Mapco Express to Emphasize Private Label
The Mapco Express convenience store chain is looking to differentiate itself from the competition and increase margins by expanding private label offerings in a number of product categories including sports drinks, energy shots and meat.
The 500-store chain based in Brentwood, Tenn. is taking the initiative with its private label at a time when it is making pennies per gallon on gas sales at retail while its parent company, Delek US Holdings, is losing money in its oil refinery business.
Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS), sees the logic behind Mapco’s move. He told The Tennessean, “When there is such a price sensitivity with gas prices, people will ditch you for a penny a gallon. By having something that only you have that no one else has, you might be able to reduce some of that price sensitivity.”
Private label only generated 1.4 percent of Mapco’s merchandise sales in last year. The company’s vice president of marketing, Paul Pierce, said the company is shooting to increase that number to five or six percent.
According to Mr. Pierce, private label will help Mapco build an advantage, especially against smaller retailers that “don’t have enough stores, and enough volume to offer products like this.”
Ben Brownlow, a stock analyst with Morgan Keegan & Co., said now is a good time for Mapco to emphasize its own brands.
“I think one thing that you’ll see as gas prices remain around $3 is that consumers will trade down from branded products (such as brand-name soft drinks) to private label because they’re lower priced,” he said.
Discussion Questions: Do you expect to see a much greater emphasis on private label by convenience stores than has been the case in the past? Has the traditional emphasis of the channel on branded products made it more difficult to develop strong private label franchises? Are there built-in channel impediments to convenience stores developing robust store brand programs?
Most convenience store chains have no one aboard who’s empowered to create compelling private label products. Convenience store traffic is based on location, not assortment. Is there a convenience store chain demonstrating the vision needed to make its assortment truly special?
“Special” means “worth driving 2 blocks out of your way to go there.”
The convenience segment does a very poor job of merchandising and marketing PL items. They just don’t have the number and quality of personnel to handle this burden. Selling anything requires dedication.
The DSD vendors that supply the majority of the c-stores volume are usually supplemented by broker reps for the warehouse-delivered items. Please explain to me how an operation that can’t keep its coffee hot stands a chance of marketing and merchandising PL items! Now don’t get me wrong, there might be three chains in the US that could pull this off, but the other 10,000 wouldn’t stand a chance.
If convenience really does trump other factors, the move to private label in c-stores should have happened decades ago. Is the real convenience shopper going to leave Store A and drive to Store B because a particular branded item has been replaced by (and this is the critical point) a high quality private label alternative? It seems unlikely as long as the quality of the private label lines doesn’t slip.
Private label for the c-store marketplace needs to be genuinely unique in order for the business model to have a chance of being successful. Otherwise, the usual knock-offs approach will fail in this channel of trade, with the possible exception of pure commodity items that are not brand-sensitive, nor very price-sensitive, since it’s not likely that c-store private label will compare favorably with traditional private label.
Every company is interested in making more money, higher margins, etc., but it takes some creative planning to make it work.
The issue is merchandising, not product. Private label products don’t necessarily mean inferior. Next year they will be telling us they are moving private label to 10% of the store.