During most of the pandemic, convenience stores were considered an essential business and were allowed to remain open. But Casey’s General Stores was, arguably, the most “essential” of all the convenience store chains. The company has traditionally located its stores in smaller towns and rural communities not served by national-chain convenience stores. Last year’s annual report disclosed that approximately 56% of all Casey’s Stores were opened in areas with populations of fewer than 5,000 people. As such, Casey’s provides a service generally not otherwise available in these communities.
Casey’s is a public company with a 2,300-plus store network across 16 midwestern states. Headquartered in Ankeny, Iowa, the retailer has over 37,000 employees. The retailer offers self-service gasoline, a wide selection of grocery items, and an array of freshly prepared food items – most notably pizza. They are the 5th largest supplier of pizzas, based on unit sales, in the U.S.
Ena Williams, the chief operating officer at Casey’s, explained to me that their “stores have full kitchens, and they use fresh ingredients to make the pizzas – as well as salads and daily fresh donuts – from scratch.” Because of the kitchen, a typical Casey’s store is somewhat larger than many of their convenience store competitors. The average store is about 4,000 square feet.
To ensure quality, they have a mystery shopper program, and they benchmark themselves against their competitors. Quality, and pizza, allows them to become the neighborhood restaurant in many of the communities they serve.
During the pandemic, store cleanliness became very important. Their secret shoppers focused on this. “Our (same store) scores did increase when we honed in on this,” Ms. Williams explained.
The company could not effectively produce fresh prepared foods without self-distribution. Whereas many of their competitors’ source from wholesalers like McLane or Core-Mark, Casey’s supplies their stores with groceries, food, health and beauty aids, and general merchandise from the distribution centers (DCs). The stores place orders for merchandise electronically to the Store Support Center in Ankeny, and the orders are filled with shipments in company owned and operated delivery trucks from one of the DCs.
The company views self-distribution as a competitive advantage. It gives them more control over their supply chain. It is easier to deliver what stores need, when they need it, with the ability to provide “hot shot” shipments if a store runs out low on inventory before the next shipment is scheduled. Currently, there is a static delivery schedule for the stores. The typical store gets one delivery per week. Some of the larger stores get deliveries twice a week. But they are looking at developing the ability to develop a more dynamic schedule that will further enhance their capabilities.
Casey’s recently opened a new distribution center in Joplin Missouri; the retailer also operates warehouses in Ankeny and Terra Haute Indiana. The Joplin facility cost $60 million and will employ 125 employees when fully staffed. The DC serves over 600 stores and will reduce miles driven by approximately 1.8 million miles per year and will reduce operating expenses by over $400,000 per month.
In their warehouses, some workers operate forklifts and pick full pallets of heavier items, like bottled water. Other workers, known as light workers, because they are picking lighter items, walk through the DC and fill totes. Putters take the contents of the totes and put the inventory into pick-to-light machines. The pick-to-light machines dispense inventory to create store shipments. When Casey’s implemented the pick-to-light machine at their new DC, productivity among their light duty workers improved 30%. The retailer also uses Softeon’s warehouse management system – including load planning, yard management and labor management modules – to improve the efficiency and accuracy of its operations.
The new distribution center is not the only supply chain initiative the company launched in the last year. The pandemic led them to launch curbside pickups and expand home deliveries. In their recent fourth quarter call, the company reported they have over 700 stores that offer DoorDash deliveries and that have launched Uber Eats at another 700 stores.
The curbside pickups were facilitated by a digital engagement initiative begun before the pandemic. The retailer had implemented an omnichannel system from SAP Hybris, a customer relationship management solution from SalesForce, and an integration platform from MuleSoft.
In the past year, the company has also launched a centralized procurement team. This team is tasked with employing strategic sourcing tactics and leveraging the company’s scale and to drive savings. The centralized fuel team has already provided a significant improvement in fuel margins.
Darren Rebelez, President and CEO, summed up their year by saying “Casey’s achieved remarkable results in one of the most difficult retail environments of our lifetime,” said. Fuel sales represent over 40% of the company’s sales. Fuel sales declined because of a reduction in driving during the pandemic. Despite this, in the 12 months ending April 30, Casey’s total revenues increased by over 18 percent.