We look at how Circle K’s parent company, Couche-Tard, continues to adjust to the pandemic and the changes it’s making across its global operations.
Second quarter key numbers
- Total merchandise and service revenues increased 6.3% to $3.8bn
- Same-store merchandise revenues increased 8.6% in Europe, 4.4% in the US and 11.4% in Canada
- Operating income increased 32.0% to $1.0bn
1. Accelerating food-to-go programmes
Year-to-date, it has introduced its ‘Fresh Food, Fast’ programme into 1,500 US locations. These stores are performing well relative to control stores, with plans in place to roll-out to a further 3,000 locations in North America by the end of fiscal 2022. While this is driving a change in store operations, it has the potential to significantly enhance margins. In Europe it has several related initiatives underway. Denmark has seen the launch of a pilot self-service hot and cold food offer, with a focus on delivering a quick and easy experience. In Norway, it has launched a new pizza offer in collaboration with the country’s largest pizza chain, with digital ordering a key part of this.
2. A new format strategy is emerging
Part of this plays into the retailer’s new format strategy. As it continues to close weaker sites, it is building new stores that have the potential to deliver three to four times the sales volumes of the sites it is closing. The acquired Holiday Stationstores stores are providing the business with design and layout inspiration, focusing on signposting the fresh food-to-go offer, packaged groceries and impulse ranges. A new refreshed look, ‘Horizon’, will also be rolled-out in the future. The business is also looking to build a stronger presence in urban locations with non-fuel stores, especially given the increased availability of sites post-COVID-19.
3. Delivery programmes are bringing in new customer groups
Innovation has been prioritised over the last 18 months. This takes a different form across Circle K’s markets. In Norway, it has expanded its license plate recognition payment system, with plans to launch the programme in Sweden. In the US, it has expanded it home delivery capacity, partnering with DoorDash, Uber Eats and Favor. This is helping it to bring new and different customer groups into the Circle K brand and enhance day-parts, especially late evening. The retailer is also testing a click and collect model in the US.
4. Building a leadership position in EV charging
Electric Vehicle (EV) charging is also an important area of focus as it builds out its network in North America, starting with Quebec and California. It is taking learnings from its lead market, Norway, including the impact on store conversion, site facilities and the food offer, to ensure it remains relevant as customers charge their vehicles. Globally it has added 1,000 EV chargers, half of which are in Norway, while a further 2,700 Circle K chargers have been installed in people’s homes and offices.
5. Setting the foundation for growth in Asia
Recently, the retailer pressed ahead with its plans to grow in Asia. It has entered into an agreement to acquire the convenience store business, Circle K Hong Kong, which operates 340 stores in Hong Kong and 33 stores in Macau. Circle K Hong Kong has been a licensee of the Circle K brand since 1985. This is expected to form the platform for stronger growth in the region. The retailer sees the Philippines, Indonesia, Vietnam and Thailand as attractive prospects. China is also of interest, but it is a market which the business believes it needs to understand in more detail. Reverse synergies are expected to include optimising Circle K Hong Kong’s expertise in operating smaller stores, including in dense, urban locations, along with its merchandising, loyalty and supply chain capabilities.
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