CHEVRON'S EXTRAMILE: GOING AGAINST TRAFFIC

Mina Williams

Convenience stores exist for the very reason that they are conveniently located, with a convenient selection of on-the-go foods and beverages. They offer an impressive array of products in a small footprint, though they have a difficult time shaking the general image of purveyors of cigarettes, lottery tickets and beer.

A number of convenience channel retailers are striving to change this picture. The world leader, Dallas-based 7-Eleven, has added fresh sandwiches and fruit, among other things. Chevron, San Ramon, Calif., is also going against convention with a new generation of its ExtraMile gas/convenience stores. The updated format, launched last year in the Seattle area, includes several new in-store elements that emphasize healthful options on both the food and the beverage sides. It's not totally re-inventing the health-and-wellness category in c-stores, but it is showing consumers these foods are accessible - an idea they might take with them into the supermarket on their next shopping trip.

"When modernizing and updating the units, we looked at positioning, consumer trends, retail trends and what gives a store differentiation," said Ian Noble, Chevron's manager of franchise concept development and alliances. "One standout is the healthier trend. It has no definable boundaries. Product definition is flexible and not limited. There is evolution ongoing within the category."

The stores participating in the pilot were refitted with call-out gondolas that put the spotlight squarely on healthful options. The c-store operator has brushed up 43 existing units so far, including 31 franchise outlets and a dozen Chevron-operated locations. The first ones opened last summer with a fresh look, healthier snacks and a premium coffee program.

Company executives expect those changes will lure new customers into the units along with the traditional c-store customers seeking beer and cigarettes. If the proof is positive, expect a nationwide rollout, they said.

"Better choices and better-for-you items all fit into the health-conscious global trend that we want to grow with," Noble said. "We want to learn with the pilot."

The spruced-up stores offer customers easy access to chilled energy drinks, fortified beverages, waters and sports drinks in a refrigerated HydraZone walk-around merchandiser. Across the aisle stands a similar walk-around ambient merchandiser dubbed Better Choices.

The fixtures provide modular flexibility for Chevron, enabling nimble repositioning plus expansion and contraction to fit into ExtraMile stores ranging from 500 to 3,000 square feet. Smaller units present key offerings and scaled-back destination displays.

New items lead the stockkeeping unit count on the Better Choices merchandiser. Power and energy bars, apple chips, rice snacks and organic popcorn all are set alongside existing categories including salty snacks, nuts, seeds and meat snacks like jerky and sticks. But even these c-store standards take a healthful turn, with range extensions that boast lower fat and sodium contents than their original counterparts. The boldly signed Better Choices area is set apart with a green backdrop and stylized identity signage hanging from the ceiling. The HydraZone's doorless refrigerated merchandiser "floats" atop a graphic overlay of a pool on the store's floor.

"We are taking trends and putting them into a merchandising orientation," Noble said. "We have taken a look at lines and called them out. It makes a big splash. We bring it out and make more noise. The grab-and-go allure of the convenience store is still there. The reach-in cooler of the HydraZone is positioned up front. The Better Choices section is also well positioned and well signed, easy to spot from the front door."

The Better Choices and HydraZone destinations are joined by two other sections, Food-To-Go and Coffee, which together complete the anchor for the ExtraMile stores. "Communication is strong at shelf level," Noble said.

The Food-To-Go set sports a traditional fountain that's been updated to deliver "flavor burst" shots to soft drinks. Hot bratwursts stand ready alongside corn dogs, breakfast sandwiches and burritos. The Coffee offering showcases six Van Houtte drip coffees with two refrigerated creams on tap, four flavored syrups and four coffee "condiments" such as cinnamon and nutmeg for customers to craft their own morning buzz. A selection of six English teas cap off the hot beverage bar.

Adjacent to the Coffee section are muffins, scones, bagels, cookies and Danish pastries, supplied by a local bakery, plus a refrigerated case with sandwiches and juices.

"We are not becoming a restaurant," said Noble. "We are building a program with consistent delivery for consumers. We are trying all sorts of things that will fit within our quality and hygiene demands."

The stores themselves have a new earth-tone color palette, brighter lighting, new sign packages and comfortably wide aisles. All these elements effectively open up product visibility and let the food and beverage displays announce themselves from the entry door.

When the ExtraMile stores were introduced to the marketplace, food sampling, coupons, give-a-ways, radio advertising and outdoor boards blitzed Seattle-area residents and encouraged them to come in and witness the changes firsthand.

"Convenience store consumers have certain expectations," Noble said. "We are seeking what is a meaningful strategy in product orientation."

Seattle was selected as the test site because of its marketplace conditions. With a population of 573,000 already giving Chevron a strong nod in the fuel category, company executives believed that the active lifestyle of the region's residents would provide the Better Choices concept a trial by fire. It helps that the market is not dominated by any one convenience store chain and generally offers a wide variety of retail styles, classes and sizes of food outlets.

Chevron executives intend to maintain the pilot program through this year, tracking indicators weekly. The addition of new units is being considered for later this year, but only in the Seattle area.

"We have a long way to go in the convenience store industry," Noble said. "Our legacy is what we have made it. Still, we have to keep pace with influences."

So far the pilot, and the Better Choices section, are making positive inroads. "Not all categories react the same way," he said. "Seeds and nuts we already had. Jerky is not new either. Now we are just calling it out. The fact that we are calling these categories out and getting early success is encouraging that this may be a good way to communicate with consumers. Still, we want to make sure to that we are in touch and see results."

Gathering all sorts of results will help Chevron executives determine if convenience stores and health-oriented consumers can co-exist. The company is conducting extensive field research to understand the dynamics at work, and not just relying on sales receipts.

"The competition is changing in the consumers' eyes," Noble said. "When we talk about 'convenience' with consumers, we hear that it isn't just gas, it's the checkout at the supermarket that is more like a mini-shop. The competitive set is wide."