Couche-Tarde: Beyond Milk

Couche-Tard has been relentless in its mission to redefine the convenience store experience. The Laval, Que.-based company, which in Canada has the Mac's and Couche-Tard brands and Circle K in the U.S. (acquired over a year ago), hasn't been shy about its plans to become the number-one convenience store chain on the continent. In 2005, it's moved from number four to number two in the U.S after 7-Eleven. In Canada, it has secured the number-one position - and now has a total of 4,845 stores.

Couche-Tard has been relentless in its mission to redefine the convenience store experience. The Laval, Que.-based company, which in Canada has the Mac’s and Couche-Tard brands and Circle K in the U.S. (acquired over a year ago), hasn’t been shy about its plans to become the number-one convenience store chain on the continent. In 2005, it’s moved from number four to number two in the U.S after 7-Eleven. In Canada, it has secured the number-one position – and now has a total of 4,845 stores.

‘It’s been going great,’ says Stéphane Gonthier, SVP Eastern Ontario. Not only has its acquisitions been aggressive – outstanding revenues prove the brand’s success. According to its most recent annual report, revenues topped $10 billion, buoyed mainly by the new Circle K chain. More telling however is that in Canada, revenues were up 10.7% over last year.

‘It’s working because we’re not going to market in the same manner in each market that we’re in,’ says Gonthier. ‘This is the difference between us and the other retailers. Other retailers tend to have a cookie-cutter approach under which they [use] the same marketing mix and the same products.’

A case study example of this strategy has been the repositioning of the Mac’s brand in Ontario and Western Canada. Once a chain relegated to the ‘burbs, (Couche-Tard acquired the brand from Silcorp in 1999),

big-city expansion has been a key priority.

By year’s end Couche-Tard will have opened 17 Mac’s locations in the greater Toronto area. That’s in addition to the approximately 200 Becker’s stores (also once a Silcorp property) that it’s also rebranded this year in Mac’s green and blue.

Introducing unique products not normally found in Canada into those stores, like salty snack products from TGI Fridays and Hooters, has also been a key focus. Couche-Tard even secured exclusivity deals to have these products in their stores up to a year before any other retailer. And by partnering with such chains as Subway and Timothy’s and incorporating nearby exteriors into the interior design of some of its stores (like a Canada’s Wonderland theme, complete with rollercoaster, in the Vaughan, Ont. location, which is close to the Paramount theme park), the chain is establishing itself as a forward-thinking and increasingly unbeatable brand.

All told, it’s adding up to a strategy that’s redefining the simple convenience store experience and positioning the brand. ‘It’s a tough business to be in right now,’ says Joanne Balles, president of retail consultant shop Perennial, adding that with stores such as Loblaws and the like opening for longer hours, the lines between retail categories are increasingly being blurred. But what the brand has managed to do is carve out a niche by centring on the time-pressed consumer and offering better quality products, a broader selection of quick-serve products and a better at-retail environment. ‘Everybody’s in everybody’s back yard,’ says Balles. ‘There are so many more options, but focused, simplified and better in-store experiences are going to help [Couche-Tard] maintain a leadership position.’

Another thing the brand has managed to do almost seamlessly this year in Ontario and the West is market to both a mainstream and young, edgy audience. The Froster brand crushed-ice drink, which launched this past summer, targets teenagers using the gross-out factor (Think: Bloody Zit as a flavour). It’s a rebranded version of Couche-Tard’s very popular Sloche that took Quebec by storm.

‘There’s a lot focus on youth and teens,’ says Balles. ‘That’s interesting because those kids have coin; they’re buying a lot of that stuff. [They've created] an opportunity to embrace, rather than to shun them.’

At the same time Mac’s spent $70 million marketing the convenience store staple, milk, to men, using quirky radio jingles and in-store signage. ‘We’ve never spent as much on a campaign for dairy,’ says Gonthier. (Bos Toronto is the AOR.) He says the strategy is to reinforce the relationship that consumers already make between the brand and fresh milk by tapping into a bit of nostalgia, while taking the very bold and unusual move to target dairy products at men aged 25 to 45. It’s worked ‘extraordinarily’ well, he says. ‘Most dairy advertising is more towards females or families,’ he says.

‘We’re convenience stores; our main segment is male, so we’ve basically provided them with a reason to come shop for dairy in C-store instead of being forced to shop in a grocery store.’

Up next, more expansion in Canada and the U.S. For example, while there are currently 608 Mac’s stores in Ontario, Gonthier says about 800 is the goal. ‘We think the market can currently take it.’

Also, continuing to introduce products unique to their markets and responding to customer tastes figures strongly into the brand’s strategy. (For example coffee beans in Circle K stores are roasted differently to better appeal to the taste buds of customers in Florida versus California). And next month Mac’s is moving into…wait for it…financial services, a decision Gonthier won’t share details about but says: ‘[It] makes us more innovative than ever.’