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The king of Couche-Tard’s next move

At 65, the man behind Couche-Tard is still building his empire

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Looking back, Alimentation Couche-Tard founder Alain Bouchard credits his father’s misfortune for his own undreamed-of success.

Bouchard, now executive chairman of a chain of more than 8,500 convenience stores around the world, officially handed over his role as CEO to Brian Hannasch, his chief operating officer, Sept. 1.

But Bouchard isn’t planning to take it easy. At 65, his new job is to make Couche-Tard bigger than ever.

His plan: to conquer the world–again–with a formula of clean, bright stores, no perishables, up-to-the-second analytics and what he sees as first-class customer service.

Bouchard was just 10 when he watched his subcontractor father go bankrupt. The event had a profound impact on him.

“There was a before and after,” is how he describes the affair. When he started his own business, Bouchard readily recalled his father’s experience and set out to build a company that could withstand the rollercoaster of retailing, and that no bank could pull the plug on. And he would be his own boss.

He has fulfilled his ambitions, and then some.

READ: Couche-Tard looks for coffee sales perk

Couche-Tard’s c-store empire includes more than 1,880 c-stores and gas stations in Canada, mostly under the Mac’s and Couche-Tard banners; 4,360 Circle Ks and other stores in the United States; and some 2,250 Statoil and Ingo in Europe. There are also 4,600 Circle K stores under licence in China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Malaysia, Mexico, Philippines, Vietnam and United Arab Emirates.

Starting with just one store in Quebec in 1980, Bouchard has grown the company to a worldwide US$38-billion business. More than US$4.9 billion of that amount comes from its Canadian operations–half from fuel, the rest from cigarettes, beer and wine, coffee, sandwiches, chips, pop and chocolate bars.

Last year, Canadian Business pegged Bouchard’s net worth at more than $1.5 billion, up 48% from the year before, ranking him among the Top 50 richest Canadians.

Bouchard doesn’t seem interested in counting his money, though.

“I could never spend even a tenth of what I have,” he says, speaking to Canadian Grocer from his suburban Montreal head office, which is nestled in a cul-de-sac surrounded by a plush forest. “Money is not what motivates me.”

BOUCHARD’S EMPIRE IS INCREASINGLY USING FUEL stations to boost convenience store quick-sale items such as beverages, cigarettes and ready-to-eat.

While standalone fuel stations are closing, those with convenience stores are opening, fitting right into Couche- Tard’s wheelhouse.

Convenience stores offer the types of high margins that pumping gas doesn’t. Last year, for instance, Canadian merchandise and service gross margins were 34%, the highest in the company. Meanwhile, same- store merchandise sales rose 1.5%.

Now, with Hannasch in the day-to-day driver’s seat, Bouchard is setting his sights on what he loves best– growth.

READ: Couche-Tard to accelerate pace of convenience store construction, remodelling

“One thousand stores is nothing for me,” he says, though on average he buys about 100 a year. “I think we can be 25,000 stores [strong] in 10 years. We want to have a foot in Asia with our own money. I love what I do every day. I will continue to travel and I want to accelerate organic growth.”

In Canada, he is on the hunt for stores with fuel to buy. Couche-Tard’s ratio of stores here with fuel is much lower than in Europe and the U.S.

So Bouchard wants to add 35 to 50 stores with fuel a year in Canada, up from 20 to 25 per year in the last five years. But since the company is closing “a good number of stores every year,” too, there will be no net increase in stores, he says.

Bouchard believes the key to growth in convenience stores is customer service.

“It’s the first thing we do when we buy a new company–we start with customer service.” That includes clean stores, well-stocked shelves, good lighting and, whenever possible, a washroom in every store.

Staff training, meanwhile, is decentralized and each Couche- Tard division has its own training centre to recognize regional differences. Decentralization is a hallmark of Bouchard’s business style and one reason the company has managed to grow around the world.

“[Bouchard] puts a lot of confidence in his people,” says Raymond Paré, the corporation’s vice-president and CFO. “He has enormous faith in his management team. He delegates an enormous amount.”

Keith Howlett, an analyst at Desjardins Security in Toronto, says Couche-Tard has service–mainly driven by tobacco–down to a science. Customers drop in to buy smokes by habit, and it’s an easy way for staff to get to know their preferences.

“It’s the ultimate in local retailing,” says Howlett. “They have a very personal presence, they put a high value on their store managers. And they put a high premium on analytics.”

READ: Couche-Tard and Core-Mark to join UGI

Bouchard, in fact, just oversaw the installation of a new computerized inventory system that instantly feeds data to the Laval headquarters about what is selling where, down to a chocolate bar in a store in Scandinavia. Shelf space is allocated at each store accordingly.

If there are no pets in the area, pet food will give way to what does sell, be it potato chips or licorice.

ALAIN BOUCHARD FOCUSES ON SERVICE IN HIS STORES BECAUSE, once upon a time, he was the guy behind the counter. He started working in convenience stores, at 19, with his brother in the nascent chain of Perrette, Quebec’s first open-late quick stop. He went to business school at the same time he worked nights and weekends.

“I enjoyed keeping the store clean and serving the customers and seeing how they reacted to changes I would make,” he says. “I would move stuff from one place to another… see how customers would react. I really enjoyed that part.”

He went to work for Provigo when that chain bought Perrette and started the convenience chain Provi-Soir. After that, in 1980, he struck out on his own, opening his first convenience store, in Laval.

By 1986, he had 34 stores and within the next decade, Bouchard would grow his network by leaps. In 1997, he purchased his former employer, 245 Provi-Soir stores, plus 50 Wink’s stores from Provigo.

Two years later, he acquired 980 Mac’s, Becker’s and Mike’s Mart locations across Ontario and Western Canada through the acquisition of Silcorp.

READ: The rebirth of convenience stores, smaller format grocers

The next decade would see Couche-Tard go international. The company expanded into the United States, picking up first, in 2001, 172 Bigfoot stores in Indiana, Illinois and Kentucky; then, a year later, 272 Dairy Mart locations in Michigan and Pennsylvania.

In 2003, Bouchard pulled off a blockbuster deal, acquiring 1,663 Circle K stores in 16 states from ConocoPhillips Company. In 2012, Bouchard entered Europe with the acquisition of Statoil Fuel & Retail, operator of c-stores and gas stations across Scandinavia, Poland, the Baltics and Russia.

It was in Scandinavia where Bouchard brought back lessons in ready- to-eat, especially during the early rush hour.

“If you own the morning, you own the day,” he says. But in Europe he does not face cutthroat competition for morning coffee and on-the-run breakfasts from Tim Hortons and McDonald’s, whose revamping of their coffee has dented Bouchard’s ambitions to get a bigger bite of the breakfast trade.

In Europe, his stores have about 35% ready-to-eat, house-made sandwiches, coffee and other baked goods, but no perishables. In North America, it’s 20%.

Ready-to-eat food has also become a priority, perhaps even a necessity. Now, with expanded grocery store hours and even pharmacies selling food, Couche-Tard has had to adapt. Bouchard has changed his stores’ focus to coffee for the mornings and snack food and beverages for the evening. Today, Couche-Tard stores have a large selection of fresh coffee, grilled hotdogs, sandwiches, pastries and rows of snack food. Groceries have all but disappeared.

“The most important thing we sell is time,” Bouchard says of his stores, which average between 3,500 to 4,500 sq. ft. “It’s quick, it’s fast, it’s right there around the corner. I don’t have to walk through a huge store to get what I want. It’s parking in front of the door.”

OF COURSE, BOUCHARD IS NOT THE ONLY FOOD retailer that prizes the convenience shopper.

Loblaw wants to attract more of them by revamping some of its Shoppers Drug Mart stores, adding more fresh and prepared foods. Sobeys, meanwhile, has opened its own c-store/gas stations in Quebec under the IGA Express banner.

A global study by Dunnhumby earlier this year found consumers now prefer convenient shopping trips, with proportion of small basket sizes (three items or fewer) rising three percentage points in the last five years.

READ: Rethinking big boxes

Jordan Lebel of Concordia’s Molson School of Business says Couche-Tard reinvented the convenience store. Though it might feel the pressure of Sobeys’ and Loblaw’s smaller stores, and smaller Walmarts in the U.S., he thinks Couche-Tard is well positioned to capitalize on the convenience customer.

“Their common thread is neighbourhood marketing. They occupy a privileged position because they are present in the community.”

In addition to looking for new stores to acquire, Couche-Tard recently bulked up on the buying end. In June, it joined the grocery buying group UGI, whose other members include some of Canada’s biggest grocers, including Metro and Longo’s.

Ask Bouchard how he feels about his competitors and he smiles.

“I welcome competition,” he says. “It’s good motivation. We have seen many big guys coming in our market and expressing long-term goals, and all of a sudden…” He shrugs. “It’s quite a different business.”

After all, Bouchard set out to build a business that couldn’t be knocked down–no matter how big the competition gets.

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