C-store giant expands U.S. store footprint
Alimentation Couche-Tard has closed on the biggest transaction in its history.
The Canadian company announced that it has completed its $4.4 billion acquisition of CST Brands. The deal will add approximately 1,300 stores to the Couche-Tard portfolio, including 666 locations in Texas.
"CST is the fourth-largest network of convenience stores and fuel retailing in North America," stated Brian Hannasch, president and CEO of Couche-Tard. "This transaction…will strengthen our footprint in the United States, especially in Texas and the Southeast region, as well as in Canada (Québec, Atlantic provinces and Ontario), and bring our total store count in North America to close to 9,500 and close to 14,000 worldwide."
The majority of former CST stores in Texas will become part of Circle K Stores, a subsidiary of Couche-Tard, reported Convenience Store Decisions.
Couche-Tard is the largest independent convenience store operator in the United States in terms of number of company-operated stores. As of January 29, 2017, adjusted to include the acquisition of CST Brands, Couche-Tard's total network was comprised of some 9,500 convenience stores throughout North America, including 7,567 stores with road transportation fuel dispensing. Its North American network consists of 16 business units, including 12 in the United States covering 42 states and four in Canada covering all 10 provinces.
In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics states and Russia through ten business units, for a total of 2,766 stores. In addition, under licensing agreements, close to 1,700 stores are operated under the Circle K banner in 13 other countries and territories worldwide, bringing the company's total network to close to 14,000 stores.
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Engaging Customers with Personalized Videos
To be competitive, retailers must have a strong digital marketing strategy to be seen and heard, attract new customers, and build stronger relationships with existing ones. Spending on digital advertising is on the rise. In 2017, U.S. digital advertising is on pace to surpass expenditures on TV ads. Globally, more than 40% of media advertising budgets in certain markets are devoted to digital marketing, according to media company Magna.
Supersizing digital marketing budgets, however, is not enough. Successful retailers need to move away from classic marketing techniques such as one-size-fits-all campaigns where all shoppers are reached with the same messages. Both traditional and online ads are essentially one-way communications that can’t really engage with consumers, even if they are highly compelling.
Delivering customized online experiences is a strategy that retailers are increasingly using to build connections with customers. A University of Texas research paper discovered several reasons why people seek a customized experience. It found that a personalized message is something that consumers can claim as their own. In a sense, the receiver controls the personalized content since it uses their personal details and draws on their experience. Examining internet purchasing trends, the study found that sales increased by 19% when the browsing experience was personalized.
Personalized Online Videos
Online videos have increasingly become part of people’s browsing experience. You only have to see the rise of video on Facebook and YouTube before that to understand their popularity. Videos can draw even further attention when they can be customized to provide a unique experience. These kinds of videos can connect with customers by drawing on their personal information such as their name, date of birth, gender, past online purchases and geographic location.
There are a number of ways retailers can use personalized videos to increase their sales. A client who is about to celebrate a birthday, for example, may receive a targeted video message enticing them back to the store where the jewelry was sold. The occasion for the video could be an anniversary, Valentine’s Day gift, or a Black Friday sale where the shopper is personally notified about bonuses and in-store promotional offers.
These videos can be particularly effective within email marketing by targeting customers who have already made a purchase, or shown an interest in products. Studies have shown that conversion rates increased at least 10% with videos in personalized emails with click-through rates increasing by 14% compared to emails with no video. Using email marketing, furniture retailer Habitat emailed videos to congratulate customers on their most recent purchase and suggested a complementary cross-sell matching their preferences. The campaign was successful because it built on the already existing relationship with the customer and the items that they already bought. By suggesting new items related to their preferences, sales greatly increased.
Making Traditional Ads More Effective
Personalized videos can also be created by consumers themselves to help make traditional ads more effective in connecting with shoppers. These are videos where visitors provide their personal information and use a template to insert a photo of themselves into an existing ad campaign. Shoppers upload an image of their face, adjust its size and line it up so their eyes and chin are in the right place. The newly created ad features the web visitor as the star who can watch it a few times, share it with friends and upload it to social media.
When people create their own personalized videos matching TV spots or outdoor billboards, they can connect to the traditional ads in more meaningful way. The engagement built from these videos is remembered every time they see the company’s ads. The videos build a closer connection to the brand, and it feels more like a relationship is created rather than a one-way communication from the advertiser.
This strategy was employed by eyewear company Carolina Lemke which markets its products across Europe. The company created TV, print and billboard ads featuring model Bar Rafaeli and rock icon Steven Tyler of Aerosmith. To further reach shoppers and build the effectiveness of these ads, the company put together a customized online video campaign where visitors could replace the face of Bar or Steven with their own.
After uploading their own photo and a few clicks, a new video was generated for online sharing. The online campaign generated great results with tens of thousands of views and shares. More importantly, the campaign help consumer more deeply connect to running TV, billboard and print advertising. (To watch a personalized video for furniture retailer Habitat, click here.)
Making the Connection with Customers
Given the attention economy we live in, retailers must do everything they can to connect with customers in a personal way beyond blasting out a one-size-fits-all message. With the rise of digital marketing and personalized videos in particular, this strategy can be implemented with relative ease by retailers. When consumers can create their own videos using their image and personal details, they can have an interactive experience resulting in a video that can be shared online. This experience can also help shopper build a stronger connection to ads on traditional platforms. For retailers looking to stand out in the crowded media landscape, personalized videos are a resource to consider in helping to build connections with new and returning customers.
Tal Rubenczyk is CEO of Treepodia, which specializes in video personalization by producing customized and creative ad campaigns for pre-rolls, dynamic video banners, product videos and loyalty videos.
Thanks Tal! I’m looking forward to using the services of Treepodia for my video remarketing campaigns.
Analyst: New deal is ‘good compromise’ for Walgreens, Rite Aid — if FTC allows it
The news that Walgreens is to scrap its $9.4 billion merger with Rite Aid is unsurprising. The glacial pace of the Federal Trade Commission investigation and increasing signals that the federal government would disallow the merger have forced a rethink.
In some ways, the process so far has been a colossal waste of resources and effort. Walgreens has to pay out a $325 million termination fee to Rite Aid, and all parties — including Fred's, which was due to acquire some Rite Aid stores — have invested time and money with very little to show for it.
We are highly critical of the FTC's involvement in this process, just as we are of the body in general. When it comes to retail matters, we believe it to be both inefficient and ineffective. Its previous decisions, such as the instance that Dollar Tree disposes of Family Dollar stores during acquisition, and that Albertsons-Safeway sells off stores during their merger, have resulted in failure. In both cases, the spin-offs, designed to provide more choice to consumers, went bankrupt and ended up back in the hands of larger players. For us, this underscores the government's complete lack of understanding of how the retail market works in practice — something we believe was at play in the case of Walgreens.
Fortunately, Walgreens and Rite Aid have taken a pragmatic approach and replaced the merger with a deal under which Walgreens will buy 2,186 Rite Aid stores, related distribution assets, and some inventory for $5.175 billion. While this will still be subject to FTC scrutiny, it will, at least in theory, be easier to gain approval because it avoids the dilution of store competition in some markets and leaves Rite Aid as a viable player in the pharmacy space.
For Rite Aid, the deal is a good one. The proceeds of Walgreens' payment will allow it to reduce debt and restore its balance sheet to health. The company's first-quarter results, which were also released today, show the imperative of doing this: the $109 million interest payment dragged it down to a net loss of $75.3 million — an unsustainable position.
The question, of course, is how Rite Aid will survive as a smaller entity. After the deal, the group will have 2,337 stores — around half the number it has now. This will be punishing on economies of scale, especially for a company that is already struggling to turn a profit even before interest payments are taken into account. The answer lies in the agreement with Walgreens, which will allow Rite Aid to become a member of Walgreens Boots Alliance's group purchasing organization. In our view, this will be highly beneficial and will allow Rite Aid to improve pharmacy margins drastically.
For Walgreens, the deal allows it to boost both the top and bottom lines at a time when growth is harder to come by. In our view, there will be some near-term benefits, but most of the synergistic savings and improved turnover will accrue over a period of three years. The costs of converting stores to the Walgreens format should, by and large, be neutral thanks to the improved margins Walgreens brings, and the uplift in sales from the stronger brand and improved store format.
In our view, while the deal is not the deal of choice for either Walgreens or Rite Aid it is a good compromise that brings benefits to both parties. Ironically, it is also one that means Rite Aid will effectively become a part of Walgreens network, albeit with a degree of operational and managerial independence. Of course, all of this remains subject to approval and all eyes now turn to the FTC for its decision on this latest move.
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