in July 2008, to $147 a barrel. That helped to put the economy into recession. Economists are worried that high oil prices will put a halt to the budding economic recovery.

Crude Oil and Dollar Trade
The current reason for the increase in pump prices is because crude oil prices have been rising, from $65 a barrel as recently as August to $82 last week. Oil settled Friday afternoon at $77 a barrel.

A year ago, gasoline prices were heading down as the recession kicked in and the implications of the global financial crisis became better understood. Demand for oil and gasoline went down with the economic contraction.

Crude Oil is moving generally higher because there are signs that the economy is improving. The weaker dollar US Dollar is also a large contributing factor, since crude oil’s worldwide price is determined in US Dollars, a less valuable currency leads to higher prices for oil. The US Commerce Dept. said that the U.S. economy grew at a 3.5 percent annual pace in the third quarter on Thursday, the best growth percentage in two years, breaking four consecutive quarters of declines.

Inventory levels of gasoline, heating oil and diesel fuel remain well above normal levels.

As the dollar rose on Friday, crude oil fell sharply. There was also the dour consumer spending report, and doubts about consumer confidence going into the holiday season.

There’s some scary Halloween news!

Stocks Dive as Consumer Spending Worries Mount

2009-10-30T13:53:00.000-07:00

Stocks plunged Friday, erasing all of the previous day's big gains, as a drop in consumer spending made investors nervous the recovery momentum can’t be sustained.

Major stock indexes tumbled more than 2 percent in afternoon trading, including the Dow Jones industrials, which gave back all of Thursday's 200-point gain, and dropped an addition 50 points. Big decliners were banks, energy and materials companies. As stocks fell, investors moved to safer assets like the dollar and Treasury bonds. The decline in stocks came after a rally yesterday, based on a 3.5% GDP growth number.

Personal Spending Falls
Investors sold stocks after the Labor Department said personal spending fell 0.5 percent in September. This number was about where the forecasts said it would be, but it was the largest drop in the last three quarters and followed a 1.3 percent jump in August that was led by the government's “Cash for Clunkers” car rebate program, which was very popular.

The report casts doubt on the economy's recovery, which many economists fear has been primarily inflated by government stimulus programs. With no bounce in consumer spending, which makes up a major part of the U.S. economy, investors are worrying the recovery can’t last.

The Dow fell 249.85 points to 9,712.73, led by news of a drop in the mood of consumers. The Reuters/University of Michigan consumer sentiment index fell to 70.6 in October from 73.5 in September.

The Labor Department also reported Friday that personal income, which will drive a recovery by consumer spending, was flat in September compared with the previous month, although this was in line with expectations. A lack of income growth is due, in part, to ongoing high unemployment rates, also a major worry for the market.

Financials Decline
Financial stocks were among the day's biggest decliners. Shares of CIT Group Inc. dropped nearly 15 percent after the commercial lender said Carl Icahn, a major investor in the firm, agreed to support its restructuring plan and provide it with a $1 billion line of credit. CIT Shares dropped 14 cents to 81 cents.

Energy and basic materials producers also fell sharply as the dollar gained ground against other major currencies. On the New York Mercantile Exchange, gold prices slipped about $9 to $1,037 an ounce, and oil prices tumbled $2.85/BBL to $77.02.
Bond prices rallied as stocks fell. The yield on the benchmark 10-year Treasury note fell to 3.42 percent from 3.50 percent late Thursday.

Stocks have has a rough week, but finished the month slightly up from September’s close. Without stronger evidence that the labor market is improving, consumers are not going to feel comfortable about spending. Indications are investors will have trouble extending the market's massive rally into a ninth month. With this week's declines, the S&P 500 index is still up roughly 55 percent since hitting a 12-year low in early March.

Major Economic News Due this Coming Week
Analysts say trading is likely to remain volatile this coming week. There is a large quantity of major economic news coming this week. Two that will be closely watched are sales reports from major retailers and the Labor Department's October employment report — arguably the month's most important piece of economic data. The Fed will also convene for a two-day policy meeting beginning Tuesday.

There were eight losers for every winner on the New York Stock Exchange, where volume came to 791.6 million shares, compared with 852.5 million at the same time a day earlier. Overseas, the averages were mixed, with Japan's Nikkei stock average rising, while European markets in Britain, France and Germany fell.

You Need Customers (and Profits) to Have a Business

2009-10-20T14:11:00.001-07:00

Our 1 year Anniversary – The first “Meter” newsletter was published on October 6, 2008, so the one you’re reading now is Volume 2, Issue 1. We’re proud of the fact that we’ve received positive feedback and that you care enough to write us back with comments. We thank everyone for their interest and time. We’ll continue to adjust the format as we move forward.
Darcee and Ron

(This article was the feature in Volume 2 Issue 1 of Condevco's Meter Newsletter)

“You Need Customers (and Profits) to Have a Business”

Well, that seems like a pretty simple statement, doesn’t it? Whether you call it marketing, Sales, Advertising or Promotion, it all comes down to one thing. Getting people to become your customer (purchase from you), and getting them to come in more than once; in other words, customer loyalty and repetitive purchasing. How?

Just cutting price isn’t a competitive strategy

In terms of Convenience Retailing, that means putting customers inside the store. Hopefully they shop there more than one time. In terms of our jobber friends, that means adding dealers to your network, and making sure they want to renew at the end of the Fuel Supply Agreement. In terms of a Refiner/Marketer, that means adding and retaining jobbers, and on and on. But just getting customers by cutting price becomes a losing proposition in the long run, so there’s more to being a good competitor than being low priced.

A simple idea, but a complicated thing to do successfully. Here as we start our second year at the “Meter” we’ve talked about Customer service, we’ve spoken about respecting your customer, and in our two most commented on stories, we’ve spoken about Sprucing up your store and the Value Proposition to your customer. (The Articles are all included in this blog).

In the final analysis, it’s all about getting customers to keep your business going, and retaining them for the long run, whether you’re a multinational refiner or a single store operator. What is the customer looking for? And how do you become the person or business that fulfills that customer need?

Revenue alone isn’t an answer

Just pushing revenue through price cutting and aggressive promotion is NOT the answer to C-Store success. You need to keep margin preservation as a goal when you set your promotional calendar, otherwise, you’re trading dollars for no gain.

In the blog story on Burger King’s new restaurant design, (Article directly below) we discuss the fact that BK hasn’t been a heavy promoter of the “value menu” items, They have them, but BK has always competed on taste -“flame-broiled” and service-“Have it your way” as a primary message, with competitive pricing as a secondary factor. Just driving revenue for revenue’s sake is a feel-good tactic, but in the long run, doesn’t do you any good.

The Future

The NACS (National Association of Convenience Stores) show kicks off in Las Vegas today, where the merchandise and trends for the next year get rolled out. Oil prices are climbing again, and while we’re being told the economy is in recovery, it just isn’t feeling that way to most of us. It’s important to grow top-line revenues, but not at the expense of profit.

A more sophisticated foodservice offering and an emphasis on fresh items is the way to steadily grow revenues in a convenience setting now. Differentiate yourself from the pack in a smart and profitable way, and customers will keep your registers ringing. NPN had a nice article on Loyalty being more than just a Fuel Brand (Click to read) It’s time to think about how to make your business grow in a structured and profitable way. Id like to finish it off with the comment that standing pat is really dropping behind, because everyone else is trying to move ahead!

At Condevco, our business is helping convenience retailers and jobbers grow their business. We develop manuals and administer programs with your staff and provide analysis and input to allow your efforts to become targeted and productive. Contact us TODAY for more information on how we can help your business increase profitability.

New Burger King Restaurant Design Continues Competitive Differentiation

2009-10-19T14:19:00.000-07:00

Article Headline / Source Burger King's New Restaurant Design (http://adage.com/globalnews/article/?article_id=139526)
Question With Burger King's (BKC) current sales trend weak and high stakes earnings call coming up at month's end, is the newly announced Burger King restaurant design viable? Is it likely to attain investment payback? Can the franchisees fund it with the tight credit conditions now underway?

This was originally done for Gerson Lehrman Group's News

1) Burger King isn't a big "Value Menu" player

2) Tries to differentiate itself through flavor and selection

3) Unit allows for more upscale uses that QSR's are taking on in recession

The new Burger King restaurant design makes sense and addresses the fact that the fast food “niche” is growing and handling more tasks for differing groups of consumers.

BK hasn’t really played hard in value price arena, so a “weak” sales trend may actually bode well for the bottom line. If they are selling more “standard price” menu items as a percentage than their competitors, is that really weakness?

The new 2020 design is a more upscale look, also showing a commitment to full price items and a different marketing sensibility. The “Whopper Bar” concept and the hi-tech Coca-Cola fountain introduction, if only for tests, shows burger King is looking at other places than a .99 price point to grow sales volumes moving forward. They have always competed on flavor as a prime driver to their marketing campaigns, this is a variant on quality differentiation.

Whether the franchisees can fund the new design build out in times of tight credit is probably the same answer it would be in good times: the strong franchisees can, the marginal ones can’t. You have to think that investment payback may be marginally longer to due to the increased cost of the unit’s build-out, but will the design alone increase sales? Probably not.

In terms of how QSR’s/fast food are being used differently by the consumer during the economic turndown, this could be a winner. Having a nicer, more pleasing looking unit to host fast business lunches or take the family out, instead of an Applebee’s or a TGI Fridays, since budgets are bit tight, cannot be bad.

Cutting Cost Shouldn’t Mean Cutting Service

2009-09-30T04:35:00.000-07:00

Newsflash: Business Has Been Tough

Business has been tough for 12 to 18 months in the convenience store business. While Wall Street imploded just over a year ago, gasoline retailers and distributors had been riding a wild rise in supply cost caused by record high crude oil prices in July of 2008, only to followed by a very rapid drop in prices as the rest of the economy “fell off a cliff” to quote a pundit, reducing demand overnight. Volatility of supply costs pushed a lot of jobbers to the brink, and some went over the edge with the rest of the economy.

So, while our stores and chains were ahead of the curve in starting to feel the pain, we were right there with everyone else as consumer confidence shrank, and maintaining business became very, very tough. When the top-line revenues aren’t growing, but actually shrinking, but the expenses aren’t going down, the obvious place to look to get more benefit from the operation is to cut cost.

Cutting Cost Leads to Better Results

And, everybody looked to cut as much as they could and still stay in business as a viable competitor. Both stories underneath this, on Walgreens and Starbucks, are about cutting cost to keep the profits growing. Howard Schultz, the founder and CEO of Starbucks, was on CNBC this afternoon to tout the national rollout of the “Via” instant coffee product; but what he talked about the most was the cost cutting initiatives within the firm allowing them to keep profits near the levels that were expected. Walgreen Corp also attributed better than anticipated results to cutting cost.

“Abandoned Cart Syndrome”

That being said, about a week ago I read an interesting article on the supermarket sector, where they have been aggressive at reducing cost, as they compete in a very tight margin industry. There is more and more of what they are calling “Abandoned Cart Syndrome” where a customer who came in and shopped the store just leaves the full cart and walks out when they see the lines at the checkouts, lengthened by reduced labor allocations. So the question posed was, when does cutting cost become cutting service? And when does that impact your business negatively in the long run? Does that customer come back?

Well, in the case of a Convenience Store, we might not have abandoned carts, but we very well could have cut cost to the point that we have abandoned sites. Customers who came in, and you were out of stock on the need, or they had to wait in line 3-4 minutes to buy a single item. Take a good hard look as you pare those costs, and make sure it’s not service that’s suffering.

Walgreen’s Beats Forecast, Shares rise

2009-09-29T14:19:00.000-07:00

Drugstore operator Walgreen Co. (NYSE: WAG) said prescription drug sales rose in the fiscal fourth quarter, pushing the company's results past Wall Street expectations and lifting shares to an annual high. Shares rose on trading today to close at $37.35, a $3.16 per share rise today, putting the stock price 9.24% higher.

Cost Cutting results in Profits

The Deerfield, Ill., company said its "Rewiring for Growth" expense savings plan started to pay off during the quarter, and also indicated the effects of the recession may be easing. Walgreen shares climbed to an annual high on the results.
For the quarter ended Aug. 31, Walgreen's profit fell 2 percent, to $436 million, or 44 cents per share, down from profit of $443 million, or 45 cents per share, a year prior. Revenue rose 8 percent to $15.7 billion from $14.6 billion.

These latest per-share results attribute 7 cents per share in savings from Rewiring for Growth, offset by 3 cents in costs. Analyst’s consensus forecast profit of 39 cents per share on revenue of $15.68 billion.

Walgreen’s said same-store sales, or sales at stores open for more than a year, rose 2.4 percent. Walgreen opened its 7,000th store in September and currently runs 7,042 drugstores, a few dozen more than main competitor CVS Caremark.

Same Store Sales Rise

Same-pharmacy sales rose 4.5 percent in stores open at least a year, while same-store sales of the "front end", or non-pharmacy items, fell 1.4 percent. The company filled 9 percent more prescriptions than it had a year ago. Even though consumers are actively looking for ways to save, Walgreen’s said fewer customers are skipping medications or stretching the terms of their prescriptions.

Walgreen’s also said that patients who receive 90-day orders of prescription drugs through the mail will now be able to pick up their orders at local Walgreen’s pharmacies, matching the features of the CVS program.

For the full reporting year, Walgreen’s earned $2 billion, or $2.02 per share, down from profit of $2.16 billion, or $2.17 per share, in 2008. Revenue rose to $63.34 billion from $59.03 billion. Walgreen’s expects store growth of 4.5 percent to 5 percent in fiscal 2010, which would give it more than 7,300 stores.

The company stated it is looking to save money by cutting back on store openings and carrying fewer products in inventory. They are going to boost sales by improving the layout of its stores in another new initiative.

Starbucks Rolling Out it’s Instant Coffee Nationwide Today

2009-09-29T12:57:00.000-07:00

Eight months after Starbucks Corp. began selling its “Via” brand instant coffee, testing it in Seattle and Chicago, today Starbucks will begin a nationwide rollout, offering the instant coffee drink to the rest of the country and in its Canadian stores.

Starbuck’s is running company's first-ever television ads, and also distributing to roughly 1,500 sites outside its stores; this effort for the Via launch shows just how much Starbucks wants to own a stake in the $21 billion worldwide instant coffee market.

"Based on the success we've had, we feel strongly that we're sitting on a very big opportunity," said Starbucks CEO Howard Schultz said during a conference call with journalists. "What's going to sell Via at the end of the day is that (it) delivers in the cup. Most people will not be able to tell the difference."

Instant coffee is popular in Europe, and through the rest of the world — instant brands account for as much as 80 percent of coffee sales in the U.K., here in the US, instant coffee has not won over coffee drinking Americans. Instant is generally viewed as an inferior product here in the US, a knock-off of drip-brewed beverages.

Starbucks executives want that image to change. They are hoping, and betting on, with this high visibility rollout, that the skinny cylindrical 3-packs and 12-packs of coffee that dissolve in water will eventually be as popular with consumers as its packaged coffee is now. The coffee is available in two flavors now, and Starbucks expects to introduce more varieties in the future.

Starbucks is getting together diverse vendors like outdoors store chain REI and office supply chain Office Depot Inc., hoping it will help the company get the product in hands of new customers. Via also will be sold inside general retailers like Costco and Target. The effort to find new customers is also taking to the air, where passengers onboard certain United flights on Tuesday will be able to sample the drinks. United will sell Via packages onboard later in the year.

Next year, Via will appear on grocery store shelves, already a strong market for Starbucks pre-packaged conventional coffees. Introducing Via in such a high-profile way comes at a particularly tough time for Starbucks. Due to the recession and consumer spending cutbacks, Starbuck’s has seen its revenue slide for the last three consecutive quarters, and profits have fallen in five out of the past six quarters. It could use a big new hit product, maybe Via could provide that “Buzz” to get the chain rolling again.

“The Value Proposition – What it means in Convenience Retailing”

2009-09-02T15:02:00.000-07:00

In the field of marketing, a customer value proposition consists of the total of benefits which a chain or store owner promises that a customer will receive in return for the customer's business (or other value-transfer- time, loyalty, brand allegiance).

Put simply, the value proposition is what the customer gets (or your store provides) for their money and time. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings. “in ten words or less, why should people be YOUR customer”
Accordingly, a customer can evaluate a company's value-proposition on two broad dimensions, with multiple subsets:

1. relative performance: what the customer gets from the vendor relative to a competitor's offering; How much better is your location than your competitors?

2. Price: which consists of the payment the customer makes to acquire the product or service, since most C-Store items aren’t unique to the location, this is a driver.

The company or Store’s marketing and sales efforts offer a customer value proposition; the Store’s delivery and customer-service processes then need to fulfill that value-proposition, in order to make the customer happy.

How to use developing a Value Proposition as a marketing tool

A value-proposition approach can assist in a firm's marketing strategy, and may guide a retailer to target a particular market segment. Typically, there are three elements that should always be in a value proposition: Convince (who’s our customer?), that (what you want them to believe), because (why they SHOULD believe it). This framework will structure your value proposition in a cohesive manner that makes sense internally and externally
A company should always have the value-proposition of increasing its market share and growing revenue by:
1. providing superior customer service – self explanatory
2. product differentiation – Colder coolers, cleaner store, fresher products
3. operational efficiency – making it look effortless
Strategic analysis and planning for value proposition marketing should contain at least five elements:
1. Your current situation (including problems, causes and effects – need to be honest)
2. target situation – what you would like to achieve
3. How long to reach the target situation – when do you need the new results
4. cost of reaching the target situation and opportunity cost analysis – need to be honest again – a plan you can’t afford doesn’t do you any good
5. the benefits of both the targeting and the achievement phases – what do you (and importantly your team) get for the all the planning and work?

Developing Your Value Proposition

It's important when developing your value proposition that it be clear and concise. It's best to start by brainstorming and focusing on what needs your target customer group have in common. This can be done by some simple market research in your stores. What does your current traffic want that your business can provide? What is important to them?

Once you've found the common denominating need, you can determine what it is that they are in search of in addition to your current lineup and develop your value proposition around that need. If you find a great unmet need, think about adding that product or service to your line-up, and letting people know about it.
Keep in mind that the purpose of your value proposition is to identify and satisfy an unmet or under-met need that your target market possesses.
Why is the development of your value proposition important?

The answer to that question is easy. Your value proposition can equip you with the following benefits to your business:

• Create a strong differential between you and your competitors
• Increase not only the quantity but the quality of your in-store traffic
• Gain market share in your targeted segments
• Assist you in merchandising and store layout that will increase business.
• Improve your operation efficiency

You can get started developing your store’s value proposition today. Just remember that an effective value proposition describes what you do in terms of tangible business results. It draws interest and shares a customer benefit within a few words.

Cash for Clunkers Can’t Save July Retail Sales Figures - Sales Fall 0.1 Percent

2009-08-13T14:26:00.001-07:00

Retailers reported a rough month in July, raising concerns for how strong the recovery from the worst recession since World War II. Outside of auto sales figures, boosted by the very popular and well publicized “Cash for Clunkers” program, retailers turned in a disappointing performance in July. The Commerce Department reported retail sales fell 0.1 percent last month, a much worse performance than economists had expected.

Sales unexpectedly lower

Retail sales had been expected to rise in July, boosted by the federal government’s “Cash for Clunkers” program. Most economists expected a very slight increase in non-auto retail for July, so the 0.1 percent drop came as a surprise.

Shoppers still hesitant to open wallets

Reports from the nation’s major chain retailers showed shoppers remained cautious about spending in July, as most consumers aren’t feeling like they’ve seen the last of the recession, and job security fears dominate peoples thinking. The next hurdle for retailers will be whether shoppers will cut back on back-to-school shopping. This could be a indicator of how good the holiday season will be for retailers. Congress approved an additional $2 Billion for “Cash for Clunkers”, and retailers are hoping some of the popularity of that program will spill over into enthusiasm for spending at retail stores. Cars and light truck are selling at the best rate since last September, boosted by the government program.

Unemployment expected to climb

Economists are forecasting that the unemployment rate, which dipped to 9.4 percent in July, will rise to over 10 percent early next year. The Federal Reserve, concluding its first meeting since the economic uptick, held a key interest rate near a record low where it has been since last December and pledged to hold rates at low levels for "an extended period

McDonalds July Sales Sizzling Hot

2009-08-12T13:59:00.001-07:00

McDonalds (NYSE:MCD) reported a 4.3% increase in same store sales for July. Same store sales are considered the most important comparison statistic for multi unit restaurant chains and retailers. Here in the US, Same store sales rose 2.6%, which is being attributed to the new line of McCafé Espresso-based coffee drinks. McDonalds stock closed today at $56.02 a share, significantly off the 3 month high of $60.99 on June 3rd.

McDonalds is now switching advertising emphasis back towards value and meal combinations, although the “McCafé Monday” promotion that ran in July through August 3rd, giving away samples of specific coffee drinks on Mondays, turned out to be a good traffic driver, according to anecdotal evidence. The new launch now is 1/3 pound Angus Beef burgers, with a higher price point that McDonalds traditionally hits. The “Any size fountain drink for $1” has been a good component to the value message.

While restaurants overall are struggling in the economic climate, fast feeders, and McDonalds in particular, have acquitted themselves well. Americans love to go out to eat, and it seems that the casual dining houses are feeling the brunt of the crisis in consumer confidence. McDonald turning in a 2.6% same store sales increase in the US market, when the US GDP shrank 1% in the second quarter, shows that the Golden Arches continue to be a family destination and place for value conscious consumers to go.

Coffee Wars: Starbucks Moves into Alcohol

2009-07-30T12:12:00.000-07:00

Starbuck’s (NASDAQ:SBUX) is testing serving alcohol at a couple of locations, to try out the idea as a way for increasing the later daypart business. Curiously, they are changing the name of the first outlet to “15th Ave. Coffee & Tea, inspired by Starbucks.” I guess the question remains what has been posed before; how badly do you need to beat a brand to destroy it from the inside?

Are Instant Coffee and Alcohol Brand Builders?

While the expansion of business in a weaker time period is always a bonus, there seems to be less respect for the core brand within Starbuck’s than there is from the outside. First, the instant coffee brand -VIA™ rollout, and now trying to be a limited-option bar in the evening.

Not Addressing Menu Overhaul

Actually the alcohol idea isn’t a bad one, but it would make more sense to include it as an overall remaking of the Starbuck’s menu. They seem to be running from the challenge being put forth by the QSR’s, McDonalds (NYSE:MCD) and Dunkin Donuts (Private), in particular, but all the big chains are jumping on the coffee bandwagon.

The way to get solid revenue increases driving at Starbucks is to commit to providing a viable light meal option to complement the beverage business, and this is something they seem reluctant to do. If Starbucks can’t drive revenue by coming up with a way make going there about more than just a side pastry or cookie, they lose the revenue war to the QSR’s challenge in the long run.

Fast Food Chains Challenging on Coffee

While Starbucks doesn’t need a “Dollar Menu” or to put french fryers in, a feature deli-style sandwich that goes with either a cold coffee drink or the newly-introduced beer or wine would seem to be a smart positioning move, and give them a chance at increasing per-ticket rings and putting more revenue into the later dayparts they are trying to improve.

Starbuck’s is running from what made it a premier brand ands a ubiquitous presence in all but the smallest of markets.

When you have a big ship to steer, you can’t do it with a gentle push, you need to give it a good shove. The QSR’s have issued a challenge to Starbucks, if they don’t make a solid move in response to come up with a light meal alternative, they will lose the revenue war down the road.

Office Depot – NOT Takin’ Care of Business

2009-07-29T12:43:00.000-07:00

Office Depot (NYSE:ODP) announced quarterly results yesterday, and losses exceeded estimates by a considerable amount. The other major players in the sector, Staples (NASDAQ:SPLS), and OfficeMax (NYSE:OMX), while being hurt by the current low consumer confidence and recessionary spending patterns, aren’t imploding like Office Depot. Stock prices are down, but the core businesses at the two major competitors seem more stable.

To paraphrase the slogan they used for so long, the management at Office Depot is definitely NOT “Takin’ Care of Business”, at least not theirs. It’s hard to remember when ODP was a savvy, best in the category retailer, because they used to be. They aren’t acting or getting the results like one now.

The latest management trick of getting a capital injection by selling 20% of the company to a UK based firm, after closing 9% of their stores as “underperformers”, show that this is a sad story heading down the same road as Circuit City. Surrendering markets by closing stores, and then having an accelerating sales decline, shows Office Depot is still heading for the same sad end result as Circuit City.

This isn’t an inevitable result, but they HAVE do what they need to do: get back to concentrating on retailing, taking care of the customer they service, and improving in-store experience so that same-store sales aren’t in double-digit declines. Home Depot’s (NYSE:HD) re-emphasis on the customer and store-level service delivery might be a good blueprint for Office Depot to look at. The Microsoft (NASDAQ:MSFT) Windows 7 launch may give them a bump when it occurs, but computers are about to enter a brutal discounting phase as Wal-Mart (NYSE:WMT) ramps up its laptop sales effort.

Retailing is all about customer perception and how they feel when they walk both into, and more importantly, out of your store. Pricing, selection, cleanliness and knowledge are the pillars to increasing sales, or on Office Depot’s case, stopping the declines. Unless management launches a store-level initiative to make the sales experience better, Office Depot will have a tough time surviving the balance of the economic downturn.

Fast Food is a Recession Beater for Families

2009-07-28T14:23:00.000-07:00

Source Article: Fast Food Fading? (Forbes) Click Here For Article

Ramifications

1) Fast Feeders branching into less "Traditional QSR" Fare

2) Chains looking to upscale ticket

3) Can entertain a family inexpensively

Analysis:

Fast Food Restaurant Chains are moving through the recession in fine fashion. McDonalds (NYSE:MCD) is in fine shape regardless of what the stock price reacted against.

McDonalds has made a well-publicized foray into Gourmet coffees, stepping on Starbuck's (NASDAQ:SBUX) toes, and had added a $3.99 burger, a premium Angus Beef burger, to the menu. Wendy's (NYSE:WEN) has added "Chicken Bowls" and other chains are trying less traditional QSR items at a higher per unit price point.

The casual dining chains, Friday's and Applebee’s in particular, have aggressively promoted price competition to keep consumers coming through the door, but the QSR's are coming "Up" to meet them. It's going to be hard to break the consumer of the "2 for $20" (Applebee’s) or the $5 Dollar Entrees (Fridays) that were running in heavy rotation through the early summer.

The QSR's recognize that consumers are "Trading down" on entertainment dollars, which is why they are adding "Quality" items at a slightly higher price. They are reaching towards the casual dining houses in menu quality perception, and catering to the spenders in the family, Mom and Dad.

While the value menu is what McDonalds is famous for right now, the advertising is going to the McCafe line of coffees, and they are going beverage promotion with the $1 Fountain drink promo. It's a smart and two tiered approach, and whether the benefits show up right now or a bit later, the entire QSR segment has acquitted themselves well in the recessionary consumer environment.

As long as the economic future remains uncertain, the fast feeders will be the choice for families "Feeling the squeeze" but still wanting to go out,

Home Depot focuses on Retailing

2009-06-11T06:52:00.000-07:00

Results Better Than Expected

Home Depot's better than expected results, given the fact that the economy really isn't growing, shows that the management focus on it's core retailing base is starting to pay off. The forays away from the core home retailing business are over.

The home improvement and "DIY" sectors of the economy have taken a big hot, along with the housing market and decrease in home values. People are fixing what needs repaired or replaced, but really aren't, in most markets, making the big home improvement purchases right now.
Lowes and other home improvement retailers and suppliers are all experiencing the downturn in the housing market firsthand.

There's too much uncertainty in the future course and timing of economic recovery for people to feel comfortable about big discretionary expenditures. So, going back to the basics of good service and knowledgeable associates to assist their customers will pay off in the long run. Working on improving the in store experience for their customers is a great strategy.

They have closed the Expo design centers, are serious about cost controls, and management is really concentrating on being the best home improvement retailer they can be. As long as they continue to look at efficiencies and increasing per square foot sales, the things HD’s management can control, it bodes well for future results.

As long as they stay focused on that very worthwhile goal, HD will come through the balance of the recession poised for renewed growth.

Crude Oil flirts with $70 a Barrel before falling back

2009-06-07T09:43:00.000-07:00

Done for the Examiner.com Sunday June 7

Crude Oil broke through the $70 a barrel level for a while on Friday, before falling back to $68.44, down 37 cents for the day. Prices are steadily moving higher, and as the economic recovery seems to be taking shape, the market is betting on energy going higher as activity picks up.

Natural gas Futures are up; Heating Oil and Gasoline are heading higher, consumers see first hand when they fill up at the gas pump that the overall outlook for energy prices is bullish. Multiple studies are suggesting we will see $85 a barrel oil this year.

A strong dollar move Friday contributed to Crude prices falling back, but on the whole, it looks as though Crude has plenty of room to move higher. The big question is; what does this do to the potential for recovery, not just here in the US, but worldwide? Most of the “Big Engines” in the worldwide economy are net oil importers, so it’s bound to create a drag on growth.

US consumers were just getting used to lower prices for gasoline, heating oil and natural gas, will the price shock send them back to hiding from all but the most necessary spending? The US economy needs consumers to feel good moving forward to get spending rolling again, while sentiment is up right now, it won’t take many weeks of $3.00/Gal gasoline to end that feeling.

As the summer driving season rolls in, tourism interests have to be feeling a bit nervous. What will increased costs do to traditional “Summer Vacation” destinations like Orlando and Seaside resorts?

Well, Oil seems like it’s going to go higher. Had the worldwide economy not been in a serious recession, it’s wise to think it never would have gone down below where it is right now. As growth picks up, energy costs are bound to rise.

Gasoline up 47 cents a gallon since Easter

2009-06-02T08:00:00.000-07:00

Published in the Examiner.com

The report released yesterday by the Energy Information Administration (EIA) shows gasoline, on average, has gone up 47 cents a gallon since Easter. Oil hit a 7 month high at close of trading yesterday. As economic uncertainty recedes, energy prices are heading back up.

While not close to the historic levels of last year, this price climb with the world economy not yet back to growth mode means energy costs to the consumers, and the fortunes of oil and natural gas companies, are going to continue up. OPEC is saying they would be comfortable with $70-$75 per barrel oil, and we are heading back there right now.

US domestic exploration and production had slowed down after the large price drop for Oil and Natural gas last year, but the firming market makes US domestic supply plays look like a good bet moving forward.

For the motorist, this means more expensive fill-ups are going to remain a fact of life. Had the US and worldwide economies not contracted over the last 9 months, the price respite we just received as drivers never would have happened. Heating Oil customers should be budgeting for higher prices over the winter.

The world is still a hydrocarbon based energy consuming system, and it will be for quite some time, so as demand ramps back up with the increase in economic activity, so will oil and Natural Gas prices. Can the fledgling economic growth trend sustain itself in the face of higher prices for Oil, Natural Gas, and Energy in general? How much of the economic slowdown of the last year was caused by higher energy prices?

This summer will an interesting test of those questions, as well as the resiliency of motorists in the face of climbing gasoline prices.

Starbucks asking for Rent Reductions Good First Move

2009-06-01T15:24:00.000-07:00

Source Article: Starbucks Pushing Landlords for 25% Cut in Cafe Rents | www.bloomberg.com (view article)

Implications:
1) Cost reductions pay off every month over term of lease

2) Opportunistic move or readying for Market Share battle?

3) Cost Reduction good Defence, what about adjusting to competition.

Analyis:

As reported, numerous landlords have received letters from Starbucks asking for rent reductions of between 20 and 25%. This is a good tactic, and the resulting reduced costs are good for operating results every month.

My question is, is this an opportunistic way to reduce overhead, and admission that they were paying too much for sites when times were better, or are they getting ready to defend market share, as the QSR's lead by McDonald's and Dunkin Donuts, takes a bead on the market Starbucks has dominated for so long? Maybe a combination of the three.

The rent reduction initiative is a good defensive move, but is just another admission that the "Fat times" are over for Starbuck's unless this move is followed up with some "offense."

In other words, pushing back in a big way against the Fast feeders coffee push. Otherwise, at some point, Starbucks will hit the point where a reduced market share cannot be covered by cutting costs.

Innovative advertising, a new food product or two, sharper pricing and promotions, and a real competitive challenge to the upgraded competitors are the real key to long term survivability for Starbucks.

Coffee Wars: Is Starbuck’s in McTroublé?

2009-05-29T10:54:00.000-07:00

This article was written for the Examiner.com

Can Starbuck’s maintain in the face of competition from McDonald’s, Dunkin Donuts?

Summer is a great time for a cold coffee drink. This year, consumers have more choices than ever before. McDonald’s (NYSE: MCD) and Dunkin Donuts (Dunkin Brands - Franchisor - Privately Held) pushing coffee products means it could be a long, hot summer for Starbuck’s (NASDAQ: SBUX).

The McDonalds marketing push for the McCafé line of cold coffee drinks, and their upgraded premium coffee program could really cause a shift in served coffee consumption patterns in McDonalds favor. Even more outlets than Starbuck’s and a lower price point could put a real dent in Starbucks revenue.

Starbucks rollout of an instant coffee product this spring is a puzzler to most watchers, and they are really pushing it in stores. This isn’t a competitive response to a larger and deeper pocketed competitor crowding your market. The sputtering food choice upgrade program hasn’t helped Starbucks to craft a response to QSR encroachment into their space.

Dunkin Donuts has been running a campaign featuring cold coffee drinks and also a renewed emphasis on doughnuts. They are a large store count (6,300+) competitor that Starbucks needs be aware of also.

So as the summer coffee war heats up, the question is: Is Starbucks in McTroublé? The consumers will vote with their wallets this summer, and then we will see.

Costco is Rock Solid for the Long Run

2009-05-29T06:55:00.000-07:00

Source Article
Costco Net Falls on Litigation, ‘Higher-Ticket’ Sales Decline | www.bloomberg.com (article)

Implications:
1) Costco's results impacted by Litigation settlement

2) Fuel Price declines drove revenue Dip

3) Still a Great Retailer

Analysis:

Costco showed declining profits this quarter, but 40% of the decline was caused by a litigation settlement.

Costco, having the highest member demographic of the warehouse club type retailers, was most affected by the dip in consumer discretionary spending, but it will also be the best positioned to bounce back.

Costco treats its customer-members quite well, has a liberal returns policy, and sells high-quality goods at excellent prices. The fact that income only dropped as much as it did is a testament to this customer friendly philosophy.

Sourcing items at Costco is one of small businesses biggest cost savers, and as has been said many times in the general and business press, small business will lead the way out of this recession.

They are a major volume gasoline retailer now, and the revenue decline is what all the oil companies and distributors (jobbers) experienced, but Costco sells large volumes of gasoline per site, and as prices have firmed back up over the past 6-8 weeks, this bodes well for the revenue bounceback, too. Plus they are ultra competitive in pricing fuel for members, so higher prices help them that way, too.

Sam's Club and BJ's(NYSE:BJ) product mix is skewed more to consumables, so they were better able to get through the quarter, but that is a long-term strength for Costco, not a weakness.

Costco may have had a rough quarter, but they are a model retailer who will only benefit as the recovery starts, whenever that may be.

Carbon Emissions Credits Are Designed to Dampen Fuel Demand

2009-05-26T13:28:00.000-07:00

Source Article
Oil Refiners Predict Higher Gas Prices | online.wsj.com (view article)

Implications:
1) Refiners paying for transports share of Carbon output is "De Facto" Emissions tax

2) Higher Carbon Emissions share on Refining, an efficient part of energy supply chain, seems counterproductive

3) Refiners paying price for auto makers lack of progress on efficiency and emissions?

Analysis:

If refiners have to pay for the Carbon output of Transportation, it acts as a "De Facto" emissions tax on prior choices made by the consumer and auto business.

Transportation manufacturers should have to include the projected emissions amount each vehicle will emit over it's lifetime in the initial purchase price; that will give consumers a really clear choice as to why more efficient and cleaner cars are the way to go.

Charging refiners for emissions is like charging farmers for the sewage fees that the people eating the food they produce will eventually use.

The higher carbon emissions share on refining, an efficient part of the energy supply chain, seems like it's more a choice of the best place to "close the barn door after the horses have left" than anything else. The automakers and transport manufacturers should be paying the Carbon Output up front in the sale of the vehicle.

The multiplication of increased fuel prices across all sectors of the economy was clearly seen last year in the fuel price spike. The linkages cause a "ripple effect" of price increases throughout the economy. We saw there is very little elasticity of demand on transport fuels; whether the increase is market driven or government mandated, it still affects all sectors of the economy with higher prices.

There needs to be a direct correlation between the choice of vehicle and the Carbon Output tax, not on usage for a fleet that was built before this was a rule, which is what hitting the refiners does. Capping and eventually reducing carbon emissions is a worthy and necessary goal, the mechanism for getting there needs to be fair.

Home Depot and Customer Service haven't gone together for awhile

2009-05-26T13:18:00.000-07:00

Source Article: Home Depot Retrains Cashiers, Shelf Stockers in Turnaround Push | www.bloomberg.com (view article)

Implications:
1) Home Depot grew from it's inception by using skilled associates

2) Service became a lower focus as they grew

3) Focusing on being a retailer again is good long-term strategy

Analysis:

Home Depot focusing on Customer service is a good thing both for the customers and the firm.

As the economy stays in the doldrums, more and more people who wouldn't have dreamed of "DIY" before will be thinking about doing things around the home and garden themselves. A Customer Service emphasis and associates who can provide knowledge for nervous novices is where this company can really take off.

This is where Home Depot originally grew, and where they need to be again to get the business growing in these troubled times.

THD strayed far from it's retailing roots under the prior management, led by Mr. Nardelli. Concentration on doing all the little things right, keeping the stores in stock on promo and fast moving items, making sure there are enough associates with knowledge available to make the customer experience a pleasant one.

Lowe's has been winning the customer in-store experience recently, so to see a momentum swing back to Home Depot, in a tough retail climate, shows the tough initiatives and focus on retailing are starting to bear fruit

Meet the New Boss, Same as the Old Boss - Big Oil and Alt Fuels

2009-04-09T12:59:00.000-07:00

Source Article: Oil Giants Loath to Follow Obama’s Green Lead | www.nytimes.com (article)

Implications:

1) World still hungry for Hydrocarbon-based energy

2) Electric Transportation will require new infrastructure

3) Plug-in electrics have technical and cost hurdles to clear before becoming competitive

4) Oilco Capital better spent on immediate consumption needs

5) Liquid Bio (Renewable) hold better immediate promise

Analysis:

The Major Oil Companies apparent reluctance to invest in alternative energy plans to supplant the current dominant product class - hydrocarbon based fuels, is easy to understand.

Look at the ethanol business in the US. With much hype and great hopes going forward, most of the ethanol producers are in bankruptcy, victims of the volatility in Oil prices and the global economic downturn. Valero(NYSE:VLO) purchasing VeraSun's refining capacity after VeraSun filed for bankruptcy, announced a couple of weeks ago, is endemic of this situation.

Valero(NYSE:VLO) has announced they will use this capacity for their own blending needs. Instead of a potential large customer, they are now a producer with captive demand. It lead me to say in a prior article about green energy investments; "Meet the New Boss, Same as the Old Boss".

Valero(NYSE:VLO) will be one of the largest, and for sure the most economically healthy, ethanol producer in the US as of the completion of the sale. AND they got the assets at a large discount vs the development costs.

When it makes economic sense to invest in alternative and renewable energy, the Oilcos will do that. There just isn't a business case for it yet.
BP, ExxonMobil(NYSE:XOM), Total, Chevron(NYSE:CVX) all are doing research, but that's it for now.

While people don't understand why, the answer is simple; the best use of capital for an oil company is to produce more oil at this point in time. The world economy was built for and still thirsts for oil.

Plug-in electrics are a ways from being more than a "Special use" replacement for a conventional vehicle, whether gasoline fueled or some sort of hybrid and alt-fuel powered iteration of it. Electrical vehicles that aren't producing power onboard, like a pure plug-in, will need a whole new transportation "Sub-infrastructure" designed for it.

Liquid renewables seem to have the most development potential for fast adoption and economic viability, but the ethanol wipe-out for the corn-based producers shows there needs to be new technologies and feedstock found to make it a viable long-term model.

Until there are real government measures put in place to protect renewable fuel investments and resources, the Oil companies are better served to watch the "experiments" that are taking place begin to become commercially viable before jumping in.

This may not seem a very "Green" argument to make, but until there's "green (money)" in going green, don't expect more than research from the big Oilcos.

Waitrose brings Upscale Convenience to Hurried Consumers in UK

2009-04-09T12:54:00.000-07:00

Source Article: Waitrose to open in motorway service stations | www.retail-week.com (article)

Implications:
1) This format has worked well in the US

2) Foodservice component accelerates consumer acceptance

3) A good way to practice "Brand Extension" without getting too far from core offering

Analysis:

Waitrose testing two smaller-format stores based on Highway traffic / Petrol linked traffic as the primary driver is a very, very good idea. The idea of high-quality prepared foods and better fare than generally found in a "C-Store" setting is a winner when done correctly.

Whether in the US, UK or the rest of the EU, people are in hurry and feel rushed for time. The tradeoff of good quality "home time" with the family can still be a good offset to guide an expenditure decision, even with consumer confidence at a low.

As long as there's no discernable quality drop off in service and merchandise from the "traditional" Waitrose Stores, this should be a real winner.
We helped develop a store and Brand some 15 years ago that worked straight along the same thought processes- High Quality food in an upscale convenience setting, and it worked quite well and was very profitable. We were considered quite groundbreaking at the time with the “NexStore” concept developed and built when I was the COO for Knight Energy in Boca Raton FL.

Great Service, uncommon food offering prepared by Chefs, a few hours a day of full service fuel at no additional cost, selection of mid-priced and fine wines, frozen yogurt, it was a real frontrunner in it’s time and day.

The long-term success of concepts like this by Waitrose are all about execution. You can’t just “talk a good game” or look upscale, you need to deliver on those promises. If you do the payoffs are good and long-lasting. It's a good move fo the Brand

Eight Ways to Freshen Up your Store and Energize your Employees

2009-04-01T06:28:00.001-07:00

This was written by Darcee Santicola and was the feature article in Volume 1, Issue 9 of Condevco's "The Meter" Newsletter, distributed on March 28th.

SPRINGTIME… A time reserved for the renewal of surroundings and spirit.

As a residential and commercial designer/space planner, this time of the year has always played an important role in the energizing of our client’s spirits along with their employees’ and customers’ as well. We all enjoy feeling refreshed after the winter months, especially with the economic times we’re living in. Change no matter how small creates excitement.
Here’s eight ways I feel will help start you on your way to achieving this goal.

STORE
1) Painting. A fresh coat of paint works wonders. Then there’s what I consider “creative painting”. Adding color be it to create customers purchasing excitement, enhancing designated areas of the store including restrooms, or to draw attention to specific promotional displays is always an inexpensive solution. Painting of graphics is one of a designer’s tricks in creating an illusion of spaciousness. Also, a change of scenery for employees has been proven to create an increase in productivity. If budget permits, having a professional work out a schematic especially designed for your store is well worth the investment, however if this is not possible, browsing through the trade publications such as Convenience Store News, CSP or NPN with a keen eye for inspiration can be helpful in achieving your goal.

2) Lighting.

A well lit store and canopy is essential. I’ve also found by adding a few specialty fixtures in featured areas creates warmth and a sense of quality for your customers. A wide range of pricing for these fixtures are readily available in accommodating your needs. It’s a quick way to give a modern update to a space.

3) Floor Rearrangement.

Rearranging shelving and cooler space from time to time is so important. Creating a new traffic pattern engages customer interest while providing longer store visits. It also helps to stimulate employee’s interests as well.

4) Special Promotional Decorating.

It’s all about creating excitement. Take full advantage of this opportunity. Have fun with this and really go for it.

EMPL0YEES

5) Employee Image.

Providing new uniforms or uniform shirts is a great morale booster. Sometimes just a change of color or style modification is all that’s needed.

6) Employee recognition and incentives.

Sometimes it’s very easy to become complacent when it comes to our employees. They are the backbone of the convenience store business and needs to be recognized for their efforts. Also, having “fun“ contests is a good way to achieve this.

Here’s one of our favorites: “Boss for a Day” . A contest using management created criteria for customer service personnel runs for a short period of time. Winner is determined by contest rules. He then switches places with the Manager; in which the employee becomes the manager for the day while the manager works employee’s position. This fosters teamwork and an appreciation of each others positions. A win-win situation.

7) Promotional sales leader.

When putting together a special promotion, having a friendly competition among the staff or the staff of other branch stores is an added production achiever. Many options are available to managers as to what the prize and or award could be.

8) Customer service.

Providing a “paid” training session is extremely productive. In these economic times it’s more important than ever to give exceptional customer service especially with your regulars. Having a staff show a special recognition to them means so much. When a customer was greeted by their name or an having their customary purchase remembered they became loyal customers for a long time to the point of making special trips just to receive such treatment. Employees need a refresher on company policies dealing with customer service. Again, there’s added and updated data and manuals available to owners by Condevco and others for just this purpose.

Let’s make Spring a happy, positive and profitable season by using some or all of the above suggestions.

Darcee Santicola

Green Energy Investment is Risky without Government Backup

2009-03-30T06:54:00.000-07:00

Source Article
Green energy plans in disarray as wind farm giant slashes investment | business.timesonline.co.uk (article)

Implications:
1) Alternative Energy is not able to compete with "Cheap" oil at this time.

2) Wind and Solar may be able to compete before Biofuels for Transport

3) There is no way to Project Competing Energy (Hydrocarbon) Costs reliably for the length of investment needed for Alternative Energy Infrastructure.

4) Government programs guaranteeing "Floor" pricing for alternatives and renewables only way to attract investment capital

Analysis:
The "Green Energy" movement - Renewables, Biofuels and oil substitutes like ethanol, are subject to energy market price volatility as a whole, and compete for capital with other energy projects.

The rapid spike and decline in oil prices over the last 18 months has shown that there is very little elasticity of demand for hydrocarbon-based energy. The infrastructure the world has invested in for the past 100+ years is based on the availability of hydrocarbon fuels (Coal, Natural gas, and Crude Oil derived refined products) as the primary energy source.

As long as the emerging "Green" energy sources cannot be guaranteed a "floor" price where government will make up the difference between production and market costs while the industry matures and is able to become competitive in the global energy free market, there will be very little incentive for private(NYSE:BBY) investment in these technologies and the infrastructures needed to support them.

The financial collapse of corn-based ethanol producers in the US is a prime example of why alternative and Bio energy will be a hazardous proposition for investors until a way to protect them from the bottom of oil's price swings can be initiated.

Relatively inexpensive oil will always be a threat to Green Energy business plans; they are building against a competitor that has years of investment and operating experience, in addition to loads of capital, with which to compete.

State oil firms pump based on how much cash they need to bring in to support the government that owns them, market lows are of little consequence to their plans. While the State-owned Oilcos love the high prices, the odds of a group of state-owned firms volume discipline being maintained at the expense of a bankrupt government is virtually nil.

The Super Major Multinational privately owned firms have been very selective about competing wit their core hydrocarbons businesses, they understand the economics better than anyone else.

Until some large governments embrace distributed-generation electrical production and the smart grid needed to make that model work, as a national security priority, the odds of significant amounts of electricity being produced by "Green" means is very slim indeed.

Biofuels for transport face an even tougher uphill fight without help to get the industry off the ground

Consolidation of Mid-Size Oil Firms is Sign of Current Market Conditions

2009-03-30T06:49:00.000-07:00

Source Article: Suncor's Petro-Canada bid may spur more deals | www.reuters.com (article)

Implications:
1) Suncor(TSX:SU)/Petro-Canada(TSX:PCA) combination makes for stronger single entity

2) Merger will make access to capital easier- Oil sands are expensive development prospect through to production.

3) Creates a firm with broad interests and verticle integration

4) Other mergers are going to occur in "Mid-Major" firms, and not be limited by national borders

5) State Oil firms may look to reach out to create "hybrid" firms across borders like PDVSA-Citgo

Analysis:
Suncor's(TSX:SU) purchase/merger with Petro-Canada(TSX:PCA) makes sense for both the players, and advances Canada's overall energy interests by creating a player with deep pockets and a breadth of resources.

Firms of this size, while large by conventional standards, are dwarfed the Super Major Multinationals like Chevron(NYSE:CVX), ExxonMobil(NYSE:XOM), BP, Royal Dutch Petroleum (Shell(NYSE:RDS/A)(NYSE:RDS/A)) and Total. They compete with these firms for exploration and development properties, in distribution and retail in R & M operations, and for capital on the global lending market.

Bigger, in this business, means real and realized efficiencies of scale, and make economic sense. The combined entity will find access to capital an easier proposition, and be able to expand those savings over the entire range of both firms operations as they combine.

Look for other mergers to occur in Major or Mid-Major Oil firms. The time is right for strong firms to make moves before energy prices head precipitously back up, making the book values of known reserves prohibitively expensive.

The prospect of State-owned oil firms purchasing privately held firms in other markets shouldn't be discounted as a potential play, either.

Had Venezuela's current political posture not come to complicate the situation, the PDVSA-Citgo combination could be a blueprint as how to leverage a nation's natural resources into commercial interests that are far more than trading extracted natural resources for cash.

Super Major Multinational Oil Firms Can Continue to Invest for the Future

2009-03-26T10:59:00.000-07:00

Source Article: Shell Plans Major Investments in 2009, Tags Dividend Growth at $10 billion | www.rigzone.com (article)

Implications:
1) Recent big profits give them strong balance sheets
2) Can Source Capital inexpensively right now
3) World Still Hungry for Hydrocarbons at any Price
4) OilCo's can control bio and alternative fuel assets at discount now.

Analysis:
Shell's announcement of capital expenditures remaining at high levels should come as no surprise. All the Supermajor Multinational Oil firms have plenty of cash and strong balance sheets, access to capital at very low rates, and an inelastic demand vs price in hydrocarbon based energy. ExxonMobil(NYSE:XOM) and Total are doing the same.

While prices are down right now, the historic run-up last year showed just how inelastic the core demand for oil, natural gas and refined products really is. While alternative fuels and conservation measures like hybrid and electric cars will reduce demand in the long run, those developments are still way out on the investment horizon.

The oil companies can also exert influence and a degree of control on the future of biofuels right now, and Valero's(NYSE:VLO) announced purchase of bankrupt VeraSun's ethanol production assets this week shows. BP, Chevron(NYSE:CVX) and ExxonMobil are all featuring alternative technologies in their advertising right now.

The collapse of oil prices created an opportunity to purchase overleveraged bio and alternative fuel assets at a discount, as the market price the VeraSun's and the like used to justify investment fell apart.

So the future for the Oil companies isn't just about crude, but the alternatives and substitutes being developed to supplant the world demand for crude. The Supermajors are expert and efficient conduits for product and capital, as they diversify into the other types of energy alternatives, that isn't going to change.

Discretionary Spending dip Hitting Casual Dining Sector

2009-03-26T10:53:00.000-07:00

Source Article: Hard Times Are on the Menu at Restaurants | www.usatoday.com (article)

Implications:
1) Discretionary Income is Being Spent more Conservatively
2) Adjusting Menus to "Fair Value" propositions key to traffic
3) Keep Signature Items as alternative to "promotional" menu to keep ticket prices fairly normal

Analysis:
Casual Dining is under attack as consumers adjust their spending habits. The dip in consumer confidence was certain to be followed by a dip in discretionary expenditures of all kinds.

Casual Dining, to most people, is one of the most discretionary of spending categories. The fact dinner has seen the biggest drop-off shows it's the family market making the biggest adjustments.

A Menu adjustment to feature "Value" items promotionally is the best way to drive traffic into the casual dining houses again. Whether you can "upsell" your seated customers back onto regular menu items will be the key to how successful the promotions are.

Cutting price across the board on the standard menu, or running "2 for 1" specials would be a more expensive, and more damaging to a quick bounce back when the economy turns. TGI Fridays is taking that approach. Once customers get used to your standard menu at half or reduced price, it's tough to drive them back to paying full markup again.

A chain with an extensive menu, like Cheesecake Factory(NAS:CAKE), really has to feature promotional specials to prevent a costly menu rebuild after the business comes back. Applebee's idea to bring out a new menu is a good alternative strategy.

As fast as the decline in same store sales occurred, a quarter or two of solid consumer sentiment will bring the sector back again. It's how the slump gets handled strategically now that will portend how fast each of the players recovers.

Capitalist Communist Regulators Block Coke's Bid

2009-03-26T10:49:00.000-07:00

Source Article: China Blocks Coca-Cola’s $2.3 Billion Huiyuan Bid | www.bloomberg.com (article)

Implications:
1) Chinese Regulators Thinking Short-Term
2) Coke will invest and grow organically in China
3) Huiyuan Shareholders get Disservice from Regulators

Analysis:
The Chinese Blocking Coca-Cola(NYSE:KO) Corporations acquisition of juice-maker and rival Huiyuan just speeds up organic growth in this sector by Coca-Cola, which will become inevitable.

The regulators blocking the acquisition are not only engaging in protectionism, but will now "force" Coke to grow market share organically in the chinese domestic market through their own branding and products. This they will do, and eventually control the market share they were going to purchase through the acquisition.

Carbonated Soft Drinks are a slow growth portion of the packaged beverage business. It is a mature market, and in order to push volume and revenue growth, Coca-Cola must distribute and market other categories of packaged beverages.

Juices and juice blends, Teas of all flavors, energy drinks and bottled and flavored waters are all experiencing greater percentage gains in consumption annually than CSD's.

Coke, if the acquisition is ultimately denied, will need to emphasize these other categories of products in China in order to maintain volume growth, so all this move really does is give the Huiyuan shareholders a formidable competitor rather than a premium buyer for their shares in the product category.

The denial of this purchase is a short-term and short-sited move on the Chinese regulator's part.

Starbucks Instant Coffee Move a Curious One

2009-03-21T11:34:00.000-07:00

Source Article: Starbucks has high hopes for its instant coffee | www.marketwatch.com (article)

Implications:
1) Is Move to Instant a "Value" Play
2) Detracts from Barista-prepared "Core" premium offering
3) May Cut In-Store Visits if Successful - Reduce retail profitability
4) Is this the beginning of migrating the Starbucks(NAS:SBUX) business model to become a CPG firm?

Analysis:

Starbucks(NAS:SBUX) introduction of it's "Via" instant coffee product is a curious one for a company struggling to improve performance at it's retail stores.

Is bringing "Via" to Costco(NAS:COST) and Target(NYSE:TGT), and eventually Wal-Mart(NYSE:WMT), a shrewd way to increase overall corporate revenues, or a way to begin to migrate the company model from a retail coffeehouse-based chain to a CPG company?

Starbucks(NAS:SBUX) retail locations have been the driving force behind the firm from it's inception. To make a move to deemphasize any focus on retail is a bit of a head scratcher.

If Via is Starbucks(NAS:SBUX) move to a "Value" product in response to the current tough consumer spending environment, then introducing an expensive alternative for a category (Instant Coffee) considered to be an inferior substitute in their primary North American markets is a tough sell to make.

Is this a more strategic and long-term plan to deemphasize retail and become a premium coffee purveyor through traditional retailing channels? That makes more sense, and putting a premium instant in as the transition begins would be a way to expand those channels and get customers looking at Starbucks(NAS:SBUX) products that would have never considered the brand before.

There's no way to know yet if this is the eventual direction of the business, but the new Starbucks(NAS:SBUX) initiatives to bolster the retail side have been underwhelming, up to this point in time.

The Starbucks(NAS:SBUX) experience was and is about good quality brewed coffee or coffee/espresso-based drinks, excellent customer service and ambiance at the sites. With the margin that coffee delivers, it's hard to imagine that they cannot retool margins and still deliver a retail experience that addresses the current consumer sentiment.

Is Via a misstep, or the beginning of Starbucks(NAS:SBUX) migrating to a new business model? Only time will tell.

Don't Just Stand There, Do Something!

2009-03-21T11:26:00.000-07:00

Originally published as feature article in "The Meter" Condevco's newsletter in the March 4 Edition

As we have watched the last month unfold in our little corner of the petroleum field, we have seen:

1) Jobbers filing for bankruptcy, of both the chapter 11 and 7 varieties.

2) Store chains being sold either in whole or in part, and

3) Stations going up for sale with prices that do not reflect the reality of the markets, either in real estate or retail convenience and gasoline.

Here’s a recent conversation I had with a friend who shall remain anonymous.

Ron, “Hey, did you get those listings you were talking about from that client?”

Friend, “No, I went and looked at them but the client is in them upside-down. The businesses aren’t making money and poorly managed, and what they need to get won’t work in this market, so I didn’t take the listings.”

Ron, “Well, do they want to fix the businesses so they can get more down the road?” (I had sent them over a consulting proposal at this friend’s request)

Friend, “They don’t want to spend any money on the business right now”

Ron, “OK, so they aren’t breaking even, can’t sell the stations for what they paid for them, and they don’t want to work on fixing the business”

Friend, “That’s right”.

While I find that a hard to believe conversation, but that’s not the only thing I’m seeing that makes me think the “fight” is leaving lots of folks in the business right now.

In a different time, I guess the owners could figure someone would rescue them by “purchasing the problems” before too long. I have to say, I don’t think that’s the case now. If you have assets that aren’t performing, hoping isn’t the way to go. It’s time to become a retailer again.

Jobbers are going into bankruptcy with no apparent plans for coming out. If you want to be broken up, just skip the Chapter 11 step and get yourself dissolved.

That means pricing your motor fuels as competitively as you are able to, keeping your stores clean and stocked with current and timely product, and making sure your Customer Service Associates are doing all they can for your customers as they walk in.

Condevco is the Customer Service Training and Store Merchandising authority, we can help you freshen up your stores and employees without major expenditures. Be sure to watch for Darcee’s first feature article for The Meter, “Eight Easy Ways to Freshen your Store and Energize your Employee’s Customer Service”

To ask Ron and Darcee for Consulting Help, visit our web site! (Click here)

McDonald's Beverage Business a Fountain of Profits

2009-02-28T06:42:00.000-08:00

Source Article: McDonald’s Ends Pepsi Test in Victory for Coca-Cola | www.bloomberg.com (view article)

Ramifications:

1) Bottled Drinks would make McDonalds Beverage Business More Complicated, less Profitable.

2) Bottled Drinks would need to be Priced at Premium in order to maintain margins - Away from "Value" Image

3) McDonalds and Coca-Cola Linked in Consumer's minds - Iconic American Consumer Brands.

Analysis:

McDonald's testing Branded Bottled Drinks in Stores is an unnecessary complication to a vital high profit product line.

Being rooted in Convenience Retailing, any store owner will tell you the profit picture and inventory turns between Fountain products and individually packaged beverage portions is night and day. If we could only sell fountain, we would. McDonald's can, and that's what they should do.

An increased selection for the customer means decreased inventory turns for you. The availability of packaged beverages isn't going increase visits to McDonald's in any significant way, but it will reduce the margins in their drink business. To sell a unit of packaged drinks at a competitive price, they will be in the 35% to 40% GM area, versus an 80% plus margin on fountain drinks, even with free refills. Fountain drinks that are received at the drive through are even better. No refills there.

No Inventory to stock and reorder, no additional refrigeration equipment and energy consumed... Fountain is the way to go in McDonald's.

In terms of a Pepsi-Coke fountain competition, which wasn't in play, Coke has a large and dominant presence in the field. To switch to Pepsi doesn't seem to make any sense. What competitive advantage would it give McDonald's?

McDonald's should stick with fountain drinks and keep the profit formula they have used to achieve great operating results over the years.

The free, low-cost, self-service refills fit into the value image very well, and makes for a good complement to the packaged meals with sandwich, fries, and the fountain drink.

Dollar Stores have the Blueprint for Profits in Current Economy

2009-02-27T06:02:00.000-08:00

Source Article: Discounter Dollar General lifted by downturn in US | www.retail-week.com (view article)

Ramifications:

1) Value oriented retailers like dollar stores will experience growth vs Competitors

2) "Cash is King" for the Middle and Lower Middle Income Households

3) "Value" pricing and Large Store Count Means convenience for consumers

4) Other sectors should benefit from downturn, Auto Parts, Rent-to-Own among big potential winners.

Analysis:

The news that Dollar General's results are good is a direct reflection of the prevailing retail climate in the US. "Value" is winning the battle for the hearts and minds of consumers as economic uncertainty continues to be the headline.

The "Dollar Store" category is interesting in that it offers a bare bones consumer experience, private label and lesser known CPG brands, and no frills for the consumer. Exactly what families worried about current finances and future job security and shaky signals from business and the government want.

The shampoo still gets your hair clean, the kids still drink the carbonated soft drinks you can buy in 2 Liter bottles "2 for a buck".

It will be interesting to see Pepsi and Coca-Cola's volume figures, as they have tried to make a price increase stick in the face of the economic downturn. Coke went with a straight price hike, Pepsi went from 12 paks to 8 paks for 12 OZ cans. The dollar stores can give a good alternative to that.

Dollar General is a retailer that fills an urgent need right now, and the news of continued store count growth makes sense. The ubiquity of well-known Dollar Brands in suburban and working-class communities has eliminated any stigma consumers may have felt about patronizing the stores. They are convenient and provide value. Big Lots is a good bet to prosper, too.

That should lead to thinking about other retailers who may benefit from consumer sentiment and the economic climate right now. Auto Parts retailers come to mind. Cars aren't being purchased, new OR used, but people are still driving. Somethings gotta give, and I think Autozone and Advanced Auto parts could be beneficiaries of this trend; Pep Boys and other repair service chains should benefit, too.

Rent-to-own retailers Rent-a-Center and Aaron's Rents should benefit as consumer credit stays tight and consumer confidence remains low.

Retail this coming year will have some bright spots, but they will be in value-oriented main brands (Wal-Mart, McDonald's), and retailers like Dollar General and Rent-A-Center, whose offerings appeal to families who are struggling to maintain their lifestyle, when it's becoming very tough to do that.

Starbucks: Soluble or Instant - This New Coffee is a Revenue, Not Brand, Driver

2009-02-21T08:05:00.001-08:00

Source Article: Starbucks Takes Plunge Into Instant Coffee | online.wsj.com
(View Article)

Implications:
1) Instant Coffee has downscale Connotation in US
2) Does it "Cheapen" experience of Barista-Brewed beverages
3) Is the "Starbucks(NAS:SBUX)" Coin-op machine next?

Analysis:
The news that Starbuck's is introducing "Soluble" coffee seems to come from left field for a firm as tied to it's Brand Image as Starbucks.

It's as though they are saying "we can't fix the retail experience for our customers any further, so brand extension is the next step."

The news that Starbucks was adding breakfast sandwiches to the store lineup makes sense, It's a competition driver and complements the core premium site-prepared coffee product.

This one doesn't make much sense at all. No matter how good it is, it's still instant coffee. AND, it isn't price competitive at all with current instant coffee products. Perhaps they've researched and found an underserved "Premium Instant Coffee Drinker" niche no one else is aware of.

Instead of brand extension, improving quality of product and retail experience, along with providing some sort of value offering in a "Combo" promotion with brewed coffee and one of the new sandwiches will do more for the business in the long run.

If "Via" is to become the "Value" coffee offering for Starbucks, which is what they seem to be positioning it to be, then they don't truly grasp the competitive challenges that lay ahead for premium consumer brands right now.

If getting Starbuck's coffee for under "A buck a cup" means eliminating the water, then that seems like a strategy gone backwards.

What's Wrong with this Picture ?

2009-02-05T13:09:00.000-08:00

Some Operators and Jobbers still don’t “Get it”

What is wrong with the picture to the above?

I took this with my celphone camera on Sunday, February 1st, while on the way to the Super Bowl get together Darcee and I were attending. We got off I-95 and needed some gas for the car, so I pulled into a prominent local jobber’s self-branded site. As I pulled up to the pumps, this sign, times eight, was looking out from each dispenser fueling point as I got out of the car. It says, in case it’s hard to read “If you don’t know your pump #, don’t expect us to Guess. Thank You.” Well, at least they thanked the customer at the end.

Where can we start on what message this sends to the customer pulling in to fuel up at this location?

Fiirstly, if there’s a real problem with people knowing what pump they are fueling on, how about switching the dark red numbers on a black background to a contrasting color? Remember, this unit isn’t subject to national branding appearance guidelines, it’s a local brand.

Secondly, you could computer print a sign and laminate it, perhaps worded with a more businesslike “Please note your pump # before approaching cashier” or something more customer friendly or appropriate. With the proliferation of computers and printers, almost any manager or employee has the capacity to get something printed with friendly wording.
And since I paid at the pump and wanted a receipt, you know what the next part of the story is... The dispenser flashed the “ Printing receipt” message, followed by the ever infuriating “See Cashier for receipt”! No paper in the dispenser’s receipt printers!

So, I headed inside to put an end to this quality customer experience at the cashier’s booth. Of course, the cashier never put down her celphone, and seemed disturbed and dismissive that I had disturbed her conversation with the “Receipt for pump 6, please” request. As I got back in the car, I told Darcee, “This is why customers love to buy gas!” Even if I had wanted to purchase something inside the store, I was pretty steamed by now. Remember, this was Super Bowl Sunday, 2 1/2 hours before the game. Prime C-Store time, if there ever was. Beer, Sodas, Chips, Dip, Candy, and people in a hurry, isn’t that what “Convenience” is all about?

Well, enough of my rant on this little incident. We all know business is getting tougher as consumers feel anxiety and concern of the state of the economy. Let’s not “Shoot ourselves in the foot” by not looking at our businesses through the customer’s eyes.

Condevco has created and rejuvenated brands and operations for many different clients in many different fields, retailing/distribution/services, so let us help you make it through. Contact Ron with your consulting inquiry. (Click Here)

McDonald’s is a chain for the times

2009-02-03T13:19:00.000-08:00

Source Article: McDonald’s Profit Falls as U.S. Dollar Hurts Sales | www.bloomberg.com (See article)

Implicatons:

1) McDonald’s Global reach and Marketing muscle will allow increased share

2) Both operating profits and Revenues will continue to grow.

3) The “Wal-Mart” of Fast feeders – low-cost and well-run

Commentary:

While McDonalds profit may have fallen vs. last year’s quarter, they were up in terms of income from operations. Revenue was up, and the future looks bright. McDonalds, much like Wal-Mart has itself positioned to ride through the current economic climate and emerge stronger financially and holding even greater market share.

The “Dollar menu” has forced all the other players to feature dollar and value items, and upped the ante on efficiency and volume. The Wednesday and Sunday .49 Hamburger and .59 Cheeseburger promotions shows the muscle the McDonalds system can deliver. Even as they feature value, they are grabbing share and driving traffic into the restaurants.

The whole “Strength of the dollar” decreasing profits, while true, is a macro situation that McDonalds cannot control. As long as they continue to operate in the manner they are now, they are going to be a consistent and dependable earner who can continue to grow their business.

Consumers are looking for relief from the daily drumbeat of economic downturn news; unemployment and layoffs soaring, auto firms on the ropes, Wall Street bailout questions… here’s the antidote for middle America, and McDonald’s has it.

You can still easily feed a family of four at McDonalds for under $20.00, even if no one is taking advantage of the value items. If you’re watching your money closely, it can be done for $10.00/$12.00. The kids might not get those Happy Meal toys at that expenditure level, but you’re still having dinner out.

The time of reckoning is here for most families in the working class; they may not be facing economic disaster, but there is very little comfort in what the future holds at the moment. Most people have little confidence that things are going to rapidly improve with the nation’s economy.

That’s where an iconic brand and offering like McDonalds can make a big market share move through operational efficiency and value instead of fighting a marketing war with advertising dollars and giveaways.

Burger King, Wendy’s and the Yum brands are all offering value. Wendy’s 99 cent menu was really the first of these regular value offerings way, way back, but the store count and ability to deliver food at a low cost that McDonalds can offer will mean the others can’t be the driver in this competitive sector.

Denny’s Grand Slam giveaway was just completed an hour or so ago; while it’s tough to beat a “Free” offer, it’s not a sustainable competitive position, just a promotional gimmick. McDonalds can sit at the value menu prices as along as it needs to, and continue to earn just fine.

How Much Should a Good Cup of Coffee Cost?

2009-02-02T08:35:00.000-08:00

Source Article: Starbucks cuts jobs and stores
www.theappointment.co.uk (view article)

Implications:

1) Starbucks overexpanded store count

2) Product quality became spotty as chain grew; service level stayed high

3) Other players "Upped Their Game" in the coffee sector

Commentary:

Starbucks retrenchment is no surprise given the slowdown in consumer spending, but the seeds were sown for a turn in their fortunes, regardless.

Starbucks started as a "boutique" coffee store, nicely appointed with good quality product and well-trained, polite employees.

As the store count grew, the employees stayed remarkably friendly and customer oriented, but the barista's skill level dropped. Sometimes, you didn't get a perfect cup of coffee. That was a break with the "Brand Cache" they have with their base consumer.

Starbucks has that core following that will always give them "X" amount of business out a certain area, but as stores began to be placed more closely together, they needed to reach out to the "casual" coffee drinker, one with whom price and convenience were keys to repeat business, in order to maintain revenue as stores got more tightly packed.

They never really addressed that market successfully.

The rise of the premium coffee programs at McDonalds and Dunkin Donuts addressed the mainstream coffee drinker in a faster turnover model, and the Convenience retailing sector has made an effort to deliver a very good coffee product as time has gone by. ExxonMobil and BP put lots of time and effort into the coffee offerings in their retail operations, and large convenience store operators like WaWa and Sheetz run great coffee programs.

Everyone "Upped their game" to work at getting some of Starbucks revenue. They worked at being more convenient, faster, and more price friendly, even if the product isn't quite to Starbucks level, although many times, it is.

The current slowdown in consumer spending sped up Starbucks store cutback, but it would have happened sooner or later anyhow.

Rental Car Firms Caught in between Two Tough Realities

2009-01-30T18:20:00.000-08:00

Original Article: Rental-Car Firms Seek a Bailout www.Online.wsj.com (Read Original Article)

Implications:

1) The Public is traveling less in the current economic climate

2) Auto values and lack of credit are freezing used car market values

3) Holding onto rental fleet cars longer only short-term fix

Commentary:

The Automobile rental business is getting hit on both sides, a demand reduction as leisure travelers and now, even "Road Warrior" businesspeople travel less in the current economic climate.
This is affecting top-line revenues a these firms in a direct and negative way.

Then, the automobile market has essentially imploded, leaving the steady stream of new autos, financed with help from the automakers like Ford, GM, Chrysler and Toyota in doubt, and the ability to make money when disposing of the favorably purchased vehicles disappearing as demand in both the new and used auto markets slow down.

The are caught in between declining revenues from rental demand, and declining used car values. Also, the automakers may not be a position to give te large volume discounts the rental car firms are used to running their revenue models from.

Hertz, Avis, Dollar, Enterprise, are all actively discounting rental rates, but as the fleets age and demand stays down for the foreseeable future, they are locked into expensive arrangements in airports, when the entire rental customer model may be switching away from that for now.

It's going to be a tough few years for the rental firms, I think a program to help them weather this is in order, and will also give an indirect boost to the automakers.

Home Depot Cuts: Getting Back to Core Business Good Idea

2009-01-30T12:20:00.000-08:00

Source Article: Home Depot will cut 7,000 jobs, exit Expo division (Bloomberg.com)

(Read Source Article)

Implications:

1) Home Depot has been "De-conglomerating" itself since Nardelli departure

2) Back to "Category leader" business model instead of trying to be next GE

3) Emphasis on core DIY business, better service will yield dividends down the road

Commentary:

Home Depot built itself to the leader in the Home-Improvement and DIY field by being a very good retailer who followed a focused and simple business plan: If people felt as though they could do things themselves, they would attempt to do so if they knew they could get help and advice. The Corner hardware store, "Supersized" as it were.

The purchase of builders supply firms, infrastructure suppliers, and branching out into high end home decor just subtracted from the focus that had made them successful. Diversification, on the consumer perception side, has its limits. The shedding of the acquired businesses and non-core retail concepts will allow THD concentrate on the standard stores and customer experience there.

McDonalds can sell you a salad or a chicken sandwich with relative ease, but they don't try to sell you cedar-plank salmon or chateaubriand. Even if the restaurants could prepare them successfully, it's too much of a stretch for consumers to be comfortable with.

Home Depot is back to being what is has always successfully been, the leader in home-improvement retailing. The renewed emphasis on in-store experience, which had slipped in recent years, is good for both for now and down the road.

Lowe's impressive growth has shown people wanted a good alternative to THD, and they have taken leadership in items such as appliances.

Home Depot shedding the rest of the "distractions" and getting down to retailing again bodes well for the firm in the long run.

Trying to be a new version of GE wasn't a good strategy; being what they were when they grew the financial strength and market share to attempt to emulate GE IS a good idea.

Brand Equity During the Economic Slowdown

2009-01-21T13:03:00.000-08:00

In general retail, Circuit City liquidating, in the convenience field, Flying J in reorganization, replacing their CEO (a 30 year employee) with a founding family member, RBS announcing a $40+ billion loss on inauguration day; the hits just keep on coming.

Which brings us to the main topic for our blog entry: Brand Equity, and what it consists of. How do you support it in dire economic times? You will see in another posting we discuss Macy’s taking a $3+ Billion dollar write down on the “Goodwill” it acquired when the purchased May Dept stores in 2005.

Goodwill’s definition, as described by businessdictionary.com, is:
Assumed value of the attractive force that generates sales revenue in a business, and adds value to its assets. Goodwill is an intangible but saleable asset, almost indestructible except by indiscretion. It is built painstakingly over the years generally with (1) heavy and continuous expenditure in promotion, (2) creation and maintenance of durable customer and supplier relationships, (3) high quality of goods and services, and (4) high quality and conduct of management and employees. Goodwill includes the worth of corporate identity, and is enhanced by corporate image and a proper location. In other words, Brand Equity.

In times of reduced consumer spending and economic uncertainty, of the 4 items that define what goodwill consists of, one is always controllable by current management, can be changed for the better in a hurry, and is something you owe your customers, in any case: and that is number (4) High quality and conduct of management and employees. Maybe you can’t advertise like you did a couple of years ago, maybe your suppliers aren’t as generous with the discounts and promo allowances as they once were, maybe you need to be a little “tighter” with promotions and discounts to your customers… BUT, it’s your store, and you CAN control how you treat your employees, and how your firm as a collective whole treats your customers…

We must strive to make every customer interaction a positive experience for the consumer, and make sure the connection between treating customers right and keeping the revenue flow where you need it to be is clearly understood by everyone on the team. The customers are living with the same news you are, make sure they understand that your firm truly appreciates their patronage.

Branding is so much more than a flashy logo or beautiful store designs, those are an adjunct to a solid system that keeps out-of stocks to a minimum, fulfills customer needs, and motivates your associates to take a sense of ownership in how your customers feel about purchasing in your stores.

Condevco has created and rejuvenated brands for many different clients in many different retailing fields, let us help you make it through. Contact Ron with your consulting inquiry.

Goodwill Writedown on Macy's purchase of May makes sense

2009-01-21T10:11:00.000-08:00

Source Article: See Article

Implications:
1) Macy's admits it overpaid for May merger

2) Why was goodwill valued where it was, when Macy's plan was to change all the regional nameplates to Macy's?

3) Do it now; make the move while reduced investor expectations are in place.

Analysis:
Macy's expected move to write down over $3 Billion of goodwill from the May Dept Stores merger/acquisition makes sense in light of the current economic climate and the performance of the firm.

Macy's admits it overpaid for May, but 2005 was a completely different economic climate than they are operating in now. One question about the merger, though; if you were going to take the stable of respected regional Department Store brands nameplates that May controlled (Burdine's and Marshall Field as examples), and then change the name to Macy's to create a National Department store chain, shouldn't you have looked at the goodwill valuation a little more critically?

Macy's was purchasing goodwill, and then spending to rebrand and reposition the assets that they paid to acquire the goodwill for. They "Double-dipped" on the goodwill, overpaying for brand goodwill and continuity, and then paying to remake the "overvalued" brands into Macy's.

In order to put it all behind them the writedown should be as soon and as large as they dare. Retailers, and department stores in particular, are suffering in the consumer spending slowdown. The faster and larger the adjustment made, the better position Macy's will be in to benefit from any uptick in consumption.

Circuit City Management is Finally in a Hurry

2009-01-15T11:38:00.000-08:00

Source Article: Circuit City Ask Court for Auction Read Article:

Implications:
1) Circuit City(NYS:CC) is pushing Court to move very quickly

2) Threatening they be forced to "Liquidate" if auction isn't approved.

3) Is this about recovering shareholder value or a "Fire Sale" so it's over for current management team?

Analysis:
Circuit City(NYS:CC) is back in court, asking for approval to hold a "Two Party" auction within a very short time frame, in order to survive as as an ongoing concern, or something resembling an ongoing concern.

Well, it seems as though the Management team at Circuit City(NYS:CC) is finally in a hurry. They weren't in a hurry when they lost the "leading national consumer electronics retailer" title to Best Buy(NYSE:BBY), they weren't in a hurry to adjust their clearly noncompetitive retail offering after the last store update made them into a poor imitation of a Best Buy(NYSE:BBY), and they weren't in a hurry as the firm's financial results spiraled downhill.

I'd be very wary about them being in a hurry to dispose of the firm now, if I were one of the bidders or the court.

With the news this morning that Bank of America(NYSE:BAC)(NYSE:BAC) is going back to the TARP for MORE money to absorb the Merrill Lynch(NYSE:MER)(NYSE:MER) acquisition, it seems a wise course of action with all these "troubled" firms that everyone should step back, take a breath, and engage in real research and investigation of what is actually being bought and sold in these rapidly constructed purchases.

You would think a bank should be able to read the balance sheet and critically examine what the assets they are purchasing are worth. In a retailing firm, there are many more "Gray areas" to look over. The Court's obligation is to the shareholders, so we'll see what they decide.

Hertz Would take on Additional Risk if they start Hedging Fuel

2009-01-14T06:52:00.000-08:00

Source Article
Hertz Looks Into Fuel Hedging to Lock In Prices, Control Costs - www.bloomberg.com (See Article)

Implications:
1) Fuel Costs are an easily passed-though item to the consumer

2) Hedging increases potential losses in exchange for incremental expense control

3) This is an unnecessary complication to a straightforward expense model

Analysis:
Hertz's announcement that it's going to look into fuel hedging as a way to control costs makes very little sense from an operational point of view.

One of the most widely known and publicized consumer price categories is "What a gallon of Gasoline costs". This should be an easily passed-through to the consumer expense.

Instead of predicting usage and betting on which way the price is going to move, it seems Hertz would be better served by making an advantageous national fleet deal with a supplier. Hertz could take a set discount from retail, or a % markup over "Rack" prices in the specific markets.

It's easy, you still get a discount as opposed to the consumer, and you can pass the costs through at the prevailing retail costs to the customer. Easy and predictable.

Additionally, the oil and Motor Fuels markets have not been behaving in easily predictable ways, certainly not in response to traditional supply and demand curves. Even distribution firms who are in the market with experts every day haven't been able to win at hedging this past year.

It seems fuel hedging is a complication that Hertz should try to avoid.

Down Only Slightly, Retail Volumes Mask Markdowns Damage

2009-01-08T18:21:00.000-08:00

Source Article: U.S. Retail Sales Fell 0.8% in Week After Christmas | www.bloomberg.com (Read Article)

Implications:
1) Big Markdowns mean it took additional goods to get to volumes.

2) Sales Weakness through the month kept encouraging more markdowns

3) Consumers aren't going to pay full price for goods in this environment.

Analysis:

The retail numbers are out for December, and to no one's surprise, it was the worst season on record. The volumes would have been even worse, except for the drastic markdowns taken by retailers as the traffic and sales tanked.

While the volume numbers are weak, the profit numbers will be nonexistent. "Buy one, get two," and "65% off" are a recipe for balance sheet meltdown.

Retailers decided to push inventory now to minimize the "Hangover" from the bad season, created by the lack of consumer confidence and the crisis in the financing mechanism people traditionally use to "splurge" at Christmas. Saks(NYSE:SKS), Macy's(NYSE:M) and Target(NYSE:TGT) were actively promoting markdowns early, Wal-Mart(NYSE:WMT) went low on toys pre-Thanksgiving.

The problem with that, while it's taking the drastic medicine now, is that consumers start to get used to the "Big Sale" and extra Savings as a course of habit.

It takes long to reestablish margin than it does to regain volume. As the retail roster begins to shake out, and operating results are reported, I guess we'll see who comes out on top.

Costco(NAS:COST) reported a 4% gain, we'll see where their margins were.

It's going to be a tough time for retailers. Let's hope these markdowns were able to be tolerated by the businesses that offered them.

Tobacco - The Regulatory Cash Cow

2009-01-07T15:59:00.000-08:00

Source Article: Coming Down on Tobacco - NY Times
(See Article)

Implications:
1) Tobacco regulation has not reduced number of smokers
2) Increased taxes a key feature of regulatory schemes
3) Global rules are to benefit who - governments or smokers?

Analysis:
Tobacco contains a highly addictive ingredient, nicotine. This is why regulators treat it the way they do.

Once people become addicted to anything, be it legal tobacco or alcohol, or legal or illegal narcotics, one of the key regulatory themes of the agencies charged with controlling these substances is the financial component of taxation.

Smoking is clearly a self destructive and unhealthy habit, and within the last few days, we have extended our tobacco awareness to include "Thirdhand" smoke; it is becoming clear that the toxins from tobacco smoke can effect surfaces and materials negatively long after the smoke itself, either of the "Secondhand" or primary (directly inhaled) variety, is gone.

It is clearly good public policy to regulate tobacco sales and consumption, and the fact that an essentially worldwide consensus on how to treat tobacco has been reached, well, this is a great step towards trying to reduce use even further. This remains the ultimate regulatory goal.

Taxation of "Vice" goods is wielded over the users of the "bad" or addictive, substances. They are made to pay for the oversight and regulatory mechanisms that are to protect them, but never are the taxes set to the point where a legal market becomes a prohibitively expensive way to consume the product, making it into a contraband substance that would be subject to criminal penalties.

That's what "Coming Down" on the Tobacco firms would really be...Taxing the consumer market for tobacco products to the point of making legal consumption too expensive for all but the most wealthy.

Prohibition didn't work very well as a social experiment here in the US, so lets figure that completely prohibiting tobacco sales is a non starter, for good reason. With all that being said, the number of regular smokers hasn't dropped in the US in some time, although cigarette consumption is down. Maybe making the habit more expensive is controlling the rate of consumption, but it isn't deterring people from using.

So with a regulatory mechanism and hierarchy in place that can really set worldwide rules for how the tobacco firms can act, it should make it harder for children to be targeted for marketing, which needs to be the primary focus of any regulatory scheme.

And, at the same time the governments continue to milk the cash cow of tobacco regulation. But it's not the tobacco companies who pay, as always, it's the consumer.

Global Economic Downturn Primary Reason for Drop in Fuel Prices

2009-01-06T12:07:00.000-08:00

Source Article: Drop in Gas Prices only Temporary - Colorado Springs Gazette
(See Article)

Implications:

1) Basic Transportation infrastructure hasn't changed
2) Investment in alternative fuels needs to continue
3) Current volatility in supply costs has wiped out ethanol industry in US

Analysis:
$4.00 a gallon gasoline this summer, $1.65 a gallon now. OPEC supply cuts don't cause an immediate price spike. Even with lower prices, US fuel consumption dropped 2.7% in December. What the heck is going on?

The worldwide economic slowdown has caused disruptions in major industries across the board, but nowhere does the average US consumer see and feel it so personally as at the gas pump. Prices coming down over 50% in three month in a major consumable should be cause for celebration, but the consumers are still shell-shocked from the price run-up.

The consumer now has to face the stark reality of their position in the energy supply chain...not just end user, but end user who is locked into a consumption pattern they cannot readily change!

Auto loans kept getting longer and longer, now the norm is 5 years, and with what's been going on the consumer credit and automobile markets, the consumer was (and is) driving what they own, or rather, what they are paying on.

Similarly, the vast majority of "Suburbia" was developed on the premise that there will be affordable personal transportation to service the layout of the built-out post WW II US residential infrastructure.

You can't just sell your house to move somewhere with good public transport. You can't reasonably expect local governments to instantly deliver transportation solutions to a population that hasn't wanted them, and until recently, needed them. Funding for public transportation outside of major urban areas hasn't been a particularly important or urgent item on most taxpayer's radar screens.

The prices of motor fuels have been so volatile, that the current low ebb has had another unintended result. The ethanol business in the US had every expense and revenue assumption they based their business models on wiped out in the price swoon of oil. Corn prices and most other agricultural commodity prices have headed down as a result, hammering the farmer and ethanol producers alike.

You couldn't have planned for a more cautionary tale to be told about "alt-fuel" investments. Every time the non petroleum fuels movement picks up steam, it faces the reality that it's own market penetration creates the seeds of it's downfall. The less oil thats consumed, the lower the oil prices go.

The infrastructure and extraction costs of oil are low in comparison to creating an entirely new stream of biofuel or alternative fuels, with the build out of distribution and consumption systems to go with the renewable supply.

Corn ethanol was clearly a misguided effort, "Cellulosic" (non food product feedstock) ethanol seems to be a step in the right direction, but you are building an industry with 21st century dollars and real production costs to compete against a business with 20th century costed and built out infrastructure and extraction costs as the production cost component. The oil that is "Produced" by the oil business is really extracted.

While the US model is for private oil firms to control the supply, in most of the world state-owned oil firms have no incentive not to "Overpump" to achieve revenue targets to support their governments, and not worry too much about per-barrel profits or ROI of the investment made to get the oil. They are revenue, not profit driven, in the main. A petro-economy like Venezuela uses PDVSA as a cash flow device, not an instrument to create return on investment.

So as increasing biofuels production reduces demand for oil, the inclination of the state-owned firm will be to "pump more" to maintain cash flow, and lowering the market price for crude, and consequently, motor fuels.

This is why there needs to be a more rational program at the Federal level here in the US to encourage alternative fuel sources. Whether that's the new "Petro-algae" engineered microbes converting biomass to fuel, or "Switchgrass" ethanol programs taking marginal food production land and using it to grow the ethanol feedstock, the investors in these technologies and businesses need to know they have a "floor" price, guaranteed legislatively, that allows them to plan for a return on the investment needed. If the floor price doesn't activate, it's cheaper than subsidies. If the floor price does activate, it should be for a finite period, so it doesn't foster inefficiencies in the "new" fuel supply chain.

The global economic slowdown has shown how the oil markets will act in a period of reduced consumption. In order to develop a secure alternative fuels industry, the pioneers in that business will have to be insulated from "supply shock" to prices as consumption would drop.

The economic situation with the slowdown is temporary, but the investments in alt-fuel need to be long term. Prices are going head back up as the world economies recover, but action now will help mitigate future shocks to the system.

The Ghost of Christmas (Just) Past

2009-01-02T10:46:00.000-08:00

The Ghost of Christmas (Just) Past

Implications:
1) Retailers are going into extended period of struggling to survive
2) Consumer credit, the primary spending mechanism for mid and big ticket items, is broken
3) "Trading Down" is the consumer trend for 2009

This analysis was written for Gerson Lerhman Group and published Jan 2, 2009

Source Article: Retailers' holiday sales drop at least 5.5 percent www.msnbc.msn.com (view article)

Analysis:
With a wink and a nod to the esteemed Charles Dickens...

The dismal sales numbers are starting to leak out from Christmas Season 2008, and once the numbers from the major retailers are announced on the 8th, it will be official: The "ghost" of this Christmas just past will be haunting retailers for a long, long time.

There is going to be excess inventory of high-end goods no one will purchase right now, regardless of how desirable they are. Cashmere sweaters are being pushed at a Buy one, get TWO free deal at the Off 5th Saks(NYSE:SKS) Outlets. What do you do to recoup your inventory investment in luxury goods when no one wants them?

Marginal store locations are going to be become cash flow drains on retailers with viable and previously successful business plans. Using Circuit City(NYS:CC) and Office Depot(NYSE:ODP) as examples of this, as the store count comes down, their corporate overhead gets split over fewer and fewer locations, increasing the pressure on each remaining unit to perform while cutting potential ability to advertise and market against their healthier competitors, in these specific cases, Best Buy(NYSE:BBY) and Staples.Pulling out of markets is a short-term and drastic solution if you aspire to be (or continue to be) a nationwide leader in your category. This solution doesn't address how they ended up at a competitive disadvantage to begin with, another "Ghost" that has to have a reckoning with some upper management at various firms.

Linens N Things(NYS:LIN), Mervyns; they are just the beginning of the shake out in retailing specialty and Department store chains. If you aren't nimble and financially strong enough to be able to both pick "Hot" value slanted goods and then price them right, you are in for rocky times with the consumer moving forward in the near term. This next year plus is going to be a "Survival of the Fittest" scenario for retail across the board. Consumers are wary of spending on anything but necessities, and will be until the housing and credit market meltdowns are on the way to being solved, and unemployment, a lag indicator, starts to improve.

Retail won't see things loosen up until the consumer credit mechanism is repaired in a way that allows people to be confident in their ability to spend more than is in the checkbook. Anecdotally, we saw Costco(NAS:COST) cut the price on a 60' Sharp(BSE:523449) LCD HDTV, featured at $3,999 at the beginning of December, to $3,499 the week before Christmas. Under normal circumstances, the $3,999 was a great, almost unbelievable, buy.

Electronics retailers have to be sweating, most people are thinking that 2 year old laptop isn't quite as in need of replacement as they thought it was.

Trading Down is going to be the consumer trend of 2009. Getting the car fixed instead of looking for a new one. If you need a vital appliance like a stove or washer that breaks, maybe taking a "Short-term" contract from a "Rent-to-own" company instead of hitting the local appliance store or Sears.

People are so unsure of the economic climate going forward, even a great retail concept with non-vital goods to market is going to need to work extra hard. Wal-Mart(NYSE:WMT) may be the king for quite some time to come.

Like Jacob Marley warning Scrooge he needs to change his ways, let's hope this season of despair leads to a fresh way of thinking about and solving the challenges ahead for the retail sector.
,
,

Fuel prices - the secondary market for most consumers second-most valuable property

2008-12-11T09:27:00.000-08:00

A condensed version of this analysis was originally done for Gerson Lehrman News and posted 12/11/08
Original Article: Advertising Age http://adage.com/article?article_id=133072

Implications:
1) After a home, the auto is the second most expensive item most people own.
2) The up and down volatility in fuel prices is lowering demand, regardless of price
3) Fuel prices do impact mid and lower-mid income earners most dramatically

Analysis:
On October 20th the EIA (Energy Information Agency) listed the average retail price for regular unleaded at $2.914/gallon, and it had been on a downward trend for 6 weeks or so at the time.

In it's report released on December 8th, the average price was $1.699/gal. In 49 reporting days, (7 weeks) the price went down $1.215/Gal, or 41.6%, and it wasn't even a primary economic headline.

The CSP Daily News is reporting as of December 9th that the savings at the pump aren't translating to dramatically increased inside sales at the convenience store portions of the fuel outlets. What is going on with the consumer?

Wal-Mart (NYS:WMT) may very well be getting those savings as increased holiday sales. In late summer, when $4.00/gal fuel was being sold, the discussion being had about people needing to trade down from SUV's and minivans to hybrids and smaller vehicles was a laughable argument. Most families purchase their vehicles with consumer credit, and if you were 2 years into a 5 year loan on a SUV or pickup truck, you couldn't just adjust what vehicle you chose to drive on a daily basis.

The secondary market of vehicle costs, fuel prices, is much more volatile than the vehicle market itself. That’s why demand didn’t decrease more than it did; people were forced to drive what they owned, regardless of the cost to operate it. And having seen the automaker bailout play out over the last two weeks, there wasn’t enough alternative and hybrid production to accommodate that vehicle demand, in any case.

Fuel demand is going to adjust lower, as people have been shocked into realizing how vulnerable to energy costs their personal finances and their lifestyle actually are.

Credit was already tightening up, and the average mid-level consumer felt we were in a serious economic slowdown, even if they weren't saying it. You just bit the bullet, filled the tank to keep your transportation means on the road, and hoped prices would eventually come down. Well, now they have.

Fuel prices do impact the mid-level and lower earner most dramatically, and they are using the “savings” to 1) try and recoup some of the budget damage done to them this summer, and 2) get through the holidays without accruing too much additional debt.

The average consumer is worried about the direction of the economy as a whole. "Flash for Cash" is so last year! Wal-Mart shopping was never a stigma for the average consumer, and people "trading down" are learning what lots and lots of people have known for years. Value never goes out of style.

November retail sales drop shouldn't be a surprise to most retailers.

2008-12-05T06:10:00.000-08:00

This analysis was written for Gerson Lehrman News and published December 5

Implications:
1) Credit restrictions are going to inevitably lead to lower retail sales.
2) Economic news and what they experience has consumers nervous
3) Sales made at discount prices reduce top-line revenues, and"Super-Specials" on Black Friday create expectations of better sales.

Analysis:
The news is brutal everyday...Country in recession since beginning of 2008. (That wasn't news to the average person). General Motors(NYS:GM) looking at bankruptcy protection. Circuit City(NYS:CC) and Linens N Things in bankruptcy. Auto dealers closing all over the country. Foreclosure crisis. Global Economic slowdown.

Even the breathtaking decline in energy prices and commodities in general are a sideshow to the unrelenting economic gloom.

The US government seems to making up the "Bailout" or "Recovery Package" as they go along, as each measure they enact seems to have negligible effect on the overall problem of a severe economic slowdown.

While we're all sure that everyone at Treasury, Commerce, the Fed and all the worldwide authorities are doing their best, the overall impression to most people I know is the world governments and agencies don't have a clue as to how wide and deep the problems are.

That being said, the fact that overall sales in US retail are down in only single digits should be a positive, not a negative, sign that the US economy is more resilient and the US consumer tougher and less risk-averse than the institutions that are the causing the pain.

If there's no consumer credit, car sales will suffer. Even more importantly, if the credit score criteria for getting an auto loan stay the same going forward, the ready pool of automobile buyers will be smaller, leading to a smaller new car market.

Each and every step of this process shouldn't be reported as a fresh "disaster". It's a systemic problem.

If the average consumer can't get credit readily, home furnishing and large-ticket electronics purchases are going to fall. It's not a problem with the retailers or offerings, it's a matter of the mechanism most people use to purchase larger-ticket household items is broken. As much as US homeowners love flat-screen TV's, they love eating and caring for their families more.

So, when earnings for furniture retailers and manufacturers come out, it's not a new story of another category falling apart; it's just a continuation of the consumer credit crisis, same as the auto sales drop.

Jewelry companies are reporting lower sales, again, no surprise, just another manifestation of shrinking consumer credit. So when strip centers and malls start losing retail tenants and commercial mortgages become the next crisis, it's still the same story.

The US consumer should be congratulated for what they've been able to accomplish, even in this very tough economic time. They are trading Macy's( :M) for Wal-Mart(NYS:WMT), auto parts chains should be picking up business while the dealers starve, the "Rent-to-Own" businesses (Aarons, Rent-a-Center) will be busier than the Rooms-To-Go or the Ethan Allen(NYS:ETH) store.

The consumer will adapt and survive, but it's time for a real, comprehensive program that people can have confidence in.

Sell More Gasoline !!!

2008-12-01T14:02:00.000-08:00

Well, here it is…Unleaded Regular under 2.00/gal in most of the country, diesel back under 3.00/gal, the rapid drop in prices as unexpected as the rapid run up to the 4.00/gal.+ range over the spring and summer. As I write this on the afternoon of December 1, 2008, I see Crude oil under $50.00/bbl, and NYMEX RBOB under $1.12/gal. What year is it, anyway? The last time the benchmark WTI crude was priced at this level was in the third quarter of 2004. Ahhh, the good old days!

Most of the operational and management employees at firms we’ve either operated directly or consulted for know the three words we’ve driven to success in the past…”Sell More Gasoline!” (Fuel).

It’s hard to be pumping good gallonage and not do well on inside sales, you have to do a notably bad job of convenience retailing in order to not have the corollary of “Increased Gallons pumped = increased inside sales” not ring true.

As we have designed and operated units and chains over the years, this has been our guiding principle:”To use the strength of the constant traffic flow that a petroleum outlet provides to drive the enhanced revenue flow and operating margins that a Convenience store (and/or fast food outlet) outlet achieves.”

This simple philosophy is the reason that gasoline retailers have sold additional items since before Standard Oil was broken up. While we’re not advocating any “price wars” breaking out on hotly competitive corners, we certainly believe that fuel pricing can again become a major driver behind store merchandise and foodservice volumes and subsequently, increased location profitability.

Condevco has an affordable solution that services your individual sites, and that allows for fuel pricing that drives traffic to your site, while still maintaining competitive and better margins on fuel. Contact us for details.

Circuit City Retrenchment delaying the inevitable

2008-11-10T15:50:00.000-08:00

NOTE: This was written and turned into Gerson Lehrman News last Friday Nov 7, and published Yesterday, before the Bankruptcy filing of this morning.

Implications:
1) Pulling out of Major markets a bad idea for long run outlook.
2) Last store remodel/refit wasn't successful
3)Tried to become like Best Buy(NYS:BBY), but didn't try to better them

Analysis:
The news the Circuit City was closing 155 stores and pulling out of major metropolitan areas came as no surprise to industry watchers.

The seeds for this were sown during the last major store remodel/refit, when the Circuit City stores were converted to essentially an imitation of Best Buy, eliminating any chance for Circuit City to differentiate itself in any way but price and advertising spend. Commission plans were eliminated from the sales floor, so the face-to-face knowledge and expertise of the customer service staff disappeared.

They never compensated for that loss of product knowledge to the consumer with the better POP informational regime that Best Buy has always employed.

Unfortunately for Circuit City, Best Buy is better at being themselves than Circuit City was at imitating them.

Vote "Yes" for Good Customer Service!

2008-11-08T06:46:00.000-08:00

In the Convenience Store field, our first name is “Convenience”. Convenience means being in a convenient location, having a selection of merchandise that allows people to fill their needs without additional trips somewhere else (making it convenient to stop there), and having multiple options to allow them to pay. What seems to be missing from many convenience settings is making it convenient to deal with your first-line associates. In other words, how many times has a friend or client with a store or stores had a half-hour discussion with you about how to arrange the cold vault, but shrugs their shoulders and dismisses staffing with “It’s hard to find good people”?

All the care and science that goes into everything from merchandise selection and mix, to how a store is designed and looks, to what fuel brand, if any, to select, can be of little effect if the customer/associate interaction isn’t a positive experience. The level of service in the US, in general, has gotten to the point that good friendly service is the exception rather than the norm. One of the big C-Store publications actually has a column where they talk about the good service they received when THEY are on the road.

That doesn’t mean we shouldn’t strive for a better level of customer assistance.

We don’t believe anecdotal evidence proves a norm or spots a trend, but we all know that, even with the rapid drop in fuel prices, our customers are hurting financially. Inside store merchandise and foodservice (if you have it) sales are the lifeblood of the business. The easiest way to increase inside sales is to concentrate on staffing and training. Raise your expectations of performance for your customer service associates, and reward them when they perform.

Your customers want to be served, promptly and with a smile. My blog is named “The Service Station” for a reason. Think of the category you’re in as “The Service Store” instead of “The Convenience Store” category, and both you and your customers will be much better off. Sales will go up, your associates will be happier and busier, and you’ll be providing a positive “service” to your bottom line in the end.

Condevco offers comprehensive customer service and operations consulting and manuals for your store/chain. The operations we have operated and consulted on have a long history of “famous” customer service. Let us help you.

Buffalo Wild Wings and dineEquity are both being built for the long run

2008-11-03T07:26:00.000-08:00

Title: Buffalo Wild Wings and dineEquity are both being built for the long run, but with different operating models.

Ramifications:

1) dineEquity is 6 times larger in location count than Buffalo Wild Wings

2) The two companies aspire to grow earnings in different ways.

3) dineEquity can market across the whole daypart with the brands they own.

dineEquity (DIN) and Buffalo Wild Wings (BWLD) both released third quarter results on October 27th. dineEquity posted a .47/share profit verses a .09/share expected loss, and Buffalo Wild Wings posted .25/share profit, missing the projected earnings by .06/share. We used the two firms Quarterly reports as the basis for our comments

The two companies are not similar in size or makeup, and while they are competitors where Applebee’s and Buffalo Wild Wings restaurants compete in the same market for casual dining dollars, they really market to two separate demographics. The differences are more marked than the similarities.

dineEquity is still consolidating Applebee’s into their operating system, having purchased an entity in Applebee’s that was larger than IHOP. While the wisdom of a massive expansion could be questioned in light of current market conditions, even the most conservative of forecasts missed the magnitude and speed of the slowdown in consumer spending and the dive in consumer confidence that has occurred.

Applebee’s experienced a decrease in same-store revenues, and the company acknowledged that their new value offerings didn’t perform. That’s a marketing/advertising, not an operational or management issue, and can be easily corrected.

IHOP, with several years of brand revitalization under its belt, is a much more capable competitor than they were when the exercise in refranchising and repositioning started. There is no reason to think Applebee’s won’t eventually get down the same track and move dineEquity towards its goal of being 100% franchisee locations. I believe that dineEquity’s management is building a firm for the long run, and will benefit favorably from lower interest rates as their debt instruments mature and are replaced with lower-cost debt. If dineEquity conservatively manages their financial side and continues to retire debt with free cash flows, the outlook continues to get better and better. dineEquity is out to be a marketing and franchisee management firm, creating their earnings through franchise and licensing fees.

Buffalo Wild Wings, on the other hand, experienced excellent same store sales growth, and is buying back franchisee properties as part of a program to expand company revenues and earnings. They obviously feel that their way to increased profits is to become a full line owner and operator, while still actively franchising where the deals make sense.

This is why comparing these stocks requires understanding that while it looks like they share a common operating model within the same consumer space; they are heading in opposite directions in operating structure and philosophy.

dineEquity has a very large unit count, and as it becomes more focused as franchisor/marketer on driving top-line revenues, with the advantage of having the two brands identified with different dayparts for less cannibalism of consumer marketing focus, they are building a system that will allow for ever more efficient use of capital as the Applebee’s company restaurants get moved out to franchisees.

Buffalo Wild Wings is taking the tried and true approach of picking a specific consumer segment and being the best competitor within it. Their management believing they can run restaurants as company ops more profitably than they can as being the franchisor has lead to the “Buy–back” of franchisee units.

Buffalo Wild Wings and dineEquity are two dissimilarly sized firms with completely opposite philosophies of how best to grow their specific companies. In economics, the example of bad analysis is comparing apples to oranges; in this case it would be comparing Applebee’s to Wings.

Adjusting Menu Selection a Good Short Term Fix

2008-10-27T06:07:00.000-07:00

This was done for Gerson Lehrman News and Published October 27

Original Article: Restaurants may change menus, hike prices www.msnbc.msn.com

Implications:

1) Customers are resisting higher prices
2) Food prices will come down, but not rapidly
3) Market the selections as new variety

Analysis:

The restaurant industry has a real dilemma on it's hands. Customers, given the current economic climate, are resisting price increases with fewer trips to dine out and lower per-ticket purchases.

At the same time, the core ingredient "proteins" have experienced a much greater than CPI increase in cost. Given the recent steep decline in energy costs, we can expect there to be a stop in the cost inflation, but any decrease in supply prices will come due to weak global demand, a bad sign for consumer spending in general and discretionary spending in particular. No one wants the downturn to be so great that actual "deflation" sets in. The farmers and food production industry are operating on very tight margins as it is.

So, what to do? Dress up new menu items with coatings, breading, sauces and lots of marketing. A hot ham and cheese sandwich can be made into an alternative to a cheeseburger, if presented correctly.

Certainly people are used to "Nontraditional" menu items at all the fast feeders and casual restaurants. If marketed right, both sales volumes and margins should be able to be maintained. Remember when fast-food breakfasts were a novelty? Now, they are a staple item in the product mix.

Layoff news at marquee firms across the board, the seeming end of the US automobile business as we all know it, and the unrelentingly bad economic news are going to cause people to review their personal expenditures much more carefully, but America loves to "Eat out".

The right mixture of cost containment and good menu planning, along with a great invitation to the consumer to check out the new items, will be able to allow restauranteurs to weather the storm

The Stratification of Gas Station Values in Florida

2008-10-15T14:32:00.000-07:00

UST Compliance Status, Station Pricing and how it affects the Florida Market.

This is being posted to “The Service Station” blog condevco.blogspot.com on October 15th, and will be included in “The Meter” newsletter published on October 20th.

As we watch the clock wind and the calendar pages fly off the pad, it is increasingly clear that whats been predicted for the last 10 years has come home to roost. There would be a high percentage (currently figured at 40%+) of stations that would be in a jam when it comes to the Florida Double-wall tank deadline at the end of 2009. When tank insurance is coming up for renewal this time, if you haven’t converted to a DW distribution plant, it’s essentially going to be impossible to get insurance for a non-compliant tank set at any price.

The Jan 1, 2010 deadline for conversion to all systems needing secondary containment was mandated by Florida in 1984; so 24+ years to date is a long time to claim you are now surprised. But, at this point it’s water under the bridge. The FDEP continues to say there won’t be any extensions for compliance granted.

So, as an operator who owns their site, you have a few choices; operate without insurance, getting fined by the FDEP on a daily basis, and risking a complete financial wipe-out if there’s an incident. (We are not suggesting this as a course of action, just using it as a scenario!) Or, you can shut down until your tank set can be changed. Or, you can put your station up for sale, discounting the price of a tank swap in the asking price, and hoping someone will purchase the site knowing it needs to be closed down for 3-4 months and there’s no assurance that there won’t need to be remediation during the tank swap, lengthening the time out of operation and increasing the costs.

In order to accept that level of risk, it’s clear the savvy purchaser will expect a large discount to get you out of your jam. Then there’s whole issue of getting credit to pay for the job. It’s a rare purchaser who can pay cash for the $300-$400,000 needed to swap a tank set and account for the lost gross profits for the time they are closed down, right after completing a purchase for the site. The credit crunch is affecting purchaser’s decisions on looking at non-compliant sites.

Conversely, the sites that are compliant stand to gain in two categories. 1) Value of the actual asset, and 2) improved competitive position from the immediate wash-out of (let’s figure) 30% of the station count at the end of 2009. Increased volumes, increased scarcity of sites to fuel from, and increased profits should all be in the offing if there is no extension for compliance granted. You have to think FDEP is serious about holding everyone to the deadline, taking them at face value.

Should owners be lobbying for some kind of state program for sites that need tank swaps that are not in the LUST fund? A loan guarantee or low-cost assistance for tank swaps? The population of the State of Florida will be profoundly unhappy and inconvenienced if 25-30% of the current retail sites have to close down in January 2010.

On the other hand, if you took care of business, have a new dispensing plant in the ground, why not get ready to enjoy less competition and greater volumes, all because you followed the law? Why should the people that didn’t take the deadline seriously get help?

Which leads to our title subject; the Stratification of Gas Station values here in Florida. There are two tiers of pricing setting up in the market; tank-compliant stations and those who aren’t. In addition, within each tier, there are usual considerations of parcel size, Branding/Fuel Supply Agreements, competitive position, amenities (car wash, service bays etc.), foodservice and size of store.

What we’re seeing from multiple owners is that sites that fall into the non-compliant pricing tier, are .75 of an acre or under, and need significant updating are trying to keep some kind of floor value on the pricing of these sites, but the floor is preventing the sites from moving. With today’s lack of ready credit, I think a major look at these small sites asking prices needs to be addressed, or there is going to be a significant drop in station count once the deadline rolls around.

What do you think? Write me back at rsanticola@condevco.com

Soft Serve Won't Fix Soft Sales at Krispy Kreme

2008-10-10T05:51:00.000-07:00

This was done for Gerson Lehrman Group News and Posted on October 10th - Ron

Original Article: Krispy Kreme hopes ice cream heats up sales www.msnbc.msn.com (article)

Soft Serve Won't Fix Soft Sales at Krispy Kreme

Implications:
1) The namesake product is out of synch with consumer trends
2) Soft Serve Ice Cream adds a daypart, not a full profit center
3) Quality as criteria in site selecton and Distribution key to success

Analysis:
Krispy Kreme essentially imploded during 2004-05, as the reported sales volumes turned out to be inflated. Consulting for a Convenience Store chain in 2003, I watched first hand as locations who paid a delivery driver cash daily for Krispy Kreme product would receive an invoice for the same goods at the end of the month. It would always be called into the office and pointed out as an error, and the paperwork would disappear.

Krispy Kreme overestimated their sales potential in a given market; the C-Stores carrying the product were saddled with minimum purchases that resulted in a lot of product being wasted, at the retailers expense. We shopped, over a 6 week period, a full Krispy Kreme location w/Factory on a high-value corner for a competing client (location now closed)in 2006, and they added a frozen custard operation to punch up the lack of walk-in traffic in the afternoon/evening period. It did not seem to work at this site, and so I'm not sure if the product has been adjusted to a more saleable concept or not. The product is good, but is running against current consumer QSR trends. In theory, it adds a daypart, but you need to market it apart from the core doughnut business.

Krispy Kreme has shown very little discretion in siting locations and adding distribution partners, and overall, the brand suffered. At least in the area serviced by our master franchisee, they never seemed to get over the image, cleanliness, training and personnel issues that McDonalds(NYS:MCD) and BK solved, for the most part, years ago with a much, much greater restaurant count. To rely on adding a product line as a solution, unless (and I don't have firsthand knowledge) they've addressed the daily operational and quality control (product, service and customer experience) of the operation won't make a long term difference in the firms viability.
Posted: 10/10/2008 12:57 AM

Sales Restrictions Won't Drop Tobacco Sales Volumes

2008-10-09T19:23:00.000-07:00

This was done for Gerson Lehrman Group News and Posted on October 3rd - Ron

Original Article: PM USA v. Pharmacy Smokeout www.cspnet.com (article)

Sales Restrictions Won't Drop Tobacco Sales Volumes

Implications:
1) Legislation Restricts Drug Stores Unfairly
2) Legislation Doesn't Make It Harder to find Cigarettes, just more Inconvenient
3) Smokers will easily adapt to Law; no consumption reduction

Analysis:
The law banning tobacco sales in drug stores unfairly singles out stores containing pharmacy operations as unsuitable venues to purchase tobacco. There is no inference that the drug stores haven't been following the current restrictions on underage sales, so this seems a measure aimed a simply making less convenient to purchase cigarettes, and a punitive measure against smokers with the drugstores overall sales volumes as an innocent casualty of the legislation.As a convenience store consultant to numerous operators, I see at an opportunity for more sales volume. Smokers have been adapting to increasingly restrictive rules on purchasing and using tobacco products, and will adapt in San Francisco again. If they can't purchase cigarettes at one location, they WILL stop at another. Ask any retailer who is "Out-of-Stock" on a popular brand!While I think the Phillip Morris(NYS:MO) position in this case is correct, the overall prevailing sentiment against smoking is driving this legislation.I do not believe there will be an overall drop in in the tobacco company's sales, just who is selling them to the end consumer.
Posted: 10/3/2008 1:06 AM

"The Meter" Newsletter Vol 1, Issue 1 Oct 6, 2008

2008-10-09T18:26:00.000-07:00

Welcome to “The Meter”
Vol. 1, Issue 1, Oct 6 2008
Dear friends, associates and interested parties,

Welcome to the inaugural issue of “The Meter” which will be an e-mail newsletter put out by Condevco LLC on a semi-regular basis. We named it “The Meter” because that’s what keeps track of the fuel flow in the pumps, and we’re going to try to give you a sense of the “Flow” of the business. Hopefully, you will find this a valuable resource and sounding board for your own thoughts.

This newsletter will not be taking a point of view as it relates to anything but good customer service, convenience retailing and petroleum marketing, and anything that supports that. We will also delve into real estate related issues as it pertains to retail sites and development.

We seem to be in a time of unprecedented upheaval in our business. As it relates to retail, there is cost inflation in CPG with no inclination on the consumer’s part to absorb higher prices, volatility in fuel pricing that seems to be more about speculation than the actual value of the fuel, and regardless of which way consumer sentiment is flowing, the credit card companies making more money in processing fees than the entire industry profited at retail last year. As in all times of market turbulence, some will profit and grow, and some will whither and die.

On the Distribution and Real estate side, the big Oilcos are “shedding” their retail sites en masse, but that opens up an opportunity that wasn’t available before on the distribution side of the business. Good store operators have continued to grow store count and expand their offerings, but until the credit markets get straightened out, that continued growth is in jeopardy.

Here in Florida, the combination of no or tough credit and the Double-Walled tank deadline have a lot of site owners who haven’t “re-tanked” sweating it out. There is going to be a period of opportunity for picking up assets that are “Fixer Uppers” at excellent prices, and some of that is starting to hit the markets now. Tank Insurance on Single-wall installations is going to disappear by the end of the year in the state, it seems pretty clear.

“Consolidation” is a word being bandied about the industry right now, and while it looks like there is a consolidation of ownership occurring, remember that there is a large supply of Oilco sites coming into the market, and so far, being absorbed by distributors with decent store count already. There are still lots of properties and groups of properties that fit the “Smaller” range that will need to be moved and re-branded and freshened up.

Whenever there is disruption to the market equilibrium, which is occurring in 1) the consumer market, both with credit tightening and increased fuel prices, 2) the fuel retailing and distribution market, and 3) the credit markets, both for operating and real estate acquisition, opportunities present themselves to those who know where to look.

As we move forward through this time, in mostly uncharted waters, we need to remember that an automobile is still either the first or second most valuable asset most people own, and the lifestyle most consumers lead and the infrastructure they use were predicated on relatively inexpensive and plentiful motor fuels.

This is why the fuel volumes didn’t drop as much during the price spike as most people would think. But the consumer feels hostile and wary of the oil business right now, and no matter how much people rationally know the guy who owns the Exxon or Chevron at the corner didn’t make the $40-50 Billion last year, you’re the one they can be upset at.

So give them service, give them clean, give them a smile and remember you’re still the “Corner market”. We can help provide solutions to your most pressing needs, and everyone can use a set of “Fresh Eyes” to look at the issues we’re all concerned about.

Looking forward to a long and productive dialogue between all of us.

About Condevco LLC and Ron & Darcee Santicola

Ron SANTICOLA HAS been in the Convenience Store Business for 14+ years here in Florida and Internationally, as a “C” Level executive and Consultant. Award-winning and respected industry leader. Darcee Santicola is an award-winning store designer and space planner. We merchandise locations and lay out selection, mix and promotional calendars.

Ron is also a FL Licensed Real Estate Broker, Specializing in Petroleum Retailing properties and Petroleum Distribution.
____________________________________

We specialize in:

¨ Site and Chain Acquisition
¨ Branding and Fuel Supply
¨ Store Design—New & Refurbishment / Rebranding
¨ Merchandising & Promotions
¨ Financial Modeling—Acquisition and operating
¨ Customer Service training
¨ Mystery Shopping
¨ Management Consulting
¨ Company Benchmarking
¨ Fuel Pricing using the:
marginvolumepricing.com©
Fuel Pricing System
______________________________
Convenience Development Corp.
Condevco LLC

2909 S. Ocean Blvd, Suite 3-D
Highland Beach, FL 33487-1819
Tel.: (561) 274-4261
Fax: (561) 276-9996
E-mail: rsanticola@condevco.com
E-mail: dsanticola@condevco.com
URL: www.condevco.com