Speedway’s Clark County headquarters tackles today’s time-starved customers.
In an industry that grew up selling gasoline, beer, cigarettes and candy adapting to today’s convenience and gas store consumers is critical to survival, according to Tony Kenney, president of Speedway.
Kenney says Speedway—which has headquarters near Enon and offices in Springfield—is pumping $380 million this year into building new stores and remodeling and refreshing other stores.
He expects the company—which today operates 2,733 combination gas station/convenience stores in 21 of the country’s eastern states—to spend more than that in 2018. “Our focus is to continue to grow Speedway by building more stores, building out the markets that we’re in and remodeling stores,” he says. “You know they kind of get tired after a while.”
And those new and remodeled stores don’t look anything like the old mom-and-pop convenience stores for a good reason—Speedway, a subsidiary of Findlay-based Marathon Petroleum Corp., is trying to attract today’s consumer. “Now when you go inside a store you better have kind of a fresh-food offering, you better have a big array of products in your cold vault where you have energy drinks and teas and waters,” Kenney says.
In order to provide that fresh food to consumers new and remodeled Speedway stores are incorporating Speedy Cafes, where customers can order food and have that food prepared fresh in front of them. “Those Speedy Cafes are designed to attract people who are looking for fresher, healthier choices in their options when they’re shopping for food in convenience stores,” he says.
That change in the types of products Speedway stores offer is due to the ways consumer spending is evolving, he says. “As you look at the aging populations you’ve gone from big numbers and big spenders from the baby boomer generation to the millennials,” he says.
So is there a difference between the way the baby boomer generation spends money in gas and convenience stores and the ways younger consumers spend their money? Absolutely, says Kenney.
“The biggest difference is how much more tech savvy they are,” he says of today’s younger consumers. “They choose to do business in a different way. They shop differently than I did. They want to be marketed to differently. So that’s where our loyalty program comes into play.”
That loyalty program, called Speedy Rewards, has nearly 6 million members. Those members earn points on every purchase, which can be redeemed for free merchandise and fuel discounts.
The loyalty program can also be used to market Speedway to today’s consumers by targeting them for certain promotions or offers that are relevant to them, Kenney says. “That’s what’s meaningful,” he says.
“They look for that throughout different stores or different places they choose to shop before they ever get in their car and go out to shop,” says Kenney. “They know where the deals are and where they want to go and who’s going to reward them with points and loyalty benefits and things like that.”
If Speedway can convince today’s consumers to come to its stores via its loyalty program’s promotions or offers Speedway has a much better chance of being successful in the future. “Our ability to grow the inside business as we call it—and that’s everything inside the stores—really gives you more opportunity to earn more money as you’re able to grow those sales,” Kenney says.
The second way Speedway seeks to grow is by buying other stores, he says. That’s what Speedway did in 2014 when it bought 1,245 Hess stores. Speedway is now the second-largest chain of company-owned and -operated gasoline and convenience stores in the U.S.
And it’s not over. “There will be continued consolidation in the convenience store industry,” he says.
That’s because as more competitors offer products and services that convenience stores offer many single-store operators and other smaller operators won’t be able to survive.
“What that suggests is that there’s likely going to be more stores up for sale and larger companies, like Speedway for example, would be interested in looking at opportunities to acquire good stores in good markets where we need to fill in some of our geography,” Kenney says.
But instead of being buyers in the market there was a possibility, until recently, that Speedway would be the one on the selling block. That’s because Marathon Petroleum Corp. formed an independent special committee to investigate whether spinning Speedway off and selling it would be in the best interest of its shareholders.
The committee recommended keeping Speedway as part of Marathon Petroleum Corp. Gary R. Heminger, Marathon Petroleum Corp. chairman and chief executive officer, says, “Following a rigorous review led by an independent committee of the board, the board has unanimously concluded that shareholder value is best optimized with Speedway remaining part of our integrated business.”
Kenney says the location of Speedway’s headquarters and offices in Clark County are also optimal for its business. “We’re kind of pretty well situated between Springfield, Dayton and Columbus,” he says. “Believe it or not, we draw a number of our people from Columbus to work in the corporate headquarters.”
Out of 33,000 total employees, the company employs about 1,100 between its headquarters near Enon and its Springfield offices, which opened after the company bought the Hess stores.
And it’s from those headquarters that Speedway seeks to cater to its “time-starved” customers, says Kenney. Most of Speedway’s customers know what they want, they know where it is in the store, they get it and they don’t want to be held up in long lines to check out, he says.
“They want to check out and they want to get on the road.”